Rosati: VC Board Members Face Direct Conflicts During Down Rounds
Deborah Rosati · 40 Years In, She Says the Boardroom's Real Work Happens Elsewhere · Nov 7, 2023 · at 29:23
Corporate governance expert Deborah Rosati discusses why personal or fund equity investment creates inherent conflicts of interest for board directors.
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“There were times when I was in venture capital where we'd be making investment decisions, but I'd be conflicted as the board member representing the fund on certain decisions because, you know, I, you know, let's say we put in a million dollars and the next round because of circumstances was going to be a down round and the valuation was down. I'm, we might, as from a investment perspective, what was good for the company might not have been good for the fund. And so there's conflicts there. And I think what's important, and then there's independence issues, right? So if you've got your money in, you're not necessarily independent to some of those decisions.”
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