Lines of Communication

The Importance of Openness

Other VC experts weigh in on why and how venture capitalists should interact with the employees of the companies they fund

Tom Huseby is managing partner for SeaPoint Ventures and has long-standing relationships with Oak Investment Partners, Hunt Ventures and Voyager Capital. He was CEO of both Metawave and Innova.

"One of the many ways a startup can be screwed up is by having a disconnect between management, investors and employees. I ask the CEO to present to everyone at the company what is presented at board meetings, so that there's a tight linkage between what the board hears and what the rest of the company hears. I also always tell the CEO when I'm going to have a conversation with someone else at the company, and I report back on it. If there ever is content I can't tell the CEO about, I have a problem that needs to be fixed."

Bill Malloy is a venture partner at Ignition Ventures. He has been CEO of several mobile, internet and software companies and spent 11 years as an executive at McCaw/ AT&T Wireless.

"Having been both a CEO for venture-backed companies and the Ignition board member in companies we have invested in, I have always been comfortable with employees talking with the VC representatives. I came from a '360-degree' environment at McCaw and other places where there was very open communication up, down and across the organization. The CEOs at Ignition-backed companies are, by and large, cut from the same cloth and, as a result, encourage us to meet with their teams. From time to time, we'll get requests for assistance or updates from employees. All in all, it produces a healthier working environment."

This article was originally published in the October 2009 print edition of Entrepreneur with the headline: Lines of Communication.