Now that board meetings are on Zoom,
There’s something to be said for inviting every 5%+ shareholder to join, at least as informal observer, at least for a while
Yet, trend has been opposite, to include fewer & fewer
It’s just a very efficient way to communicate and get buy-in
— Jason ✨2022 SaaStr Annual Sep 13-15 ✨ Lemkin (@jasonlk) June 13, 2022
So this is a seemingly niche post that I’ve held off on writing for quite a while.
And the point is simple, although it goes against the grain of a lot of VC advice from the past few years.
- Invite more of your investors, not fewer, to your board meetings. At least, consider inviting all investors that own at least 5%, up to at least $20m-$25m ARR. Or even longer.
- And actually have those board meetings more often. Even if you don’t have to.
In the crazy times of 2H’20-2H’21, founders treated investors more and more as fungible commodities. Raise the most, for the least, as fast as possible. That’s a decent strategy even today — if things go perfectly.
But as part of that, fewer and fewer investors were invited to board meetings. I don’t mean given board seats — that’s very different. It really does matter who has a board seat. No, I mean just given the right to attend the meetings as an observer, to listen and learn. And perhaps a little bit, to be heard.
Instead, founders and some VCs saw board meetings as even more of a tax and time sink than before, and wanted to limit attendance (and in many cases, the number of meetings), to the bare minimum.
Personally, I’ve never pushed it. I don’t find board meetings fun, and where possible, I try to be the #1 or #2 largest investor at seed stage. But if I’m #3 or #4, I don’t really care if I come to a board meeting. It’s just … everyone is less engaged when they don’t.
- The thing is, Board meetings are now primarily on Zoom. In the older days, inviting “extra” folks to board meetings consumed a lot of logistical overhead, and burned a whole day on top of that.
- And that means, like a niche webinar, you can invite as many folks as you want. And yes, there’s some overhead there.
- At least consider inviting anyone with at least a 5% ownership. Maybe even a smidge lower.
Why? Those big-but-not-huge investors matter. They can bring you in new investors, and sometimes do an even better job of it than your largest investor. And they can source you VPs. And importantly, sometimes they can be the voice of reason when your largest investor freaks out.
If they come, they may ask a few dumb-ish questions. But they’ll likely turn into your allies when times are tougher, or at least a bit less easy.
That’s what almost every founder needs these days.
At least — think about it. The advice to invite almost no one to your board meetings has its merits. That’s why it’s the standard advice. It’s just, it may not arm all your key advocates and champions on the cap table.
2019-2021: “Avoid having anyone on the board. Avoid observer seats for 5%+ investors.”
2022: 5%+ and other material investors that have never been to a board meeting or seen a board deck don’t write another check
— Jason ✨2022 SaaStr Annual Sep 13-15 ✨ Lemkin (@jasonlk) August 8, 2022
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