The following interview with Patrick Meenan focuses on the role board management plays for early-stage companies. Get insight into the value of good board governance for startups, what early-stage companies need from a board of directors, and how startup companies can get the most out of their board.
Patrick Meenan, partner at Minneapolis-based VC Arthur Ventures, has a lot on his plate. Arthur Ventures provides early-growth capital to B2B software companies anywhere outside the San Francisco area. Investing between $2 million and $5 million per company, the firm has presence across 20 different cities in the U.S. and Canada.
Patrick has been a general partner at Arthur Ventures since 2012; prior to joining the firm, he spent three-and-a-half years with Microsoft’s mergers and acquisitions group. It’s a history that’s prepared him for his incredibly demanding present, as Patrick serves on at least a dozen boards at any given time.
We talked to Patrick to get his advice on how companies can choose the most effective board members, the foundational importance of communication, and why honesty is the best policy between company founders and board members.
For Patrick, supporting a company’s current leadership is critical. “What’s important to us is that we back the current CEO,” he said. He believes in giving a CEO a long runway to realize the impact they can make on an organization. This is especially important to Patrick because, for most of Arthur Ventures’ investments, they’re the company’s first major investors and board members.
Patrick believes it’s not the job of a board member to dictate hires or departures. Instead, the best board members offer clear, evidence-based advice, support, and a process for governance.
“The best board has tight governance,” Patrick said. “A lot of people breeze over that important element and go toward strategic value add.” Additionally, Patrick believes it’s the job of a board member to provide knowledge and data points they’ve observed in the market; that gives leaders more ammunition to make the best decisions.
Many early-stage companies tend to err on the side of caution when it comes to sharing bad or challenging news with their boards as a way of “sparing” board members, so to speak. However, Patrick believes that’s unnecessary and can lead to issues later on. Best practices that encourage early, open communication can help set expectations.
“Management teams often underestimate how much bad news a board member has heard,” he said, adding that seasoned board members have seen almost everything imaginable.
“The biggest mistake I’ve seen leaders make is not wanting to disclose bad news because they don’t want to upset the board; but it ends up making them look as if they’re hiding something.”
Because board meetings often require members to consume a large amount of content, Patrick offers a best practice of sharing materials two to three days before a meeting. That said, a company that sends information out on time has done its job.
“It’s on the board members to come to the meeting educated. The best board meetings are the ones that result in strategic discussions instead of reviewing information slide by slide.”
Arthur Ventures is different from other VCs: They prefer to follow a company’s communication preferences. Whether that’s a phone call twice a month, Slack messages, or emails, Patrick and his firm believe that it’s better to accommodate a company rather than make them conform to the VC’s preferences.
It’s an approach that provides flexibility for startups and companies that are in the beginning stages of forming their boards. When it comes to good board governance for startups, Patrick requires just one thing from his investment companies: zero surprises.
“It’s never a good idea to surprise board members with new information when they show up for a meeting,” he said. “So we tell founders: If your communication cadence is going to be infrequent, there better not be any surprises. It’s a trust factor. If there’s one thing we do recommend, it’s one call between board meetings to discuss current situations.”
He also suggests involving as many individuals in a conversation as possible, which is especially key for companies with small boards.
It’s common for board memberships to turn over regularly, which requires leaders to thoroughly integrate new members. That means company leaders should share as much as possible about the value a member brings to the table—whether it’s relevant industry insight or experience scaling a business at a similar stage.
It’s also up to the board to ensure the value a board member offers is put to use. “It’s about identifying their value add and their ability to be objective,” Patrick said.
“Board members are often suggested by management. But this person’s job is to use their experience to fulfill a fiduciary duty to the company. Company leaders need to make sure that new member isn’t just a friend—they must be trusted to provide valuable insight.”
To that end, introducing a new board member by phone is a best practice for Patrick and Arthur Ventures; it gives existing members a chance to familiarize themselves with the new member and ask questions.
The job of a partner at a VC firm can be overwhelming—especially when serving on so many boards and interacting with portfolio companies on a regular basis. It’s why when it comes to providing good board governance for startups, Patrick appreciates solutions like Boardable to ensure communications don’t slip through the cracks.
“Boardable allows company leaders to share documents within the site, so rather than sifting through an inbox to find documents and relevant data, I just log in to access any document I need for that particular company—everything from financials to meeting minutes,” he said. “It also lets us easily schedule meetings by allowing us to vote on meeting times, which saves me from the back-and-forth of emails. It can all be done through the platform.”
Document organization is a woefully underestimated challenge, one that few boards meet successfully. Misplaced board documents, updates buried in email accounts, shared folders that don’t always work—they can all slow down communication and make it harder for boards to get things done. It makes Boardable’s document management functionality one of the most valuable elements for Patrick, because it means he and the boards he participates on are prepared every step of the way. And that, he believes, is the key to good board governance for startups.
“There aren’t many people busier than a founder/CEO, but board members are often on several boards and they’re often an executive within another company,” he said. “These individuals are stretched thin, so company leaders need to be specific about what they need from each member. The more specific they are, the more likely they are to get what they need.”
Whether you sit on a for-profit or a nonprofit board, if your organization is looking for a way to better communicate with and engage board members, you should consider Boardable board management software.
Use Boardable’s Meeting Center to automate meeting scheduling, build meeting agendas (even use our built-in agenda templates to make it easier), and keep track of meeting attendance and correspondence with ease. Our Document Center will also help with board meeting preparations by allowing you to organize and distribute documents without having to deal with email attachments. Try us out free and see the difference.