Before the pandemic, Rebecca Lynn, co-founder and general partner at Canvas Ventures, used to regularly spend at least two days a quarter traveling to and from board meetings.
But now Lynn, who is on the boards of Vida Health, AirVet and Doximity, attends all board meetings from her computer. That is much like everyone else since the covid-19 pandemic escalated in March, forcing investors to cancel travel plans, follow social distancing measures and work remotely.
Moving company board meetings online has been a positive experience and “natural” in many ways, she said.
For Lynn, the newfound efficiency is not only about the time saved on travel. She said that the virtual format encourages founders and CEOs to come out of their comfort zones and try new things.
For instance, instead of showing PowerPoint decks at the meetings, CEOs are now sending board members detailed writeups about their companies ahead of time, she said. Lynn finds that these reports are more informative about the state of her portfolio companies than the presentation slides ever were.
Jaclyn Hester, Foundry Group’s newest partner, also said that her firm’s fellow GPs appreciate the reduction in travel.
In-person board meetings were plagued with inefficiencies. Hester said it was challenging when some board members were physically in the room while a mix of others would call into the meeting. Foundry Group felt so strongly about how disorganized the process of board meetings could be that they wrote a parody and made a humorous video on the topic in 2018.
The fully virtual format works better than when only some of the members were remote, Hester said. She added that the online model also has a “democratizing effect” because everyone gets their own, equal-sized space on the view screen.
Some CEOs are also pleased with the shift toward virtual board meetings. Oz Alon, co-founder and CEO of HoneyBook, a fintech platform for small businesses, said that he is happy with the flexibility and efficiency of online meetings.
“We used to schedule board meetings a year in advance, but now we can reschedule or call a meeting in just a few days,” Alon said.
Another benefit of a virtual environment is the ability to invite customers to join the meeting to give presentations to the board, Alon said. HoneyBook’s VC board members include Jeff Crowe of Norwest Venture Partners and Michael Eisenberg of Israel-based Aleph.
But not all executives share Alon’s excitement about the new format.
“Some of my CEO friends are concerned that board members can get disengaged in a long online meeting,” said Alon, who pointed out that it is now easier to hide in-person meeting distractions, such as checking one’s phone.
A similar concern was voiced by Matt Howard, general partner with Norwest, who said that video calls require a lot more energy for everyone to stay fully present and attuned to each other’s emotions. “It’s unfortunately relatively easy to peel off and look at something on the phone or email during a digital meeting,” Howard said.
Longing for social interaction
George Ugras, managing director with AV8 Ventures, said that while virtual board meetings work well, he is missing their social aspect.
“The dinner and drinks with executives could be insightful about team dynamics and offer an opportunity to pick up subtle hints” about the management team, he said.
Some GPs try to make up for this by finding ways to schedule meeting with founders outdoors, while observing social distancing measures.
Rudina Seseri, co-founder and managing partner at seed-stage focused Glasswing Ventures, said that Zoom board meetings “are in some ways more focused and efficient” –but added she, too, misses the in-person interactions.
“The human connection is very important to us,” Seseri said. “Our interactions with CEOs are now 80 percent virtual and 20 percent in-person. That 20 percent makes a big difference.”
Seseri said that she tries to meet with founders in-person on the deck of her home or office. “We are masked and keeping our distance unless we are having a drink,” she said.
Similarly, Norwest’s Howard said that to compensate for some of the nuances that are lost in a virtual setting, he also started scheduling socially distanced walks or meetings in the park. It could be difficult dealing with sensitive topics over video chats, he said.
Despite the social distancing, Lynn believes that in certain ways the pandemic brought everyone a little closer.
“I feel like I talk to CEOs more on the phone now,” she said. “These impromptu conversations happen because we all know where to find each other.”
Lynn, however, identifies another challenge faced by some board members: over-commitment.
“I see VCs with 12, 15, even 20 board seats,” she said. “These people are sometimes showing up to meetings without having read board materials ahead of time.”
A handful of GPs also told Venture Capital Journal that sitting on more than 10 boards is generally too many for a partner to manage comfortably. Although that was also the case prior to the pandemic.
A VC’s over-commitment to boards is a result of larger fund sizes, Lynn explained. “If a firm raises a big fund, it either has to write larger checks to later-stage companies or invest in more earlier-stage startups and take a board seat on them,” she said.
One solution to this problem is hiring operating partners, Lynn said.
Another option is not to take a board seat, but Lynn said that in many cases LPs want investors to be on the boards of their portfolio companies.
“Our policy is to lead the deal and get on the board every time we write a significant check,” she said.
Virtual meetings may help VCs save some time on travel, but their fiduciary responsibility to all investors remains as high as ever.