One of the Bay Area’s most well-known early-stage venture capital firms, Uncork Capital, threw a party to mark its 20th anniversary last month. The celebration was held in a renovated church in the San Francisco SoMa neighborhood, and at least 420 guests arrived to share in the festivities, war stories, and trade tips.

Since Uncork got its start, the venture scene has drastically altered. When Jeff Clavier founded the firm, he mostly used his savings to issue checks for $100,000 to other founders. Today, Clavier and his associates, including Josh Kopelman of First Round Capital and Aydin Senkut of Felicis, collectively oversee billions of dollars in assets. Outside of just Uncork, the entire industry has enlarged. Venture firms gave approximately $20 billion to startups in 2004, skyrocketing to $350 billion in 2021.

Of course, many rules have changed along with the industry’s scale. To help provide some insight, Clavier and his longtime managing partner, Andy McLoughlin, spoke in depth about these transformative shifts and what they mean in the industry.

When asked to recall when it became acceptable for full-time VCs to invest their money in startups publicly, Clavier stated, “Firms typically have policies to let partners invest in things that aren’t competitive or that overlap with the firm strategy. Let’s say you have a friend who starts a company and needs cash; if ever the firm decides to invest in future rounds, then two things: there is a disclosure necessary two [the firm’s limited partner advisory committee closed bracket saying ‘FYI, I was an investor in this company, I’m not the lead, I did not price the deal, there is no funny business where I’m marking myself up here.’ Also, some firms may [force] you to sell investment into the round, so you don’t have a conflict of interest.”

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To address when it became acceptable to back competing companies, McLoughlin said, “They’re probably acting like it’s fine, and they’ll continue to act that way until it’s not, and then it’s going to be a big problem. This is something we take very seriously. If we feel like there’s any potential conflict, we want to get ahead of it. We’ll typically say to our own portfolio company, ‘Hey, look, we’re looking at this thing, period do you see this as competitive?’ We actually had this come up this week. It’s actually [a] very different [type of company], but we wanted to go through the steps and make everybody feel comfortable.”

McLoughlin’s statements suggest that founders may need more control, and perhaps VCs get away with backing competing investments right now, though they usually would not. McLoughlin says, “There’s not a lot of late-stage deals getting done, so it could just be that the founder had to swallow it because the deal was too good to pass up. There are always so many dynamics at play, it’s hard to know what’s going on behind the scenes, but it’s the kind of thing that makes me personally very uncomfortable.”

The shift in board seats responds to the belief that investors can provide better insights into companies between board meetings. However, this has sparked some debate among VCs. Clavier asserts, “It’s our fiduciary duty to pay attention and assist, so I find that argument baseless. That’s our job, to support companies. If you have a significant stake in the business, it’s your duty and responsibility to be active on the board.”

McLoughlin adds, “A bad board member can be a dead weight on the business. But we’ve been lucky enough to work with really amazing board members who joined at the series A and B and C, and we just see the incredible impact they can have.”

Additionally, McLoughlin spoke about whether they are finding boards longer and if that limits their ability to get involved in other companies. “It’s probably less to do with the exits and just more to do with later stage rounds. If the companies aren’t raising series B’s and C’s, we will be on those boards for longer. It’s a consequence of the funding markets being what they are, but we are seeing things begin to pick up again.”