As a sector-specific firm, Tenacious is often sought out for the agri-food expertise, insights, and networks we bring to the table—qualities that set us apart. However, the experience I bring to Tenacious has been shaped by my background in engineering and operational roles-- two decades working with startups and established companies alike, commercializing world-first technologies, and transitioning complex products to full-scale manufacturing. 

When I joined, the prevailing belief was that our primary contribution to an effective boardroom would stem from our ability to provide sector-specific insights, networks, and expertise. Yet, as I’ve worked to identify scalable ways to support our portfolio companies, we’ve questioned this assumption and thought deeply about what actually makes boards effective.

Are sector-specific skills truly the key to boardroom success, or are other attributes—like governance expertise and operational insight—equally, if not more, valuable? What challenges do our companies face, and how can we help them navigate these effectively?

Closing the Knowledge Gap: Is Domain Expertise Enough?

To explore whether domain expertise is essential in the boardroom, I evaluated our portfolio to identify where our skills might create the most value by mapping out the core challenges faced by each company, focusing on their stage of growth and the type of support they needed.

For example, with respect to my own skill set, in looking at some of our portfolio companies like Goterra, SwarmFarm, RapidAIM, and Phyllome, a common thread emerged: these are businesses navigating the complex journey from emerging product-market-fit to scaling operations. With physical components such as robotics, hardware, and integrated systems, they face unique challenges around operational efficiency, supply chain optimization, and governance. 

In addition to operational needs, I considered the founders and their teams, as well as the existing board composition. Founders often bring distinctive strengths to the table, whether it’s visionary leadership, technical expertise, industry insights, operational experience, or strong fundraising and sales capabilities. By evaluating these attributes alongside their companies’ challenges, I was able to identify where complementary skills, rather than domain expertise, could drive the most value. In these cases at the time, it was a combination of governance, operational efficiency, and scaling, rather than deep sector-specific knowledge. This exercise reinforced that while sector expertise is valuable, like any skill, it is not a one-size-fits-all solution, and startups change rapidly. Boards are most effective when skills are aligned with a company’s immediate needs, particularly as businesses scale and their challenges evolve.

Being a Good Investor Doesn’t Automatically Make You a Good Director

In venture-backed companies, board roles are often tied to capital contributions or founding status rather than governance readiness. While this practice reflects industry norms, it also highlights a significant gap: being a founder or investor doesn’t inherently prepare someone to navigate the complexities of governance in a rapidly scaling company. 

Governance requires distinct skills: strategic oversight, risk management, support for the CEO, and long-term fiduciary stewardship. These demands differ significantly from the investor skill set of identifying high-potential opportunities, analyzing financials, assessing risks, and making decisions on capital commitments, and the investor mindset, which prioritizes urgency, assertiveness, and decisiveness.

Few investors enter venture capital expecting to spend significant time on compliance or governance. Instead, they’re drawn to identifying opportunities and helping founders scale. But as startups grow, governance becomes unavoidable, requiring directors to focus on fiduciary duties, risk management, and operational alignment—areas that can feel far removed from the allure of early-stage investing.

The Learning Curve of Governance

Portfolio board roles often act as training grounds for investor-directors, reflecting a broader industry problem: the skills required for effective governance don’t always align with the paths that lead to board seats. 

For founders-turned-directors or investor-directors with limited governance experience, the learning curve can be steep. In scenarios where no one on the board has prior experience, this learning curve can be even more pronounced. Recognizing this gap presents a valuable opportunity to evolve industry norms by emphasizing governance training and mentorship—ensuring boards are equipped to address the unique challenges of portfolio companies and fulfill their responsibilities effectively.

This also highlights a broader challenge in venture-backed governance, and one that founders should take note of: in many cases, investor-directors—whether founders or team members—are granted board roles by virtue of their capital contribution or seniority within a firm. This doesn’t always translate to governance readiness or experience, or skill alignment with respect to board composition. Too often, the same individuals are positioned as the ones with the “right skills” simply because of their status or proximity to the decision-making process. While this approach serves practical purposes, it doesn’t always align with the evolving needs of portfolio companies.

Practical Constraints and the Path Forward

Investment firms face real constraints: small teams and fiduciary responsibilities to limited partners often drive board appointments. As a result, hierarchy is frequently used as a proxy for governance readiness. While this approach has its merits, founders must understand the trade-offs, because as portfolio companies grow, governance becomes an inescapable part of a director’s responsibilities.

