I recently had the pleasure of speaking at the VC Platform Summit in Miami, a 3-day event that brought together 500-plus VC professionals focused on platform roles across 340 firms.
The platform role has come to wear a lot of hats in the world of private capital—from business development to community-building to recruiting and marketing—and matured substantially over the past decade. Perhaps the most central and important theme today is portfolio value creation.
This emphasis on adding value to portfolio companies is no surprise. In Affinity’s most recent survey of 600-plus private capital professionals, titled the "Private capital investment predictions report: 2024 edition," more than one-third named portfolio support as their top priority in 2024. Pitchbook’s Q1 2024 Venture Monitor summarizes the current state of private capital well: “Investors seem to be circling their wagons and making sure their most promising companies are positioned for success before they make new bets.”
2022 and 2023 were defined by macro uncertainty and headwinds, as growth took a major hit across tech, and every company doubled down on efficiency and cost-cutting. Many startups went out of business or were acquired when they realized they couldn’t raise another financing round, lacking either true product-market fit or the economics to absolve themselves from their dependencies on venture capital.
Those headwinds created a profound focus in VC on giving portfolio companies and founders the support they need to navigate an economic downturn—one that continues today.
Let's take a look at some of the most important tenets of portfolio value creation.
Accelerating business development and fundraising through the firm’s network
By tapping into the extensive network of their firm, VCs can amplify their portfolio companies by facilitating introductions to major customers, partners and future investors.
Every firm does this to some degree, but the best investors are systematic and deliberate in how they approach it. Rather than reactively handling requests for introductions one-off, they proactively build an operating cadence for discovering what types of intros their portfolio companies need and when, and how they can best help.
Often, this manifests as recurring office hours with the partnership and Heads of Platform to triangulate on the most important introductions. At Affinity, we ourselves won into our first 100 customers almost entirely through the networks of our first two investors. A best-in-class approach to facilitating introductions can change the game for an early-stage startup.
Amplifying recruiting across key positions
Helping source and vet great talent is critical to the VC value proposition. For many firms, this happens through direct intros—especially with executive recruiting. Talent functions can be as hands-on as investors literally joining their portfolio companies’ weekly calls with executive recruiters.
Other firms leverage the power of their brand for more general recruiting across their portfolio. For example, firms will host job boards on their websites that aggregate all the key open roles within their startups. When a VC has a strong brand, this can be a draw for candidates and make even very early-stage startup opportunities feel more credible.
Building a network of experts and champions
In Miami, we heard from many leading investors who built curated networks of experts to advise their portfolio companies—from engineering executives to marketing experts who can provide meaningful advice specific to every stage of a startup’s scaling journey.
In a similar vein, their networks of decision-makers at the Fortune 500 help facilitate key partnerships for their portfolio companies. Their networks of industry experts guide their founders in learning more about and breaking into new markets.
From the investor perspective, it takes time to nurture and build these communities through steady communication and bringing leaders together through events. It also requires a strategic approach to expose these experts to portfolio companies so they can be the most helpful when needed.
Again, the best firms are successful because they are able to think about this in a systematic and structured way.
Technology’s role In portfolio value creation
Today’s huge array of software tools can help investors identify, curate and open their networks to their portfolio companies in more useful and efficient ways.
For example, relationship intelligence automatically maps out the collective network of a firm, quantifying the strength and history of each relationship. VCs can use this data to share real-time updating lists that showcase the aspects of their network that portfolio companies need.
Portfolio data collection platforms make it easy for portfolio companies to submit their quarterly data and metrics to VCs. Reports can be sent out in one-click to all investors, rather than having to redo the reporting for each one.
With a CRM built for private capital, VCs can automate reporting on portfolio value creation. Examples of this include identifying and classifying intros when they happen (and to whom) as well as providing out-of-the-box reports on how many intros a firm has made to portfolio companies.
Creating portfolio value at scale
There’s no doubt that many companies need more support from their VCs right now. As I’ve written previously, this is the first downturn that many founders have navigated. But to create value at scale, VCs need an approach that is deliberate, systematic and structured—characteristics that should apply to their tech stack as much as to their strategy.
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