Q: For Silicon Valley startups that have raised $10 million from VC, what % of these companies have boards that are firmly controlled by the founders/early employees?

I don’t know the exact percent, but a better way to guess this is by the # of rounds of venture investment.

Until you get to Unicorn status, you can roughly assume a board seat is granted to each new lead investor in each round.

And you can roughly assume the founders keep 2 board seats on average.

  • So after 2 rounds, control is often (not always, but often) somewhat ‘split’:  2 for the VCs, 2 for founders, 1 for no one / outside director.
  • And after 3 rounds — e.g., at the Series C — you can roughly assume the board is controlled, at least nominally, by VCs.  3 seats for VCs, 2 for founders.  Maybe 1-2 for outsiders.

There are many exceptions, e.g. Facebook.  The exceptions occur when the valuations are high and the term sheets are many.  And of course, if you can skip a few rounds, you’ll also skip these additions to your board.

But I think as a rough rule, after 3 rounds of traditional venture financing — the classic A, B, and C rounds — the VCs hold the majority of the seats, the majority of the board.

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