Can VCs really add value beyond money?
By Boris Golden, Principal at Partech
After almost 4 years as a seed VC at Partech, it still feels like the beginning!
I’ve joined the Venture Capital industry for one reason: helping entrepreneurs get the help & support I had missed as a former entrepreneur myself.
When people ask me what I do as a job, outside of the ecosystem, I typically answer that “I’m a coach/advisor helping entrepreneurs develop their startup”. Because to me, money is a mean to an end: building great companies! But people usually associate “investor” or “VC” only with the financial element (which is of course critical), and that wouldn’t be a fair description of the job I’m trying hard to do on a daily basis.
However, I gradually came to realize that it was not that simple:
- many people in the ecosystem, including VCs themselves, are doubtful on why a VC could be a good advisor & really help, or even whether it is part of the job,
- the ultimate performance measure of VCs is indeed not portfolio support, but financial performance, and you can be a highly-performing VC by being “just” a great company picker & deal maker,
- bringing “value-add” to founders is only a part of how VCs can support entrepreneurs, and the “investment” part of the support is critical but quite often not at the level it should be,
- “value-add” is still an emerging topic that can take vastly different forms, so you need to break it down into several well-defined pieces,
- communicating in an articulate way what “value-add VC” means is not easy (I often ended up describing in a fuzzy & highly dubious way how I was actually supporting the entrepreneurs I’ve backed, which made it look imho like potential BS),
- I personally need a framework to help me define, understand and better deliver on my “value-add” ambitions,
- providing meaningful, “value-added” support requires to create the right relationships with founders, but I failed to do so in some of my first investments and I want to learn from that & improve,
- it is a trendy topic as VCs need to differentiate in a competitive market, creating a lot of noise & sometimes excessive marketing.
Two years ago, I thus started to take notes on the topic (surprisingly not covered very extensively so far). I ended up with a 30-pages long messy text document. Six months ago, I felt ready to start to order those thoughts, until I came up with the presentation below. It’s still work in progress and far from perfect…
A big thank you to many of the entrepreneurs I’ve backed, my colleagues, and my wife Delphine, for their support & numerous feedback.
Looking forward to yours!