Description When a VC is able to connect with a founder on the level of values, they form a deeper understanding. Based on this understanding, it is much easier to do business together. For example, a company may have foundational moral values like diversity, mission, or environmental sustainability. A VC may communicate that they care […]
Read the postDescription Include a successful founder in the pitch to the prospective portfolio company. The founders may be Venture Partners or may be more loosely affiliated with the firm. For example, it might involve the successful founder taking the prospective portfolio company founder out to dinner. The approach work best when the founder talks about working […]
Read the postIn the venture capital world, there is a cliche that “lemons ripen quickly” or “lemons ripen early”. And you may hear talk of the J curve. How are the two related? What do they mean? In this sense, “lemon” means an investment that does not work because the company goes out of business. We contrast […]
Read the postVenture firms rely on the collective abilities of individuals and in many meaningful ways is a professional services firm. Therefore, human capital strategy is central to the business strategy of a venture capital firm. We have written about this in past Venture Patterns posts, such as Bring in Stars, Grow AUM, and Size is Strategy […]
Read the postShort Description In staffing the partnership, focus on or be just as open bringing proven professionals that come in with a new network, fresh perspective and strong skills. Benefits Fresh perspective Potential for high performance team member without as much training Trade-offs New folks may not fit May have performance drop off if the person […]
Read the postDescription By showing a founder that they care through lots of attention, a VC may make a founder feel that they are more interested, available and willing to help. Examples include giving gifts, showing up, and making introductions. Benefits Genuine attention can be helpful in building a strong relationship with a founder. Trade-offs If done […]
Read the postThe concept of judging a business by “lines not dots” has become something of a cliche in the venture capital community. The idea is to evaluate a company, not based on its status today (dots), but rather by the direction and velocity of its development (lines). VCs are trying to judge how fast a company […]
Read the postVCs must determine how best to support the companies in their portfolio. There are many approaches to allocate time and resources among portfolio companies. Even if a VC is looking to make Proactive Intros, should a VC focus efforts on helping “winning” companies in their portfolio or assisting struggling companies? VCs may want to be […]
Read the postDescription “Tranched investments” (AKA milestone-based investments) describe when an investor agrees to fund a company in stages based on a series of milestones. Each stage (or trache) corresponds with a certain accomplishment or pre-determined goal that both parties agree to—this may be a financial metric like revenue or a product development milestone. This approach to […]
Read the postWhat does it mean when someone is a Venture Partner at a VC fund? And how are they compensated? The role can mean a number of different things depending on the firm and perhaps is intentionally vague. Sometimes someone is a scout with the ability to write small checks without the normal decision process. Sometimes […]
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