Two years into VC Platform. The future of VC is data driven. This…
By: Andrea Di Pietrantonio
Tags: Venture Capital, Platform, Startup, Innovation, VC

TL;DR:

The post aims to highlight my role at Inventure and how we are trying to change the way a seed VC fund operates. Do VCs really add values to the portfolio? And how?

Inventure’s work on VC platform has evolved during the last year into a more structured and data driven value creation exercise

Inventure’s portfolio companies now go through an on-boarding workshop to define priorities and how we will be supporting them

We have run over 170 value creation “programs” so far this year with more to come in the coming months

How my role has evolved: I divide my time sparring with CXOs on operations and fundraising themes to help building the right processes and frameworks (or at least trying to :) )

In the coming months we will continue focusing on hands on advisory/support and programmatic knowledge sharing

Let’s dig in

I published ”One year into VC Platform” roughly one year ago. A post to reflect on our progress on the “platform initiative” and what that meant for both us as a team at Inventure and for our portfolio. It is time for a “Two years into VC Platform” post to check our progress and our plans forward.

For the purpose of clarity, I would define platform/value creation work as those activities a fund does to help the portfolio companies’ growth path and ultimately increase their value. During this path, there are two types of “hard” checkpoints. The first ones being add-on funding rounds, a market signal of a value increase on paper. The second, an actual exit, the moment of truth of VCs when actual money flows back to LPs. It takes time to reach these hard checkpoints, and a lot of the activities done in the meantime are difficult to correlate to success. What we want to focus on is what companies will prioritize to reach those validation moments and what we should help them with on the way.

To do that, we kickstarted an on-boarding workshop for all new companies joining Inventure portfolio. During an on-boarding workshop, myself and the case manager will sit down the core of the management team of the company to go through a few things:

What it means to join Inventure portfolio

What are the companies’ goals by the next funding round

Where the company is today and what are the short term priorities in the coming months

What it means to join Inventure portfolio

The picture above is an extract from our on-boarding tool kit. A summary of the different perks a company receives when joining Inventure portfolio. In detail:

Corporate partnerships : Overall, we estimated companies can unlock over € 500k worth of offers/discounts through the corporate partnership programs currently active via Inventure

: Overall, we estimated companies can unlock over € 500k worth of offers/discounts through the corporate partnership programs currently active via Inventure Events : We believe in small, online, theme-based workshops rather than big events. We try not to burden our companies with too many events but focus solely on value added discussions driven by burning needs in the portfolio and organise ad-hoc workshops around those topics.

: We believe in small, online, theme-based workshops rather than big events. We try not to burden our companies with too many events but focus solely on value added discussions driven by burning needs in the portfolio and organise ad-hoc workshops around those topics. Database & communication : this section hasn’t changed much from last year. We will re-new some sections of Inventure Awake in the coming months and we keep using the portfolio Slack channel. Moreover, we are keen to explore a cross VC Slack initiative with theme/position based communities, (marketing, sales, finance, product, etc) to actually give the experts in their portfolio a peer network of relevant size

: this section hasn’t changed much from last year. We will re-new some sections of Inventure Awake in the coming months and we keep using the portfolio Slack channel. Moreover, we are keen to explore a cross VC Slack initiative with theme/position based communities, (marketing, sales, finance, product, etc) to actually give the experts in their portfolio a peer network of relevant size Tailored plan: honestly, this is the part I am most proud of, and also the core of the whole value creation work. We have been tracking what we do with the companies and broke it down into categories. We then discuss what the company will prioritize and what will remain in the backburner. Also, this is an important moment for the entrepreneurs to tell us where they want our help and where, instead, we should back off and let the company work. A VC that wants to be helpful in everything will end up being helpful in anything.

A plan for value creation

Let’s next deep dive into what we actually do from a value creation point of view. AKA, how does Inventure helps the portfolio companies beside money?

I believe that question is better asked with two sub-questions:

What do we do?

Who does it?

What do we do?

