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Portfolio Management: Full Platform

  1. Description
    1. A VC firm strategy with a division of labor, where the Platform team’s job is primarily to support existing portfolio companies.  Another team is the deal team with responsibility for sourcing or deciding on new investments.  Key areas of help include: press, marketing, customer intros, and employee recruiting.
    2. Another part of platform work can be building a network across the portfolio for peer-to-peer relationships, mentoring and referrals happen between portfolio companies.
    3. See also Time Allocation Models in Portfolio Management.
  2. Benefits
    1. Added Value: if you are able to help hire key people, get key press, or introduce to enough customers or business development deals, you can increase the value of portfolio companies.
    2. Reputation: if you are seen as helpful to founders, the reputation of the firm will be positively impacted and you are likely to win more competitive deals and see more good deals.
    3. Sourcing: by staying engaged with portfolio companies, there is increased likelihood for referrals of new deals. This can begin to blur the line between platform and deal teams. See also Referrals from Portfolio Companies.
  3. Trade-offs
    1. Expense: with more people on staff, there is more expensive which can put pressure on the personal finances of the GPs and also can create pressure to raise larger funds (ie Grow AUM).  With larger funds, the opportunity set and approach almost always change.
    2. Dependency: Some argue that providing too many services will attract or promote a mindset in the management of not taking full responsibility for success.
  4. Examples
    1. A16z
    2. First Round
    3. FirstMark
    4. Union Square Ventures
    5. Chicago Ventures
    6. See also the  VC Platform Global Community with over 800 members

 

Updated 7/30/2020

Input from Lindsay Knight

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