Brazilian VCs argue less is sometimes more in startup boards

As the Brazilian startups ecosystem matures, an increasing number of firms are creating advisory boards to support and guide their everyday management and providing guidance in terms of the best ways to achieve growth. However, specialists warn boards must be assembled with caution, especially in the early stages of a startup, when governance if often looser.

An external advisor or a high-profile investor, for example, can be more of a hindrance than a blessing in the early days of a startup. In worse scenarios, these so-called contributors do not provide any help at all. For André Maciel, former Softbank investor and currently founder at Volpe Capital, clarity is a must in terms of expectations regarding the degree of engagement of board directors.

“There are a lot of boards with big market names, but these guys often parachute into the company and give advice from time to time, not knowing what the performance metrics of the investees are”, he said during a panel held at South Summit Brasil last week. “When it comes to better-prepared and engaged board members, it is often more worthwhile to have a more junior board, but one that will really be present in the day-to-day of the business”, Maciel pointed out.

Another panel member, Valor Capital Group VP Maria Carolina Lacombe, said communication is critical for a board to work well. “It is essential that the founder prepares for the before, during and after of what must be communicated, and always have an executive from the startup itself on his side,” she said.