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May 08, 2006

"Are VCs from Saturn and CEOs from Neptune?"

The US National Venture Capital Association (NVCA) and Dow Jones VentureOne has published “A Seat at the Table,” the first ever study of venture-backed company boards.

The survey comprises answers from more than 700 VCs and CEOs to questions such as:
* How many Board seats should a single venture capitalist hold?
* How many hours do you spend on Board-related activities?
* What are the top strategic concerns of your Board?
* What is the most common cause of conflict between a CEO and the Board? Between VCs?
* Is Sarbanes Oxley a concern to audit committees?

From the press release:
When it comes to the most common drivers of conflict between the board and CEO, the two groups diverged. Venture capitalists cited personality conflicts, exit strategies, and management changes as the top three issues while CEOs named valuation, burn rates, and exit strategies as being the most common causes for conflict. The most common reasons for changing leadership according to the venture capitalists are to find someone with more sales and marketing expertise (83%) and operational leadership (63%).

..As for the primary benefits venture capitalists provide to a company board, both parties agree that VC expertise in raising new rounds of financing is most important followed by the ability to help recruit top talent to the company. Both parties also cited VC counsel on governance issues as beneficial.

“Venture capitalists add value to boards through the rich experience they gain by working with multiple companies and the pattern recognition that comes from this experience,” observes Pascal Levensohn, founder and managing director of Levensohn Venture Partners. “VC’s can normally see the strategic opportunities and obstacles more readily because they go to numerous board meetings monthly and see hundreds of situations first-hand every year through their partnerships’ portfolios. This depth of exposure makes the context of what is happening more obvious to the VC than to the CEO in many cases. Strong communication between the VC and the CEO can maximize the positive contribution from this complementary relationship,” Levensohn added.

Click Here to download the actual data charts.

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.