EntrepreneursVenture Capital

Small boards are usually better

By June 26, 2008 14 Comments

I was on a call yesterday with a subset of one of the boards I am on and one of the directors was talking about how difficult it is to add value on boards.

I agree with that. It is definitely difficult. Also definitely possible, but it usually requires a lot of care and forethought.

I should add at this stage that the director in question has been brilliant for us, and that he has an awesome track record of entrepreneurial success behind him.

One of the reasons I favour small boards is exactly because it is hard for NEDs to add value. Despite their best intentions many fail, and it is also common to see people destroying value by chewing up management time precisely because they are trying to help.

Keeping the number of NEDs small and choosing them carefully is my advice. One or two is a good number for non-investor NEDs, including the chairman.

As I have been writing this post I have been wondering why I haven’t named the director in question. I think the reason is that this is in some way a no-go area, and I was unsure how people in other companies he is involved with would react to him having this opinion – which makes me want to pursue this topic further.

So I will return with another post on adding value from the board. In the mean time I’d love to hear any thoughts or experiences you have had which would help frame my thoughts. This topic overlaps with a couple of previous posts on VC value add, but it is not the same.