VCs Should Step Away From Start-Up Boards

Let’s talk about a provocative idea.

Venture capital investors should not sit on the boards of the startups they invest in.

That might sound radical or even ungrateful. But if we really care about building the right support around founders, it’s time to challenge the long-standing assumption that VCs deserve, or even belong on, the board. Here’s why:

1. Conflicted Interests

A board director’s legal duty is to act in the best interests of the company. But a VC partner’s first responsibility is to their fund. That creates an unavoidable tension, especially when tough calls need to be made about valuation, dilution, exits, or leadership. Founders deserve a board that puts the business first, not one balancing multiple loyalties.

2. Lack of Operational Relevance

Most VC partners aren’t operators. They may be brilliant investors, but they often lack the hands-on experience of building a business, growing a team, or navigating the emotional rollercoaster of scale-up life. And very few bring deep sector expertise tailored to the founder’s specific market. The result? Shallow advice, misplaced confidence, or rigid pattern-matching that misses the nuance.

3. Defensive by Default

When a VC is on your board, they’re incentivised to protect their capital. That can lead to a bias towards safe bets, early exits, or pressure to follow a “fund-returning” narrative that may not align with the founder’s mission. It’s not malicious, just misaligned. And it can seriously constrain a founder’s ability to play the long game.

4. Power Dynamics That Muzzle Openness

The boardroom should be a place where founders can be vulnerable, seek support, and openly share what’s really going on. But when your biggest investor is also your boss around the table, it gets complicated. Too often, founders feel the need to perform not confide. That’s the opposite of what effective governance requires.

So what’s the alternative?

VCs absolutely have a role to play, but it doesn’t have to be (and arguably shouldn’t be) a governance one. Instead, founders should be supported to build independent, well-rounded boards that provide:

• ✅ Sector and functional expertise
• ✅ Independent, founder-first thinking
• ✅ Strategic challenge without conflicted interest
• ✅ Emotional intelligence and coaching mindset
• ✅ Diversity of background, identity, and thought

Boards like this are far better placed to help the business scale with clarity, conviction and resilience.

But what does the data say?

There’s surprisingly little public data about board composition in UK venture-backed startups. Most term sheets still default to giving lead investors a board seat, and many funds list it as part of their “value-add.” But there's no central source tracking how many startups include their investors on the board, let alone how that impacts business outcomes. In the US, some research suggests VC board presence correlates with easier follow-on funding, but doesn’t necessarily improve performance or revenue. It’s a reminder that governance and growth are not always the same thing.

But what about the counterarguments?

To be fair, this idea does go against the grain. So let’s take the most common pushbacks seriously:

“Founders need the governance experience a VC brings.” Yes, strong governance is critical. But good governance doesn’t have to come from your investor. It can come from an independent chair, experienced NEDs, or trusted advisors who don’t have a financial stake. In fact, separating governance from ownership can improve objectivity and trust.

“We’ve invested millions so we need a seat at the table.” Fair - but a board seat isn’t the only way to stay close. Investor rights, observer roles, regular reporting, and strong communication can all provide transparency and oversight. Control isn’t the same as support. And control isn’t what founders need most.

“We add value through pattern recognition and networks.” Absolutely. VCs can bring huge value. But that value is better delivered outside the boardroom. Mentorship, introductions, and strategic input are still welcome, just without the weight of fiduciary responsibility.

“Founders often want us on the board.” True, especially when trust is high and the relationship is new. But dynamics evolve. What starts as a partnership can shift over time, especially when the going gets tough. Founders deserve boards that are built for the long haul, not just the next fund cycle.

“This is how it’s always been done.” And maybe that’s the problem. If we want a more inclusive, founder-friendly, and growth-enabling ecosystem - especially for underrepresented founders - we need to question the status quo. Just because something is industry standard doesn’t mean it’s the best model.

It’s time for a new board model

One where investors invest, mentors mentor, and boards govern with independence, balance, and clarity. Let’s stop calling “sitting on the board” a value-add. Let’s build boards that actually add value.