Most of your board members will be VCs who invested in your company. They may be brilliant strategists or operators, or alternatively just have a bunch of money that came bundled with a board role. I would always take a lower valuation in order to work with a board member or VC partner I really like, rather than a higher valuation and a lesser board member. 1
Remember, when a venture capitalist invests in your company it is the fund investing, not the individual partner. This means that funds typically have the right to swap out the partner that sits on your company’s board. While you may start off with a senior partner, you may someday find a junior, wet-behind-the-ears, brand-spankin’- new VC as your board member. This junior partner will probably start attending as a board observer 2 or just start showing up with the senior partner, who will say she wants to add “more bandwidth to your team from our firm.” If you do well as a company, this will indeed be the case. However, if you do poorly, then the venture fund has someone less valuable they can swap in to save the senior partner’s time. This junior partner will be less able to help you, and will effectively get trained by you and your other board members.
- See eladgil.com for a link to a story about Elon Musk and John Doerr. [https://pando.com/2012/07/17/who-made-the-bigger-mistake-inthe-botched-series-c-for-tesla-elon-musk-or-john-doerr/]
- See eladgil.com for a link to a useful Mark Suster post on board observers. [https://bothsidesofthetable.com/rethinking-board-observers-the-role-of-the-silent-observer-eee4ccecac7d]