We are typically early stage investors and we are active investors in our portfolio companies. In the 45 investments we’ve made since starting Spark, we have served on the board of every single company except for one company.
That’s one reason we do almost all of our investing in the United States. Of course, there are many amazing opportunities around the globe but it’s hard for us to be as active as we and our entrepreneurs want if it requires a passport to get there.
As board members, we take our responsiblities seriously.
The one dyanamic that is extremely challenging is when your various board members have a fundamental disagreement about critical matters like selling the company, blocking a transaction or firing a CEO.
Often these decisions are a combination of analysis and emotion. And the emotion can get to the best of us at times – especially when different board members have opposing positions on such critical matters.
Usually there is some combination of fear or greed at the center of it all. Fear that if you don’t sell now you will regret it. Or fear of selling now, means that you are leaving the future opportunity behind. Or greed because you are waiting for a better offer that may not materialize so you block the bird in hand.
The only advice I can offer to entrepreneurs and VCs alike is to choose your board carefully. Take your time. Don’t sign a term sheet under pressure. I haven’t met a single VC yet that stands by an exploding offer – in other words, if a VC really wants to invest then they will wait a few more days as long as they feel like they are being treated with respect.
If it’s a follow on financing, it’s worthwhile getting your existing board together with the prospective investor that is about to join your board to make sure the chemistry is right.
It’s unrealistic to expect everyone to agree on every critical matter. But taking your time will help reduce the possible headache & pain in the future.