Was anyone else as appalled as I am by the contents of Connie Loizos’ recent article, Coming out of COVID, investors lose their taste for board meetings? The stories and quotes in the article about investors reducing their interest and participation in board meetings, not showing up, sending the junior associate to cover, etc. are eye-opening and alarming. The reasons cited are logical, such as overextended investors, Zoom fatigue and newbie directors. Connie’s note that “privately, VCs admit they don’t add a lot of value to boards” is pretty funny to read as a CEO who has heard a ton of investors talk about how much value they add to boards (although the good ones do add a lot of value!). For the most part, everything about the substance of this article just made me angry. Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone. If the world has truly become a place where the board meeting is nothing more than a distraction for CEOs and investors think it’s a tax they can’t afford, then it’s time to hit the reset button on boards and board meetings. Here are four things that need to happen in this reset:
Investors need to do their job well or stop doing it
Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone. The argument that investors did too many deals in the pandemic so now they don’t have any time is a particularly silly one, since the pandemic reduced the amount of time VCs needed to spend on individual board meetings as well. I used to have four in-person board meetings each year with directors who were traveling for the meetings, having dinners, spending time with the team and sitting in on committee meetings. Today, boards are lucky to have one in-person meeting a year (more on that later). And as everything else takes less time, and there’s little transit, any given VC should have doubled the time they spend on board meetings. Serving on a board post-investment is central to an investor’s role. They have obligations to the founders they back and to the LPs they represent, as their primary function is to “find deals, execute deals and manage the portfolio.” If they no longer have time for the third job, they need to admit that to both founders and LPs before stepping down. If a VC can’t be bothered to focus on minding their investments and adding value, they should work with the company to find their replacement.