The challenges investor-directors face aren’t unique to individual firms; they reflect systemic norms and challenges across venture capital and startup ecosystems. Addressing these will require a collaborative effort from both investors and founders to align expectations and provide the tools, training, and resources directors need to succeed. This isn’t about placing blame but about recognizing that, as the roles of investors and directors evolve, so too must the structures and norms that support them.

Rather than relying on assumptions about expertise, there’s also an opportunity to evaluate the real challenges a company faces at each stage of growth and align board composition accordingly. This might mean appointing independent chairs who bring fresh perspectives and governance experience or investing in director training to ensure that everyone, regardless of experience, is prepared to navigate the complexities of governance. 

The Complex Role of the Investor-Director

While the role of a director is to act in the best interests of the company, the investor-director must also navigate their obligations to their own firm and its limited partners.

This dual responsibility creates a governance tightrope: investor-directors must contribute to the company’s growth and success without compromising their fiduciary duty to maximize returns for investors. This tension can lead to questions of alignment and impartiality, particularly when conflicts arise between a company’s needs and an investor’s priorities.  These concerns aren’t unfounded; they reflect industry-wide challenges in balancing investment objectives with a company’s long-term vision within an investor-director role.

Perceptions of bias and conflict can significantly impact boardroom dynamics, influencing trust and communication. Whether perceived or actual, this adds a layer of complexity to an investor-director’s responsibilities, requiring heightened awareness of potential conflicts—and a commitment to act accordingly. 

While this may feel like an added burden, and perhaps unfairly so for individual investor-directors, this proactive approach is essential and helps reinforce trust and alignment within the board, ultimately strengthening governance and supporting the company’s best interests. This is especially important in some scenarios where the potential for conflicts can become particularly pronounced, e.g. funding rounds, exit transactions, and major strategic pivots ​​where misalignment can intensify, eroding trust and undermining governance.

To address these challenges, boards can implement best-practice governance protocols that empower investor-directors to act transparently and objectively. This might include governance training for investor-directors, appointing independent directors and experienced company secretaries, implementing clear conflict-of-interest protocols, or separating investor and director roles by appointing Venture Partners, or external representatives or designating a separate investment team member to handle follow-on rounds and term negotiations while the investor-director remains focused on governance. 

The conflict management strategies support collaborative, objective decision-making, which is especially crucial in follow-on funding scenarios where runway is short, there is pressure to close a round, and the risk of conflict is elevated. 

Bridging the Gap: Governance as a Team Effort

Recognizing the distinct skill sets required for investor and director roles is critical, especially when these roles converge in the same individual. While investor-directors bring unique value to the boardroom, expecting them to excel in every aspect of governance, fundraising, operations, strategy, and sales is unrealistic, especially when these skills might diverge from those required to be an effective investor. 

At Tenacious, we’ve learned that a collaborative, team-based approach enables us to meet portfolio companies’ evolving needs. One team member might offer sector expertise, while another provides operational or governance support and another is the investor-director. This collaborative model reduces pressure on individuals and creates a well-rounded support system.

Investment firms face undeniable constraints—limited resources and fiduciary duties to limited partners mean board appointments often reflect practical realities of providing governance support to portfolio companies while balancing and managing competing priorities. Still, by aligning skills with challenges and embracing collaboration, we can build stronger boards and provide better support to our portfolio companies.

Final Reflections

Over time, our view of value-add in the boardroom has evolved. While sector expertise remains valuable, governance—risk management, fiduciary alignment, and strategic oversight—has proven to be where boards spend the majority of their time.

Boards thrive when directors bring a mix of perspectives tailored to the company’s stage and challenges. For founders, having directors equipped to help them govern effectively—balancing fiduciary oversight with strategic support—can be even more impactful than having sector experts alone at the table.

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Acknowledgments and Gratitude

This post is part of a five-part series drawn from a year long governance deed dive — featuring lessons from board observerships, practical takeaways for founders and investors, and reflections on the complexities of governance in venture-backed startups.

I’m deeply grateful for the generosity and openness of all the boards that welcomed me, and especially Sandford Capital, as well as the WILD for STEM program, which supported my development.

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