One year into VC Platform
What it is and what does platform mean for VCs?
Roughly one year ago we launched Inventure Awake for our portfolio. The primary goal of this initiative was, and still is, to facilitate the access and transfer of knowledge.
Simply put, there is a lot of information spread across the portfolio that, at a given time, would be useful for someone else in a different company, save some time and money, and ultimately support growth. However, by its very nature, this information is sticky, difficult to identify and to move in a scalable way.
Inventure Awake aims at solving this problem allowing us to become better VCs serving our entrepreneurs during their growth path.
How we started
Inventure Awake wants to support entrepreneurs. The first step we took was to create something our portfolio could use to access knowledge.
This is why we created www.inventureawake.com, an archive of best practices, resources, guidelines and proprietary databases ideated for the needs of the portfolio.
We built it around the topics we usually discuss with the CEOs and management teams: strategy and sales, recruitment, product development and fundraising. We can loosely define those resources around four main categories:
- Publicly available knowledge: knowledge from blog posts and other VCs that we believe is particularly relevant for the portfolio (a16z and First Round have done an amazing job in this area, great to filter and use their products)
- Partner knowledge: we rely on partners such as head hunters, consultants or lawyers for some of the activities we do. We have gathered best practices from them and made them available to our entrepreneurs. We built resources such as what you need to know when hiring a head-hunter, what kind of process a certain ISO certificate requires as well as assembled over 150 legal templates our portfolio can use for free.
- Inventure knowledge: this is where we have more specific information on how we see and deal with certain issues from fundraising to option pools and board meeting reports. Inventure has accumulated over a decade of startup knowledge and we have been working on codifying it to make it more consumable by the portfolio.
- Portfolio knowledge: as mentioned above, a lot of useful information sits within our portfolio companies. We have built some proprietary database from the portfolio and other startups to create benchmarks and best practices in terms of recruitment, salaries and other tools.
While containing quite a lot of material, www.inventureawake.com does not necessarily deliver information to the right person at the right time. Moreover, there is some knowledge which is so intrinsic in the portfolio that can’t be set in stone in an archive but should be used when needed by directly asking that person. As a consequence, we have created a communication channel(Slack) for the portfolio companies. A way for them to communicate more easily with us and between each other.
I am a big Slack user and I find it easy to reach out and discuss with entrepreneurs in the portfolio through that channel. Not all companies however are active on Slack, either they do not use it much or simply use some different communication channel. Hence, sometimes it is easier to communicate via email or phone. As we are in a people-centric business, however, there is one good old traditional communication mean that beats all advantages group chats provide: face-2-face meetings.
The companies learn and share much more when meeting face to face. After meeting they are also more keen to interact and keep in touch afterwards. For this reason we have been organising a series of small workshops for the portfolio companies around three different areas: CEOs meet ups, Sales calls and Technical workshops.
CEO meet-ups are, as the name suggests, a forum for CEOs to discuss freely with their peers. It is valuable for company leaders’ to have a moment to relate with their peers and vent about things they do not usually discuss with other employees or investors.
Sales calls and Technical workshops are more vertical oriented happenings involving specific people in the portfolio companies. Sharing best practices and knowledge in both areas is a good opportunity to grow and help each other. We have kept these events as open as possible to leverage experience from both inside and outside the portfolio. A good example is our latest B2B Sales Call in September, where companies from Inventure, 01 Ventures and Senovo Ventures portfolio all joined the discussion for some cross-region knowledge sharing. The three formats target very different people within one company. While in the span of one or two quarters a startup might attend all three of the events, the people participating from the companies are not the same. This is an important detail to maximize the time the company spends on actual product and sales instead of on VC discussions.
Finding the right balance between using portfolio time to help them grow and actually let them grow is the most important factor in VC platform development. Entrepreneurs do not to work with a venture capitals that only ask from the company. VC is a customer service job, hence, serving the portfolio comes with job description.
