Developing a portfolio management strategy
Figuring out how to manage and support your portfolio companies is key to producing successful investments. To do that, though, you need to develop a portfolio management strategy. Your strategy can be as nuanced or as broad as you want, but it should explain where and how you plan to add value to your portfolio companies.
To develop your strategy, consider the following:
- Your investment stage
- Your investment focus
- Your network
- Your experience and background
- The market size and opportunities
- Your comfort level with risks
If you’re investing in enterprise SaaS companies at the seed stage, for example, you may want to focus on business development as a key part of your portfolio support strategy. On the other hand, if you’re investing in consumer-focused companies during the Series A round and beyond, you may want to provide support with exit strategies.
Portfolio support services
Once you’ve developed a clear portfolio management strategy, the next step is to outline the services you plan to offer your portfolio companies. More and more founders are looking for VCs who can offer tools and guidance beyond funding, so it’s important to think about how to set your firm apart.
Keep in mind, though: Your firm doesn’t have to be a one-stop growth shop for the companies you invest in. Finding the specific areas where you can support founders—and then doing those well—tends to have a bigger impact than trying to support every company in every area of their operations or growth.
Consider the following:
- Talent: Helping founders create a hiring plan, source competent candidates, and make hiring decisions.
- Community: Introducing founders to thought leaders, industry experts, other VCs, and prospective customers.
- Events: Helping plan, host, and execute product launches, brand awareness events, and networking conferences.
- Business development: Helping your founders develop detailed strategies for maximizing growth, forging partnerships, increasing revenue, improving profitability, or preparing for an exit.
- Marketing and communications: Helping founders refine their value propositions, develop their brand values, improve internal communication processes, and create more strategic marketing plans.
- Operations: Advising founders on how to streamline operational processes related to inventory, production, or admin. You can also recommend a handful of different service providers for tech stacks, auditing, and tax help.
Building a platform team
After you figure out which services you plan to offer, you’ll want to start assembling a team who specializes in those services. Enter: platform roles. Over the last few years, specialized platform roles at venture funds have continued to grow. In fact, the VC Global Platform Community now has almost 1,000 members.
People in platform roles help add processes to a firm’s portfolio management strategy. They also help scale a firm’s portfolio support offerings. Having a platform team is a great way to differentiate your firm from competitors, attract founders, and build a positive reputation.
Depending on your strategy and services, you could hire platform professionals in talent, marketing, business development, community, operations, or events. A few of the roles and functions in each of those categories:
- Talent: Recruiting, HR consulting, executive search
- Marketing: Social media strategy, content development, PR
- Business development: Firm growth and strategy, portfolio growth and strategy
- Community: Mentorship, advisor network, customer groups
- Operations: Tools, vendors, production oversight, admin
- Events: Workshops, annual meetings, and summits
To assemble a stellar platform team, start by writing clear and compelling job descriptions for each of the roles you want to hire for. Only once you can articulate the responsibilities and benefits of each role can you tap into your network and start searching for great candidates.
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