Bevans Branham goes into detail about how to make sure that your board members represent your business' interests.

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Bevans Branham on Making Sure Your Board
Members Represent Your Interests
Bevans Branham from Palm Springs California:
This blog post is a response to a recent article that I
read in the New York Times that asks
the question, “Do your board members represent
your interests?” You can view the
article in it’s entirety here. The article explores some
specifics regarding how a new
company or a startup gets investors (especially
venture capitalists) and at times the
members of your board might want to push a direction that might not end up being
optimal for the company.
Why Not Just Take the Money?
Given you have board members who are venture capitalists, they have invested a lot of
money into you and your company. Hence, when you are looking to raise more money,
perhaps through another round, the VCs are often likely to push for another equity round
and, in doing so, hype returns in the immediate. However, it can be preferable for the
company as a whole to place this next round as debt, not diluting their own ownership
position yet further.
In the article they used a term for this which I found particularly provocative and quite
telling, “the venture capital treadmill”.
The best way to avoid the VC treadmill is to make sure from the start that those who
invest in your company initially have shared interests, investment horizons and
objectives. Initial investors who have only short term profits as a goal might be better left
uninvolved. Though tempting, and possibly helpful initially, in the long term you might
well end up being forced (since board members are obviously allowed to vote on
important matters) to take another VC round to the detriment of your ownership position
and the company you founded.
Do you have any experience with this situation that you’d like to share? Please leave a
comment below and let me know, be good to hear other’s perspectives and experience
and share it with the start-up, entrepreneurial and associated venture capital community.
As Yoda said, “There is no try . . . just do”. It’s true!
Bevans Branham
FILED UNDER: BEVANSBRANHAM PALM SPRINGS TAGGED WITH: BEVANSBRANHAM, NEWYORK TIMES, PALM
SPRINGSCALIFORNIA, VENTURE CAPITAL
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Bevans Branham | Palm Springs, CA says:
MESSAGEFROM BEVANS
Bevans Branham, from Palm Springs California,
has been fortunate to help many others
dreams come true. Through his work in venture
capital he has helped find the monetary
treasure of a lifetime, hopefully, prayerfully, in
turn helping facilitate long lasting and
sustainable change for the world with the
peace, power and joy that characterizes his life
journey. Indeed, a life well lived is about the
“give”.
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Bevans Branham on Making Sure Your Board
Members Represent Your Interests
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2. March 11, 2013 at 4:41 pm
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