Startup founders put a lot of time and thought into who their cofounders will be, but they neglect to do the same when it comes to choosing their investors, argues renowned venture capitalist Vinod Khosla.
“I find this question entrepreneurs give less heart to and [it] may be one of the most important early decisions people make,” Khosla said onstage at Startup Grind conference in Redwood City, California.
Founders are never just taking cash from an investor, he said.
An investor might interact with you once a month, but they’re also going to try to exercise what they think is a lot of influence. If they’re on your board, that means they could be voting on the direction your company takes as well.
“I seldom go on boards because all the VCs want to work on that. I believe a board in a small startup company should never vote on anything,” Khosla argues.
In 30 years of being on boards, he asserts that he’s never once voted against a founder, except in the case of hiring or firing a CEO. His approach as a board member is to be the one to challenge companies on different viewpoints, even if he doesn’t believe in them himself. The other area he devotes his time is recruiting, everyone from engineers to C-Suite execs. His impact comes from working with the company, not just casting a vote in a meeting, he argues.
“Nobody who comes in once every six weeks while you’re working 80 or 90 hours a week is qualified to make a decision,” Khosla said.
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