A couple of our key investors are getting aggressive at board meetings. Help!

A couple of our key investors are getting aggressive at board meetings, complaining of slow progress against our business plan. They are demanding that we achieve shorter sales cycles, but from the beginning we made it clear that the business model we were pursuing required a decent runway. Short of outright confrontation, any ideas how to handle the situation?

The most effective solution to boardroom disputes is more sales! Conversely, the most likely catalyst for boardroom acrimony is the reverse.

Central to any dispute, however, is either a misalignment of expectations or a misunderstanding of the business (or both).

In your case, it’s clear that you have not met targets so, despite the fact that you made it clear that sales cycles would be long, you have still underachieved your own projections.

Consequently, the first thing you must do is accept accountability for getting the initial projections wrong and explain the underlying reasons for this outcome. If, despite those reasons, you remain genuinely convinced that the business model is correct, then prosecute your case with all of the evidence and passion you can bring to the table.

If you are starting to doubt the business thesis then it’s important that you be honest with yourself as it is very difficult to succeed in building a new business if you are not 100% convinced of the business’ merits.

With regard to your board asking for shorter sales cycles, it is not uncommon (particularly in start up scenarios with multiple investors) for the testosterone to start pumping. In the absence of actually knowing what to do, directors may resort to management 101 motherhood statements like, “shorten your sales cycles” or “improve your cashflows”, etc. For operational management this can be quite annoying as not only is it stating the obvious but it is monumentally unhelpful in addressing the underlying reasons for the revenue shortfall.

For these reasons it’s important to be honest with your board and engage them directly with requests for assistance in solving the problems. Massage their egos and try to bring them back to your side of the table. If they can’t help, then so be it, but don’t allow frustration to overwhelm your primary focus… making your business work.

If you discover that your investors really never understood the subtleties of your business challenge, then it’s probably time to have a deep and meaningful conversation to establish if they are still interested in supporting the business. Such misunderstandings are not uncommon for investors backing innovative new businesses (particularly those investing outside their direct operational experience).

As silly as it may sound, it’s very important to make sure that any investor you bring on board has a very clear understanding of your business. Failing that, try to regularly educate your investors – remember that they are not full-time in the business and cannot have as detailed an understanding as someone working on it 24/7.

For more Funding expert advice, click here. 

Doron Ben-Meir has been an active venture capital manager for the last eight years. He founded Prescient Venture Capital and prior to that was a consulting investment director of Momentum Funds Management. He was a serial entrepreneur over a 12 year period, co-founding five new technology-based businesses.

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