The Changing Attitude Towards Boards at Seed Stage Startups

I was excited to recently see YC President Sam Altman evangelize for adding an investor or outside Director to a seed stage startup. In his recent “Valuations” post, Sam notes that:

It turns out to be really good for a company to have a board—it focuses the company if everyone knows they have to present the key metrics to outsiders once a month.  Some investors feel that if they own a smaller percentage of the company, they are willing to put in money but not time.  But I don’t think this strategy will work for long—if that’s the sales pitch, then founders will take the cheapest capital, and the crowd will probably pay more than VCs.  If I could ask VCs for only one thing in this new world, it’d be to keep showing up for board meetings. [note – Sam *might* be talking about post-seed startups as a commenter points out]

At Homebrew we agree 100%, even in the face of some investors and founders being suspicious of board involvement early in a company’s existence. While we’re not unique in our belief that early board formation help founders become stronger leaders of growing companies, we do often find ourselves taking the board seat because other investors don’t have the time or inclination. That’s fine – it’s a reason why we make only 8-10 meaningful investments a year instead of many smaller ones (and plan to step off boards by B Round at the latest so as to maintain a focus on the early stages of a company).

With larger seed financings these days, your next investors are expecting more polished companies come A Round. We believe that’s not only displayed in the metrics but the leadership cadence and confidence of the founding team.