When boards lack globalization skillsPosted: August 17, 2007
This is probably why Finnish VC’s are hesitant to provide a globalization B-round. Often the VC’s that funded the A-round have representation on the boards of the companies that they fund, which leads me to conclude that Finnish VC’s don’t trust their own skills in internationalization. Some of my contacts in the US VC community have asked why would a Finnish VC fund the first round if they are not willing to see it through with a needed second round? Its a good question…
The partners of Finnish VC’s are themselves entrepreneurs and ex-CEO’s of the type of companies that they are now helping to fund. Their success rate with internationalization has not been much brighter than the CEO’s they are coaching. It’s not like the last generation of CEO’s suddenly lost the "skill". Risto Kalskeen from Sitra wrote an artickle about the essence of this phenomeno a few weeks ago titled: "Remodelling the Boards of Software Companies".
CEO’s and boards a like often come to an impass where they subconsiously understand that the company doesn’t have the skill set to grow global. The VC’s show their colors by not funding a second round. The CEO’s believe in their dream and continue the battle on revenue basis. A year and another go by with marginal growth. The window of opportunity and the freshness of the solution begins to expire. CEO’s fall in to vicious circle of trying to find the magic bullet that will take them to the next level and the boards often fall into the same trap hoping to still make their gamble work.
I agree with Peter that the skill gap that he points out is a bottle-neck and a true concern for international companies with ability to provide second round funding. I am a "the glass is half full" type of person. We need to remove the bottle-neck!
I often explain to companies that are interested in the US VC markets that VC’s expect the IPR to be transfered to a US jurisdiction to minimize legal risks. The reality is that VC’s want to take the innovation and build a US company to take the technology global. A company with the skills and framework to grow.
When I have this discussion with Eastern European CEO’s, they are open to transfering IPR and moving closer to VC’s and clients. This for Finnish CEO’s is ideologically a much more difficult step to take.