How to navigate the dynamics of a board meeting

This article is from an episode of Matrix Moments by Matrix Partners India, a podcast featuring candid conversations on what it really takes to survive the startup world. This is heavily revised from the original show transcript. For the full interview, go here.

In this episode, we take a deep dive into the dynamics between founders and their board of investors. From setting the right rules of engagement to knowing how to deal with different opinions, Avnish Bajaj, founder and managing director of Matrix Partners India, shares his views on the best practices in the board room.

Photo credit: Simon Blackley

If multiple venture capital firms are interested in investing, how should founders pick? Or what are the factors that they should keep in mind when making this decision?

Know-how is the first. Who they know is the second. In the US, this has been very critical, and it’s largely been for enterprise software-as-a-service kind of businesses. Somebody who is able to open their network to you and can get you a number of business leads can be very critical.

So I would say domain knowledge and network, but you are also signing up for a journey together. So it’s really about going through scenarios with each other, asking what happens in this scenario; what happens if I am missing budget; what should I expect from you; what should I expect in this relationship; and what happens if you are 50% behind plan? So I think getting that kind of alignment with each other is important.

But all of these things considered, who do you feel the most comfortable with?

We have always said that when you’re hiring somebody, you have to go and get references so that you know the real person you’re hiring. I think founders should be doing that for VCs. To me, this chemistry test is going to be on two fronts: 1) How do you feel sitting across them? and 2) How do they come across after a reference check? Assuming those two make sense or get you excited, I would probably pick these over the other criteria that we laid out.

What would you say is the right cadence or the frequency in terms of email updates, calls, and meetings? How should board meetings be structured, in your opinion?

This is very much a personal preference. My view is if you take a step back in any company, there is stuff that’s tactical, and there is stuff that’s strategic.

The tactical stuff is generally asking, “How do I do something?” The strategic stuff is asking, “What do I do?”

For tactical conversations, typically somebody – let’s say one of the investment professionals at Matrix – would have an engagement with the founder on a weekly or fortnightly basis. I would definitely have a monthly catch-up, which would involve us (as the VC) and the founder. That’s because if co-investors and all of those people were part of the discussion, it will effectively become a board meeting. I want the founder’s guard to be down, but at the same time, not increase their overhead.

Usually, the engagement should be a pull engagement, not a push engagement. VCs should demonstrate enough value add along the way so that founders pick up the phone and make you the first port of call, especially if it’s a tricky situation or bad news.

However, tactical engagements shouldn’t substitute the strategic ones. In the past, I’ve seen some companies that confuse operating reviews with board meetings. So in my view, a board meeting is strategic: It is an update, but it is a strategic event. And if there is a real operating review-style deep dive required, then that should be outside of a board meeting.