1 The Renaissance of Venturing
[12] In today’s era of disruption, when everything seems to be new, it is instructive to look back at history. Every period of disruption has been characterized by concurrent developments. Schumpeter (1942) neatly summarized this process as “creative destruction.” Accepted norms of economic value creation are challenged by new, more effective and more efficient approaches. This eventually leads to the destruction of old companies and the formation of new ventures.
Creative destruction follows a structured path that has implications for the perception of venturing. In the initial phase, few pioneers actually envision the new, and they are usually ignored or ridiculed by the establishment. But, as these pioneers start to prove themselves and find their fellowship with clients and customers, elements of the establishment slowly awaken. They either begin to embrace or fight off the change, as neatly described by Rogers (1962) in his analysis of the diffusion of innovation. Disruptive innovation eventually prevails, leading to true value innovation and rendering an existing solution obsolete, as postulated by Bower and Christensen (1995).
Venturing is nothing new. It has always existed at the core of creative destruction.
2 The Venture Board – the Glue that Bonds the Venture Ecosystem
For ventures to flourish, they need to be embedded into a venture ecosystem that provides the key ingredients for success, and allows for an efficient and effective allocation of those resources and capabilities. If we view venturing as a series of interactions between the key players at various stage of a venture, as suggested by Dinnar and Susskind (2019), we can distinguish three key players with distinctive roles, functions and motivations:
–Entrepreneurs: The founders turn opportunities into business value. Entrepreneurialism provides the capabilities to realize ideas and capitalize from value creation by selling or living from the companies they create.
–Investors: Investors provide the much-needed capital to scale the business. They expect a risk-adjusted return from their investments. They also serve as validators, as they choose between different options in which to invest.
– [13]Venture Boards: One of the key functions of the venture board is to align the interests of entrepreneurs and investors, with the company’s success as the primary objective. They provide co-direction and control and expect to be remunerated for their services.
Historically, most of the focus has been on entrepreneurs and, to a lesser extent, investors. Venture boards have only gained attention more recently. The two catalysts have been well-known cases of failure in venture governance (Garg and Furr 2017) and a greater level of research at the intersection of corporate governance and entrepreneurship. The roots of this research can be traced back to Mace (1948), a Harvard professor, who stressed that the venture board can be a valuable resource of advice beyond acting as a supervisor (Gabrielsson 2017).
The pivotal role of venture boards, however, is becoming better understood, as summarized by Garg and Furr (2017, 327): “Although the exact role of the board may vary across ventures and institutional contexts, venture boards are typically central to the most significant actions within ventures.”
The venture board plays a pivotal role by connecting investors with entrepreneurs – and holding together the venture ecosystem.
3 The Four Waves of Venture Governance
[14] While the key