Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Heidi Roizen, a venture capitalist, corporate director and ‘recovering’ entrepreneur. She’s a partner at Threshold Ventures and a corporate director for Planet PBC (NYSE:PL), Upside Foods and Polarr. She also leads Stanford’s Threshold Venture Fellows Program in the Management Science and Engineering department and serves on the Advisory Councils for the Stanford Institute for Human-Centered Artificial Intelligence and Stanford Technology Ventures. This is the second episode that I record with Heidi, the first one was on E6 in June of 2020 where we talked about her personal and professional background and other board matters involving both public and private companies. Heidi has spent decades in the tech startup world, the first dozen years as an entrepreneur herself, and since then, 25 years as a venture capitalist. Heidi has served on over 40 boards, from seed stage to public companies. In this podcast, we focus on startup governance and her new podcast The Startup Solution, where she tackles the make-or-break challenges that startups face, offering clear advice on how to survive and thrive in an early-stage company. If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can also contribute as a Patron on the link patreon.com/BoardroomGovernancePod and you can subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com
0:00 -- Intro.
1:35 -- Start of interview. *Link to our first episode: E6 from June 2020.
2:18 -- On the origin story of her new podcast: The Startup Solution with Heidi Roizen.
4:23 -- The Case of the Boardroom Blow-Up. How entrepreneurs should go from 'pitching' to 'partnering' with their investors. "Entrepreneurs get stuck in pitch mode." On terms "happy ears" and "jazz handy." On the golden rule of the boardroom: no surprises. "A board meeting should be a working meeting, it should not be a performance." On "Boardzillas."
15:55 -- What should entrepreneurs know about how VC funds works? On VCs wearing two hats in the boardroom (as a board member and as an investor). On the Trados case and the Rule of Common Maximization.
19:42 -- The Case of the Downer Round. On the preference stack and nuances of venture financing. On "structured terms" or "dirty terms." "When an entrepreneur trades structure for valuation, they are almost always giving downside protection in order to get more of the upside." [Heidi's more detailed blog post on down-rounds. Take by Janelle Teng]. On the pendulum of influence from founder-friendly to investor-friendly.
33:00 -- On secondary transactions of private company shares. On reasonable and/or rational options. On removing founders. "Inside a market there is always is a sub-market, and right now generative AI is very hot."
41:51 -- The Case of the In-Law Investors. What to consider when doing an angel investment. "When anyone asks me whether they should make a seed investment, I tell them to do so only if 1) they can do so with money they can afford to lose; 2) they don’t mind tying up those funds for seven years or more (it's an illiquid investment); and 3) they have enough additional money to put about 30-40% more in a future round if the opportunity or need arises. More importantly: founders should consider how they would feel if 'family & friends' lost the money as a result of their startup failing.
45:26-- The Case of the Strategic Sucker-Punch. The difference between a strategic investor (corporate venture capital investor) vs a pure venture investor: the latter only makes money by buying the stock low and selling the stock high while the former also makes money if its stock also goes up. "They are called strategic investors for a reason: they are using investment dollars to drive strategy that should be additive to their strategy."
49:07 -- On best practices with board observers. ROFRs.
51:07 -- On the role of independent directors in startups. Promoting diversity in startup boards. Fred Wilson (USV)'s board diversity proposal.
57:44 -- On cross-over and PE board governance and cultural distinctions with VC.
Heidi Roizen is a venture capitalist, corporate director and ‘recovering’ entrepreneur. She’s a partner at Threshold Ventures
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You can follow Heidi on social media at:
Twitter: @HeidiRoizen
LinkedIn: https://www.linkedin.com/in/heidiroizen/
The Startup Solution: https://threshold.vc/podcast
Threshold VC: https://threshold.vc/
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You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
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You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
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Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License