We spent now roughly two years piloting different categorizations for the action points we do with the portfolio companies. A part of the overall work and discussion deals with vision setting and long term strategy but that quickly breaks down in different macro areas which we have summarized as:

Sales & Business Development : anything to do with the business model of the company, how the company will sell the product/service and all the processes around it. In short, making sure things work and growth happens

: anything to do with the business model of the company, how the company will sell the product/service and all the processes around it. In short, making sure things work and growth happens Talent : this area covers both board activity as well as support in hiring the team (often management team). To be noted here, we are not head hunter ourselves but we strive to match the companies with the best options in the market

: this area covers both board activity as well as support in hiring the team (often management team). To be noted here, we are not head hunter ourselves but we strive to match the companies with the best options in the market Product : as a fairly generalist fund, we are not able to help with the details of the tech but we support with a strong imprint on the product roadmap as well as the necessary introductions from our networks

: as a fairly generalist fund, we are not able to help with the details of the tech but we support with a strong imprint on the product roadmap as well as the necessary introductions from our networks Access to financing: this covers different types of financing with equity add-on funding being the case for most of the companies. Basically, helping the companies building the fundraising story and executing the round by building a long list of potential investors and introducing them to the CEO

All these action points are fairly high level as too much detail would make us spend more time logging things in rather than helping the portfolio. They are programs and ongoing discussions we have with our startups to help them overcome a certain issue.

So far, in 2019, we have completed over 170 of these programs and we have quite many more planned for Q4 and Q1. Helping companies on different topics from fine tuning their go to market strategy to planning and executing an add on funding round.

Each logging represents an activity over a certain period of time that often includes one or more people from Inventure’s team, the portfolio company team and externals (head hunters, other investors, etc). Some examples from our pipeline are:

Talent: Support in hiring the CMO. Job profile and possible candidates. Intro to Person from Company to discuss about similar job profiles

Go to market: Helping the CMO to launch New Product. Validating ideal customer profile and plan and monitor launch strategy

Fundraising: Prepare for round, vision, deck & investor long list. Support execution with relevant introduction, feedback and support throughout the round

We review our planned activities for the whole portfolio at least quarterly and make sure we mark the ones that are completed and add new ones for the coming quarters. The process is done through a pipeline on Pipedrive, simple to use and visualize and not much hassle to keep up to date.

Who does all of this?

We are proud of our diversity at Inventure as it allows us to adapt to different needs of the portfolio both in term of business skills and personality fit. We are still learning but our goal is to work as a team to provide the best source of knowledge to the portfolio. That means a fluid communication between the investment and value creation team to identify what the companies needs and then who is the most suited person to answer that need.

That person is often an internal resource, at times someone from the portfolio or an external who has encountered a similar issue in the past. As a frame of reference, most of my time at work is split between sparring with CXOs about the processes and best practices to support growth, sales and business development as well as helping some of our companies in the planning and execution of their funding round.

Do entrepreneurs like this?

We asked our entrepreneurs (active CXOs of fund II & III) for feedback and for suggestions on how to improve.

The feedback from the portfolio has been very encouraging with high level of satisfaction and net promoter score. It is a good start but we want to improve those scores in the future. If we compare the picture above with the previous one, we clearly see how we score better in the areas where we spend more time (financing and sales & BD), while we are clearly not too strong in topics we cover less (product is a perfect example of this). Some areas still need work from our side to strengthen our offering to the entrepreneurs.

What is next?

In the last two years the core of my job, as well as the essence of the Inventure Platform, has evolved radically. As we expand the scope and size of the job, “Platform” might not even be the term we will call our value creation support in the coming months (hint ;) ).

The bottom line, however, is that we will keep focusing on helping the entrepreneurs where we add more value. Standing by their side in building the processes for growth and executing the funding rounds.

We are also working on some cool stuff to re-address our weaknesses. Quality and focus will trump quantity in the long term.

Furthermore, events will still be important but we will re-think the concept. We will move towards a more programmatic, master class based format and reduce the “beer & networking” gatherings typical of the industry.

Reach out:

Finally, I do believe that the way VC work is changing and we are working to position Inventure at the forefront of this trend.

I would be happy to work with fellow seed and early stage VCs and hear your feedback about what we are building. Also, We are planning to pilot two Nordic wide initiatives for all VCs to better support the portfolio and test the interest from fellow investors :

Cross- portfolio theme based communication channels: for CXOs of the same types to achieve broader scale in the discussion

Cross-portfolio service providers lists: lists of executive search firms, marketing and PR agencies, accountants and so on, to share feedback and provide better quality information to our companies

If you are interested in a chat or in joining one of the cross-portfolio initiatives feel free to reach out to andrea@inventure.fi for a chat.

Where can you find me?

Helsinki, most of the time

London on week 46 at the EU VC Platform Summit

Slush on week 47

On Twitter -> @a_adp

PS: We are also organising VC Platform drinks at Slush on November 20th. If you work in this role and you are not in the list yet, feel free to reach out!