The bottom part of the iceberg
The database, communication channel and events are actually just the tip of the iceberg for the platform groundwork during the last year. The most excellent customer services are the ones that transfer the admin and research costs from the customers to the company. Inventure has been doing the groundwork for a much more ambitious goal: digitising VC. We are aiming to streamline the way we operate in order to transfer some of the cost to acquire knowledge or connections from the portfolio to us. VCs are actually quite “old-fashioned” in terms of processes, tech stack and metrics considering we are the ones investing in the future of technology.
The processes, or an overall idea of how things should go are often there, but they are not codified, optimized or tracked. We have been trying to move towards a more “KPI-driven” approach with our operations and best practices tracked and measured from dealflow until exit (big applause here to our CFO Kristiina Lunnas who did an amazing job with our compliance and investment process).
To achieve this, we need to act as any proper company would: define core metrics and what success means for each of them. Venture capital, however, is a people business. Helping strong entrepreneurs build great and successful companies is a very good goal, but fairly difficult to track.
Success, in venture capital, is the outcome of a combination of factors spanning from team, dealflow, entrepreneurs, ecosystems and co-investors. The ability to attract the best entrepreneurs is critical in the VC business. And the best entrepreneurs are keen to work with the best investors. Those investors often being the ones able to show a strong track record in supporting CEOs in recruiting a kick-ass team, building an excellent product and bringing it to the market. Our portfolio is our legacy, what we do for it reflects on dealflow, add-on funding and LP relations. Hence, measuring what we do with the portfolio means creating a structure to increase the quality of our relationship with the other stakeholders mentioned above.
To measure portfolio-work KPIs we need to break down the factors composing that metric, track them and over time, assess their impact. As stated, the topics we usually discuss with the CEOs and management teams are roughly divided in strategy and sales, recruitment, product development and fundraising. These four areas constitute the cornerstone of our work with the companies. Measuring what we do in those categories helps us understand and better plan our own resourcing to optimize for added value to the portfolio.
We are working with a simple but handy structure to have better visibility of the “mission critical” elements in the coming quarters for our CEOs and what we plan to do to help them. This approach brings a few different advantages:
- Resource optimization: some startups might experience a need that is best answered by a specific person within Inventure team or our network. We try to anticipate that need to find the most suitable fit to help the companies. Something well planned is half done and it surely saves time for internal resources.
- Expectation management: both for us and the portfolio companies, as well as potential startups in dealflow that can have a sneak peek into how we work as a team. CEOs need to be able to know what value will come from which investor and plan accordingly.
- Impact assessment: in the long term, we will have a quite valuable dataset to link actions performed with results. Some results might be fairly easy to predict, but a number driven approach might unveil some hidden gems of the value creation process.
In summary, our goal is to transfer the cost of accessing and transferring information (contacts, growth tips, upcoming funding rounds) from the entrepreneurs to us. To do so, we leverage a combination of front-end-facing tools (www.inventureawake.com, communication channels and events) and internal streamlined processes to find what we need, when we need it and deliver it to the portfolio companies.
What is next?
Venture capital is and will remain people centric. The platform is built to place the people exactly in the middle of the hassle and provide them with the information needed to make smart (or as smart as possible) decisions. We will keep pushing to make knowledge more accessible and scalable to leave more time for meaningful interactions and keep the human as central as possible to everyday work.
VC world is changing rapidly and “platform”, meant as a way of working internally and with the portfolio, will become an important asset in providing added value to growth companies. It marks a strong shift in the investor-entrepreneur relationship and the main value proposition of the industry.
If you are curious to know more, we have opened most of www.inventureawake.com resources to public users. Simply go to the site and sign up to dig into what we have created. Also check out our upcoming workshops (https://inventureawake.com/events), some are reserved for the portfolio companies while others are open to the public as well.
As VC platform means different things for different VCs, as well as different entrepreneurs, it would be great to hear your views on the matter and learn from others’ experience.
Weather you agree or disagree with my points above, feel free to reach out to discover more about Inventure and our platform approach at andrea(at)inventure.fi.
Happy to meet in Berlin (week 41) , NYC (week 42–43), Stockholm (week 44–48) or Slush (week 49) in the coming weeks if you are around!