You will have to live half a decade with your board of directors. So pick carefully.
People are on the board of directors. Does that sound trite? Well I mention it because so few first-timers weight the pros and cons of the person that comes with the venture capital money. Yes, VCs come with agendas, attitudes, styles of working with CEOs and a lot more. They are complex, just like you.
Do not expect BOD people to always be on your side. Most of the time the BOD people are cheering for you. In fact, the VC icon, Don Valentine, founder of Sequoia Capital, said "The best thing a VC can do is be a cheerleader." However, I've been on boards where one or more VCs are in desperate need of "a liquidity event." That means "Sell this company, right now, for whatever we can get for it." The VC may need the cash (put in personal millions and needs to get some of it returned ASAP). Or VCs may need credibility in a campaign to raise a fresh round of money from investors. When a VC gets desperate, you and your company are simply one of several pawns in a very serious game of power brokerage for maximizing hard cash ROI.
Did you get checked out via references before the VCs invested in your company? Of course.
Did you check out the references of the VC person who will be bugging you at every board meeting and who will not hesitate to call you from Shanghai to yell about something you did that he thinks you did is stupid? I do not mean check out the companies the VC firm has invested in. I mean talk to people who have worked with this person in a life prior to being a VC. And talk to people in the companies he is on the board of. Talk to more than just the CEO. Speak to founders who often are board observers and VPs whose compensation and presentations are criticized by board members. And go to lunch 1:1 with the VC before you accept his money. Once his money is in, you will have a hard time firing him if you do not get along. Then you'll grind your teeth before each board meeting and have a gut wrenching three hours that you regret each month. And you'll fear looking at your phone to see if he is calling again today.
Picking wisely brings the best out from the board. You want the great people who have managed real companies before becoming VCs. They have reputations for being fair, balanced and have helped build companies that are famous. Their industry connections are exactly what you need to get your foot in the door with customers, strategic partners and recruiting great employees. Now they have become VCs and pass on tips and encouragement. They behave more like coaches than stern authority figures and greedy, short-sighted investors. They are trustworthy and wise. They are priceless. I have several examples of how board members with their wisdom turned foreboding disaster into winning dominance. Valentine and Lamond did amazing things that turned Cisco into the world-class gorilla it now is.
A good friend of mine and very successful entrepreneur, Steve Benjamin, believes that "There is only one great decision a man has to make in life: marry a great woman." The startup corollary is "For a winning company, startup CEOs only need to make this decision: Choose a great board member."
There are billions, maybe a trillion, dollars of venture money out there available to you. There are only a few great board members available.
BOTTOM LINE: Pick people, not venture capital firms. Check out reputations before engaging VCs in deal discussions. When your intuition signals this person is not good to work with, leave. Life is too short, too hard. Startups need extra encouragement, just like an infant. Family wars create circumstances that warp the child as it grows up. Learning to wisely select board members for your startup is one of the most valuable elements of constructing an unfair competitive advantage.