When choosing a new CEO or new directors, VCs and VCBC boards may feel impelled by the accelerated development cycle to take a shortcut: appoint people who don't need to be assessed for the job.
For example, some experienced public company directors, accustomed to having enforceable oversight power, might decline to serve on a VCBC board that is advisory only versus those VCBC boards where all directors--independent or a VC--have equal voting rights.
In recruiting directors for VCBC boards, we take care to convey to potential candidates the unique circumstances of the company and its board.
Whereas in large public companies the processes, committee structure, and governance regulations would be instantly recognizable to an experienced director, VCBC boards run the gamut from boards that resemble public company boards to small boards dominated by a single investor or a powerful personality.
Perhaps few things have changed as dramatically with VCBC boards in the past decade as the issue of director compensation.
Not only do VCBCs scale rapidly but they often pivot strategically in the course of their development.
Just as VCBCs must remain nimble and flexible in order to be successful as they grow, effective VCBC boards must adapt as they experience the normal process of maturation.
For a VCBC to be successful, you need both a CEO who is appropriately empowered and an economically and strategically aligned board of directors that can also add value while serving as a fiduciary for all of the shareholders.