Venture capital or VC funds, being among the traditional funders of scale-ups, are often represented on scale-up boards. And that is mostly a good thing:
- It makes sense from the perspective of their fiduciary duty towards their own investors (money needs controls);
- What they may lack in operational experience, they make up for it in their knowledge of best market practices, as they likely sit on other scale-up boards;
- Importantly, they are in a good position to advise on, or even do the heavy lifting in, follow-on financing rounds (as fundraising cycles are core to their own business model)
Each of the three statements above could be the topic of a one-pager, but, for now, I would like to zoom in on the control bodies and growing pains of VC fund managers themselves.
About the governance of VC funds
VC fund management companies (or ‘VC fund managers’ or ‘VC firms’, a.k.a. as ‘General Partners’) will typically initiate and manage not one but a series of ‘closed-end’ funds (typically a new fund every two-to-four years). Each of these funds have their own advisory boards, populated with representatives of potentially large investors (shareholders or ‘limited partners’) in the fund.
VC funds do not employ people. Instead, each of the funds enter into a management agreement with the fund management company, which employs the people looking after the funds’ investees and investors. The fund management company is typically (solely) held by the firm’s founding partners. The investors in the funds are in a position to replace the fund management company (that once initiated the fund), but there is no direct governance role for the funds’ advisory boards with regards to the fund manager itself. One of the key responsibilities of a fund’s board is ensuring that any conflicts of interests that may arise, both between different funds or between the investors and the manager, are well managed.
Increasingly, the fund’s board is also tasked with setting, monitoring and assessing impact (ESG or SDG) targets, especially when the fund manager’s performance fee (or ‘carried interest’) is partially linked to impact KPIs.
Stages of a VC firm
I would argue that a successful fund management firm transitions from start-up to scale-up phase at around the launch of its third fund. It is the point in time where they are likely to be able to show a track record (including successful exits), have sufficient volumes (assets under management) to lower their management fees and start attracting a broader, more mainstream investor base. It is also the time where they are expected to start preparing for succession, maybe start thinking about opening up the firm to the next generation of partners. This, I believe, is a process that shares some of the characteristics of the founder/CEO transition process.
So if your VC-funded enterprise is lucky, it will have one of the VC fund manager’s founding partners sitting on the board and thus an entrepreneur with first hand experience with navigating the growing pains of a company in the scale-up phase.

Berg de Bleecker has a rich career in the investment world – having passed through BNP Paribas and PGGM, she has held several executive roles at impact investment firms with a focus on emerging and frontier markets. She is currently a Senior Investment Manager at OostNL, the regional development agency for the east of the Netherlands. In her role she focuses on fund investments and food & agriculture ventures.
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