VeeCee Event: “Unlocking the Secrets to Effective Boards”
A Cheerleader Role Proves More Effective Than a Watchdog
How can venture capital (VC) board members drive the growth of their portfolio companies?
Ideally, board members appointed by venture capital firms add significant value to their portfolio companies. However, in practice, this is not always the case. Addressing how to effectively fulfill the role of a VC board member was the central question during the event “Unlocking the Secrets to Effective Boards” on November 27. The event, attended by over 50 participants and moderated by Elisa Houweling, M&A and VC Community Manager at Sijthoff Media, included a panel discussion featuring Mathijs de Wit (Managing Partner, Newion), Myrthe van der Erve (COO, Sijthoff Media), and Menno van Dijk (Founder, ScaleUpNation).
The Role of Effective Boards in Driving Growth
Research shows that companies with effective boards experience faster growth, which underscores the importance of appointing competent board members. Nevertheless, as discussed during the event held at the Capital C Building of Sijthoff Media, board members do not always perform optimally.
One explanation could be that board members adopt an overly supervisory role, which may be suitable for established corporations but less so for startups or scaleups. As Menno van Dijk emphasized, board members in these contexts should focus on “propelling, not protecting.” Myrthe van der Erve added that the board member’s role is akin to that of a “cheerleader.”
The Risk of Distrust and Misalignment
Mathijs de Wit, Managing Partner at Newion, candidly admitted, “I don’t trust founders,” reflecting the concern that investors prioritize safeguarding their investments. Appointing board members provides oversight and influence over critical decisions, mitigating risks associated with leaving such matters solely to the founder’s discretion.
However, this dynamic can create tensions when the founder and investor’s interests diverge. One participant shared an example where a VC-backed entrepreneur spent nearly $2 million on private jet flights and was later implicated in misconduct. The VC ultimately negotiated a costly exit package to resolve the situation.
Challenges and Pitfalls for VC Board Members
It’s not always the founder’s fault when companies fail to achieve their potential. Venture capital firms and their board representatives also bear responsibility. Often, there’s a conflict between the company’s needs and the investor’s interests, such as when a VC firm pushes for a quick exit against the company’s long-term growth objectives.
Moreover, board members may lack the necessary skills to drive growth, such as coaching entrepreneurs, understanding the specific industry, or leveraging their network. Limited time commitment further hinders their effectiveness, especially for board members overseeing multiple companies.
Fostering Effective Collaboration
The panelists emphasized the importance of mutual alignment between founders and investors. Menno van Dijk suggested a rigorous “dating” process before formalizing partnerships, including discussions about shared vision, strategy, and areas for founder development.
The ideal board member, they argued, is reflective, willing to learn, and adaptable to the company’s evolving needs. This individual must strike a delicate balance between guidance and autonomy, trust and control. Van Dijk aptly described such a person as an “insecure overachiever.”
Ultimately, effective board members act as collaborative partners, ensuring that both founders and investors thrive in their shared journey toward growth and success.
Check out all the pictures here.