Wie gehen VCs mit Konflikten und Herausforderungen im Vorstand um?

Finding the right-fit Board members, for the phase that your company is at is key; as you grow from $1M to $100M, your Board will need to shift and that's ok. We've found in our Board searches to first align to the criteria for the open spot (ie country, expertise, and founder vs CPG exec for example are 3 buckets to consider) ... a cohesive and complementary board with a strong chair is key to delivering on the Board roles summarized here.. easier said than done!

It's also important to understand that the nature of the board and its relationship to the CEO changes over time. Tasks and challenges in a newly founded 10ppl start up are very different from those in a multi-million dollar revenue company. Board but also founder/CEO have to adapt to this changes and maybe even sometime make room for better suited people. Think external board members. Especially with VCfunded companies staying private ever longer. Now the average time-in-private is 13yrs. And that's only the average, not the maximum. And it's growing. 13yrs is exceeding the typical 10+1+1yr fund term. So it's even structurally inevitable that the board composition will change over time as early investors will be forced the sell stakes.

In my experience, it is important that there is level setting at the beginning of the relationship about expectations. This includes things like how often do we meet, speak, etc? What type of issues should be immediately brought to a board’s attention? The level of risk and funding we are willing to increase revenues? How much cash do we want to always have in the bank as reserves? And so on.. these discussions are tedious and awkward but necessary to avoid fallout. I would also encourage the board and management to revisit this conversation at least every 18 to 25 months.

As a Venture Capital expert, I emphasize that board members must balance their fiduciary duties with strategic guidance. It's crucial to maintain a collaborative relationship with the CEO, providing oversight without encroaching on operational autonomy. Effective board members use their experience to mentor and steer the company towards growth, while ensuring that their actions align with both the company's and shareholders' long-term interests. The ability to challenge constructively is a hallmark of a board that adds true value beyond capital.

As an entrepreneur, I see being on a board pivotal. It's about: Guiding Growth: To help steer the organization towards growth, ensuring it's manageable and aligned with its goals. Fiduciary Responsibility: To uphold a legal and ethical duty to act in the organization's best interests, making tough decisions when needed. Risk Management: To assess and mitigate risks to safeguard the organization's future. Strategic Direction: To shape the company's strategy, fostering innovation and adaptability. Accountability: Accountable to shareholders and the public, requiring transparency and ethical conduct. Being a board member demands dedication and strategic thinking, all in the pursuit of the organization's success

communication is the linchpin of effective board dynamics. Its important to firmly believe in open, honest, and respectful communication with fellow board members and the CEO. Clarity in conveying expectations, goals, and concerns is paramount. Regular and proactive communication channels beyond formal meetings, such as phone calls, emails, or informal discussions, foster transparency and trust. It's crucial to avoid surprises, hidden agendas, or gossip, and instead, maintain a culture of transparency and honesty. This approach helps build strong alignment and trust among all stakeholders.

Effective communication involves proactive and respectful engagement. It's not limited to board meetings but extends to consistent interaction through various channels. I've personally learned the importance of this the hard way. In larger corporations with shareholders primarily focused on growth rather than day-to-day operations, it's crucial to realize that they might not be aware of your weekly communications or the challenges you face. To safeguard your work effectively and legally, ensure you communicate with the right individuals and escalate issues at the appropriate time. This proactive approach will protect both your interests and the organization's mission.

Was vielen jungen Unternehmen fehlt, ist eine institutionalisierte Communication Cadence mit entsprechenden Foren und klar definierten Zuständigkeiten. Es geht um den „Rythm-of-the-Business“ : wer redet wann mit wem über welches Thema und trifft welche Entscheidungen und wer muss von diesen Entscheidungen in Kenntnis gesetzt werden. Diese Art von Kommunikation, bei dem das ganze Unternehmen involviert ist, muss von dem Management in Verbindung mit den Aufsichtsorganen forciert werden. Das beinhaltet auch die Kommunikation bis auf Mitarbeiter-Ebene und nicht nur das Management.

Board members in venture should consider an annual retreat - like a strategic summit. Each year. Thoughtful dialogue out of the office is healthy and brings fresh ideas.

Best practices of VC backed board compositions vary a lot between the US and Europe and within European countries. My 2 cents worth - have two independent directors on the board and have one of them be Chairperson. Both should be able to contribute to strategy, finance and corporate governance. One of them should have a second role as mentor to the founder CEO. Use options as compensation, if cash is tight.

81% of early-stage startups are facing failure in 2023 because, as of the end of October. From concerns about growth to disagreements about costs and hiring, or misalignment about future strategy, a range of issues can come to a head when growth hits the buffers. Funding strategy is another matter of contention, as existing investors face the prospect of having their equity diluted, as is exit timing if investor interests don’t agree with the route you want to take. Pick your battle. Eye success!

I think it is essential to have some agreements and boundaries in place while dealing with conflicts. Again, it is important for each one on the Board to acknowledge that ideas and approaches are being challenged and not the people themselves. If we can acknowledge this thought then we can move towards constructive discussions and move away from ego centric conversations that don't serve any purpose. In my opinion, conflicts are a really important part of decision making, if no one on your Board is challenging you then I would be a bit concerned about the effectiveness of the Board.

Conflicts indeed arise in high-stakes board discussions, and they can indeed be constructive when handled adeptly. They should be approached with a positive and collaborative mindset, emphasizing solution-finding over assigning blame. It's essential to respect the board's decision-making process and authority, adhering to the majority vote or the lead investor's direction. In cases of disagreement, there is a need to voice dissent respectfully and constructively, contributing to the discourse. Once a decision is reached, wholeheartedly accept the outcome and provide unwavering support for its execution.

