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Founder Control

Written By: admin - May• 23•12

Someone we funded is talking to VCs now, and asked me how common it was for a startup’s founders to retain control of the board after a series A round. He said VCs told him this almost never happened.

Ten years ago that was true. In the past, founders rarely kept control of the board through a series A. The traditional series A board consisted of two founders, two VCs, and one independent member. More recently the recipe is often one founder, one VC, and one independent. In either case the founders lose their majority.

But not always. Mark Zuckerberg kept control of Facebook’s board through the series A and still has it today. Mark Pincus has kept control of Zynga’s too. But are these just outliers? How common is it for founders to keep control after an A round? I’d heard of several cases among the companies we’ve funded, but I wasn’t sure how many there were, so I emailed the ycfounders list.

The replies surprised me. In a dozen companies we’ve funded, the founders still had a majority of the board seats after the series A round.

I feel like we’re at a tipping point here. A lot of VCs still act as if founders retaining board control after a series A is unheard-of. A lot of them try to make you feel bad if you even ask—as if you’re a noob or a control freak for wanting such a thing. But the founders I heard from aren’t noobs or control freaks. Or if they are, they are, like Mark Zuckerberg, the kind of noobs and control freaks VCs should be trying to fund more of.

Founders retaining control after a series A is clearly heard-of. And barring financial catastrophe, I think in the coming year it will become the norm.

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