Bad VC board behavior stems from LP pressure and asset illiquidity
David Helgason · 20VC: Unity Founder David Helgason on The Hypergrowth Early Days of Unity, Why Running A Company Is Like A Liberal Art, The Secret To A Successful CEO Transition and What Makes Roelof Botha Such A Special Board Member · Oct 29, 2020 · at 19:05
David Helgason, co-founder of Unity, discusses VC board behavior on 20VC, explaining why venture capitalists exhibit short-term or destructive behavior on startup boards.
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“When I've seen sort of bad behavior or weird behavior, I think it often comes down to the fact that VCs are money managers for other people, and it's a bit the same as you get in kind of middle management in companies, that you get people that are under pressure from different directions, and when you're into pressure from different directions, it's hard to kind of sometimes focus on the task at hand, or the task isn't so clear anymore, because you're kind of trying to manage different things, because it's such an illiquid asset, and you're in there so long. When you aren't doing that great, your investors, the LPs, start questioning what's going on, and then you start showing kind of short-term things, like this company raised an upround, and we sold this company at maybe not a great market, but still, we had an exit. And these kind of things, I think, is probably the worst kind of board behavior I've ever said, I've seen. And I think most kind of bad behavior comes from that.”
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