Fewer Board Seats – The Next Bay Area Fashion Statement?
The National Venture Capital Association (NVCA) published a report yesterday on CEO and BOD relationships that is causing a bit of a stir. Many people are commenting on the fact that there is a disparity in views between CEO’s and VC’s on the ideal number of Boards that an early stage VC should sit on. My friend John Rodkin, whose Board I sit on, had a first hand perspective in recent post.
According to the NVCA report the VC’s view is 4.6 and the CEO view is 4.0. It seems to me that isn’t a large disparity. The thing I found more curious is that my VC brethren are collectively reporting they are only on average are on 4 Boards (5 in the Bay Area). I looked at the number in amazement; given the people I know in the industry it seems way too low. Over the past few days I held an unscientific survey with a number of CEO’s and VC’s and they have a similar impression. So it raises the question, what is going on? Could people be underreporting?
I remember not too many years ago it was a badge of honor in the Venture community to be on numerous Boards. It was a sign of the economics of the time where spreading your bets as widely as possible was the ideal investment strategy. Times have certainly changed especially in early stage investing. It’s not a very scalable business and in my opinion seems to require more time per company not less to make an investment strategy work. So is there a change under foot? Is the new fashion statement in the industry how few Boards you are on? I hope so; I think it would be better for the entire ecosystem.