VC Board Member Archetypes
Every venture capitalist is unique; however, when one is joining your Board of Directors, there are some patterns that can guide you in ways to engage them effectively.
When you first raise venture capital, the Board of Directors of your C-corp startup takes on increased prominence. Part of a venture-led funding round term sheet will be important governance provisions, including reserving specific investor rights and having representation on the Board of Directors.
While each individual venture capitalist is unique, with a particular background, set of experiences, personality, and point of view, I have noticed some investor board member archetypes over the decades across different high-potential venture-backed startups. Seeing those patterns has enabled me to engage various VC board members in ways that play to their strengths and perspectives. In general, I have noted three different archetypes:
Archetype 1: Deal Maker
Some VCs enter the business from what I think of as the “deal side.” They have backgrounds in finance, private equity, investment banking, mergers and acquisitions, or purely venture capital. Typically, they have a business degree and are adept at financial and deal modeling. They have seen many deal types and structures, know the ins and outs of negotiating and term sheets, and are often focused on getting the best deal. They are my first call when I am planning my startup’s financings, sorting out the nuances of the cap table, and considering exit prospects.
Archetype 2: Subject Matter Expert
Some VCs enter from the perspective of technological or industry skills and background. They bring specific technical knowledge, experience, and insight into particular domains or industries. Physicians will become healthcare VCs. Computer scientists will become tech VCs. Engineers will become hard science VCs. They are often great assets to a startup when they bring to bear their relevant industry-specific experience and/or customer or technological expertise and point of view. They can help articulate value propositions, be good sounding boards for product development direction possibilities and competitive landscape investigations. In addition, they can bring great contacts at strategics or potential customers in your space and can be great champions of the customer’s point of view.
Archetype 3: Operator
Some VCs enter from the perspective of having built successful startups. They know the challenges of creating something out of nothing, building and selling a minimum viable product, assembling and empowering a team, and all the myriad details and nuances that go into building a startup. They bring management know-how, decision-making prowess, and awareness of the endless prioritization challenges and tradeoffs that need to be balanced. Often, they are the easiest to relate to because they understand the CEO’s perspective. They are often affirming and supportive when difficult circumstances emerge – and they can be great sounding boards you navigate the complexities of building a startup.
I have noticed that even if one of your board members blends more than one of these archetypes, they will likely exhibit a strong suit. Of course, it is crucial to keep in touch on all matters of significance with all Board members. However, it is often not fruitful to talk to those whose experience does not match the need when working on particular topics. Most effective for me has been thinking about the problem at hand and then drawing on the skills and experience of those Board Members with the archetype to address it. I call on my deal makers when planning a round, my operators when wrestling through an executive staffing issue, and my subject matter experts when validating my go-to-market strategy.