This an important point. Many portfolio companies are led by individuals who have industry expertise but who have nowhere near the level of connections of a VC. Management may not be aware of all of the things a VC brings to the table - make it known early on in the relationship.

O Conselho e formado por quem viveu experiências dentro do que se aplica (setor) ele nao é curioso. Conhece a fundo passo a passo de cada etapa exercida pela empresa.

Managers should leverage their strengths and expertise by identifying areas of proficiency, delegating tasks accordingly, seeking opportunities for growth, and offering mentorship to team members, thus maximizing productivity and fostering professional development.

The strength of portfolio companies is partially driven by the diversity of strengths and experiences of the board members and their VC advisors. Conflicts always arise in growing orgs. Involving a VC to assist in working through 'rough spots' is in many cases the difference between success and failure. Having seen many deals, the VC is an additional tool that is under-utilized by early stage companies. From cash flow to engineering to sales/branding, the board and VC advisors are aligned to achieve success.

With a nicely built board, each board member has something to share : vision, experience, network...just make sure the CEO is aware of what each board member brought to the table. Each board member should be aware of other board members' strengths, and respect them.

Das hört sich ebenfalls sehr toll an, aber nur so lange bis die Entwicklung des Unternehmens positiv vorangeht. Wenn es mal schwierig wird, weil die Zahlen nicht stimmen, dann wird es sehr schnell frostig mit Schuldzuweisungen bis hin zu forcierten Personalwechseln.

VCs are typically the source of Board conflicts and challenges. 😂 Effective conflict management needs to be timely and fact-based with egos checked at the door. At the end of the day, the Board needs to defer to the management. If a Board does not trust management to decide and do what’s best for the business….they have the wrong management in place.

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A positive board structure is also rooted in transparency and consistency. Regular board meetings, whether monthly or quarterly, provide a structured forum for discussing progress, challenges, and strategic decisions. Effective communication between meetings is essential to ensure that all board members are well-informed and aligned. This ongoing dialogue helps to prevent surprises and fosters a culture of openness and trust, which is crucial for the board's effectiveness and the startup's success.

...'Uma cultura positiva do conselho pode aumentar a eficácia, a coesão e o desempenho do conselho.' Por isso que eu falo que os texto nao tem consenso. Conselho não tem haver com trato ou ações de dia a dia de chefia como trouxe o texto. O conselho decide fechar as portas ou por quanto tempo as portas ficarão abertas. Shalom

La armonía se origina cuando les das lo que desean y cuando lo desean , analizar sus preferencias y comprometerse en las entregas a tiempo . Resumir y entregar información confiable .

Managers should actively seek feedback from their team, peers, and superiors, valuing diverse perspectives. They should use this feedback to reflect on their performance, identify areas for improvement, and implement strategies for growth. Continuous learning and development contribute to effective leadership and team success.

The world needs feedback and improvement. The focus is on what we have done and what we can do better. Continuous quality improvement (process) results in consistent quantity improvement.

As board members, our role extends beyond oversight to fostering continuous improvement. Actively seeking feedback from peers and the CEO is essential. Embrace criticism and suggestions as tools for personal and board-wide growth. Providing constructive feedback respectfully enhances our colleagues' performance and skills, promoting a supportive environment. Participation in board evaluations is crucial, helping to identify areas for improvement and develop actionable plans. By committing to these practices, we strengthen our governance and drive organizational success. Continuous improvement benefits from the collective effort of the entire board, creating a culture that values feedback and strives for excellence.

Major conflict reasons in the current market situation would be Growth vs Sustainability. VCs have a mindset of growth whereas portfolio companies adjust the risk with sustainability for a certain amount of time. Instance market situation should be judged and looked after before reasoning upon growth trajectory.

Read the board deck before th board and if it is not ready call the company out. Question assumptions, be constructive and positive but don't be shy to call out problems or issues that are not thoroughly addressed. Be careful not to be prescriptive but make sure to share your VC view which you help the company understand how other VCs might see the company as well. Try to meet the CEO before the board to discuss any controversial issues so that the board can have a more effective discussion. Offer your seat if you are not providing value. As long as you have trust in the rest of the board members there is no shame in stepping down if you are no longer useful.

The Importance of Legacy in Venture Capital The transition of directorships from my dad to me in 2009-2010 at All4U BV and Quantaris Holding BV is a prime example of sustainable legacy planning. For venture capitalists, this story illustrates the importance of succession planning and knowledge transfer. My dad’s approach of involving me ensured continuity and fresh insights, vital for long-term success. This story emphasizes the need for venture capitalists to cultivate the next generation of leaders, ensuring that their ventures continue to thrive and innovate. Learning from my dad, venture capitalists can see the value in building and sustaining a lasting legacy.

Learn to live with limited information and make the best out of it. There´s always a tendency to work with financial models which are from the day they have been developed wrong. Suich effect is not only true for young organizations but for all businesses I worked with in my carreer. Focus on new business, contracts, timelines will support future growth better, and support the positive dynamic a young company deserves. From the sponsor´s perspective, the VC company, the focus on risk and risk management in a multi project portfolio (which is the portfolio of investments) will allow to improve the overall performance of all portfolio companies. There is not magic natural law about the failure rate of investments.

Please understand that to have conflicts are healthy. The vision of an organization may seem to be conflict free, but it isn’t. A vision conflicts with reality. A strategy as next breakdown is not conflict free. It conflicts with external realities. The processes in an organization organize work, but conflicts, too. The conflicts can be visible and should. The organization is always offering conflicting situations. That all addresses the need for leadership. With the right people on the board you will increase perspectives and with perspectives chances to conflicts. Make sure that all understand the huge potential in conflicts and the need to understand the role of everyone: be open to conflicts, change and problem solving