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VC vs. CEO

Here’s an intriguing study about the differences that emerge between CEOs and venture capitalists on company boards. It is a reminder to entrepreneurs to take the selection of their board members more seriously. One nugget is how venture capitalists are comfortable sitting on more boards than CEOs would prefer. The link above is to a summary of the study done by the National Venture Capital Association and Dow Jones VentureOne, but you can get more details by contacting them directly (michelle.jeffers at

VCs believe the ideal number of board seats is an average of 4.6 for early stage companies and 5.5 for later stage companies, according to the study. CEOs prefer their venture capitalists limit their early stage board seats to an average of 4.0 and their later stage board seats to 4.6. There are many Silicon Valley VCs who sit on more than ten boards. This study might make them uncomfortable. How many board seats is your VC sitting on?

However, some VCs argue that the more boards they sit on, the more contacts they have, and so the more useful they are to companies. What do you think? Does that argument fly?

Geographically, San Francisco Bay area VCs averaged the highest number of board seats at five per VC (understandable, because it is pretty easy to drive five miles from Sand Hill Road to participate in the board meeting).

Meanwhile, venture capitalists said conflict is likely to stem from personality issues with the CEO, while CEOs said conflict is more likely about disagreements on valuations. We are slightly amused by this perception difference, because we think the two conflict sources are in fact the same. The CEO’s job is to negotiate a high valuation for his company. That way, a VC gives him more money in return for a slice of ownership in the company. VCs who feel taken advantage of may then attribute this to a personality conflict with the CEO.

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