Do VC Platforms Make Sense?

In the VC insider baseball world a discussion has gone on about “VC platforms” over the past 5 or so years. While firms define platforms differently, let’s just say they are the services that a VC offers outside of investment capital and partner time on boards or providing intros.

Examples of VC platform services include: recruiting, marketing, design support, inside sales reps, consulting, accounting services and so forth. Each VC has their own take on which services to provide and mostly they’re free but some smaller VCs charge portfolio companies for use of these services but usually at a cheap cost.

[Side Note: Upfront has hired Kerry Bennett as a member of our executive management team to run marketing — please follow her on Twitter here]

Platform services aren’t a new concept — in the late 90s a new breed of firms emerged who provided services that hadn’t typically been offered. The two most prominent — Internet Capital Group (ICG) and CMGi — raised the bar for others and every firm in the Valley seemed to have a new war for services. But it didn’t last long as the dot com bust gutted both of those firms (ICG survived but in a smaller format) and many non-investment execs hired by SV firms were jettisoned through down sizing. After all, you didn’t really need a recruiting department when half of your companies were shutting down and the other half were laying off massive amounts of staff.

The new war for platforms has mostly been waged by Andreessen Horowitz who have raised astounding amounts of capital and therefore had the fees to put into providing more services for entrepreneurs. Nearly every startup I have spoken to over the years — including some where I’m a co-investor — talks positively about the support they’ve gotten from A16Z.

Other firms like Google bring massive resources to design or engineering and as as corporate VC can offer things normal VC firms can’t offer.

Of course not every VC has the fund size or the fee size to build services at this scale yet many provide extremely well-regarded programs that are valuable.

Perhaps the best known new VC platforms of the last 10 years that are done on more modest scales are First Round Capital and True Ventures. They offer leadership conferences, regular content articles on leadership, board pack templates and the like. Both firms were able to establish themselves as clear market leaders in early-stage finance even though they were effectively startups 10 years ago in their own right because they did things a different way.

On the other side of the spectrum is Benchmark Capital who famously eschews platform services and believes that having nobody between their partners and the portfolio companies they work with makes for the most productive relationship between VC firm and founder. As best as I can tell, Foundry Group is also pretty close to the “platform light” side of the equation also, believing that they should have a firm with very few non-partner resources.

It is clear to me that both approaches work. You can’t argue with the successes of Andreessen, FRC, True on one side or Benchmark and Foundry on the other. All are great firms with great reputations and phenomenal returns.

When we think about how we want to run our firm at Upfront Ventures we clearly had this debate ourselves and tried to decide what we felt was right for our skills, ambitions and management styles. We came down on the side of believing that platform services would suit us well but we didn’t want to build a huge corporate infrastructure so we’ve tried to be sensible about how we roll out our services over the years.

In the spirit of our WYSIWYG culture at Upfront I thought it might be useful to explain what we’ve done, what we’re doing and why we feel this best suits our working style.

As a starting point you have to realize that investment firms (which a VC is) have management needs. We need to fund raise, we need to report to our investors, we need to look at industry returns and see if we believe we’re doing well (scorecards), we need to define our strategy & revise it over time, we need to recruit staff including new partners and think about succession planning, we need to constantly review legal documents, we need to make investment decisions as well as follow-on investment decisions and we need to make sure we market ourselves as a firm and as individuals to attract entrepreneurs who want to work with us.

With all of these tasks you end up with either a partner or two who “manages” the firm (some trade this role every couple of years), a loose confederation of partners who own and split tasks of management or a firm that brings in professionals who help manage the firm.

VC Management Styles

There is no right or wrong — these are the three basic models. As a partnership we’re all pretty young (relatively) and active in investments and we most mostly did this job out of our love for working with entrepreneurs at startups. So the partner who spends 50+% of the time managing wasn’t for us (although truthfully this probably does take 25% of my time).

What we found in the “loose confederation” model that many firms employ — associates are often allocated to the partners who arm-twist the hardest and become resource hogs. And there is often competition over marketing activities, fund raising ownership and the like. And often it is hard to motivate people to take on big tasks like strategy re-evaluations because everybody is busy doing investment work. So I find that less “management” happens at these firms. That certainly works well for some.

We felt we wanted “management heavy” where we’d try to put more effort into tracking systems, data analysis, event management, content creation and the like. As many of us are ex operators I think it intellectually suited us. But if one was going to build out management functions clearly that would either take one of us to oversee it or we’d have people doing platform services with limited direction.

So we decided to hire a partner, Stuart Lander, who would run operations for Upfront Ventures. He is a peer of the other partners and is the reason we run a much tighter ship than we did before his arrival. I had worked with Stuart for years before being VCs (he was a co-founder at my first company, where he ran global operations) and so the trust was there and the knowledge that he could handle what is a pretty complicated role.

Stuart began by spec’ing out new systems we wanted to build, processes we needed to improve and creating new functions within the firm that we hadn’t previously had.

I would define our goal of creating new services on our platform team as a triangle having three primary objectives: to provide more & better support for portfolio companies, to help create more leverage for partners and free up our time to focus on the most critical tasks and to better help run over overall internal operations.

Marketing Constituencies

And in thinking about where we wanted to place our 2016 internal resource investment dollars into we began to think about which services would have the highest impact on the three edges of this triangle and we recognized it was marketing. And if we were going to emphasize truly helping our portfolio as well as helping our own internal team better manage and live our own brand we wanted somebody senior who was part of our executive team.

So I’m very pleased to announce that Kerry Bennett has joined our leadership team. She will work directly with portfolio companies, will work with all of us as partners, will help us improve communications with our investors and our peers, will help us solicit feedback on how we’re perceived by portfolio companies and the market [and how we need to improve] as well as helping us better share knowledge and experiences within our portfolio.

Kerry brings experience from all parts of the marketing mix. After she was graduated from Princeton she worked at prestigious firms including Leo Burnett and Grey Worldwide. She spent years in marketing for startups including a telecoms company and for HauteLook, which was acquired by Nordstorm for nearly $300 million. Importantly at HauteLook she worked directly for now Upfront Partner Greg Bettinelli so she was a known and trusted hire for us. And more recently she ran marketing for DogVacay, run by Upfront alum Aaron Hirschhorn.

So why do we believe Kerry’s role at Upfront is so vital and why did we feel it was important to bring on board somebody who was senior?

From an entrepreneur’s perspective we’re asked to assist in a lot of situations. Our top request include: helping with PR announcements, helping with recruiting, helping to connect with other companies with similar issues [acquiring expertise], helping with introductions [biz dev] and of course help with strategy, advice, mentorship, conflict resolution and several other interactions.

The reason that marketing resonated so much for us as a 2016 priority is:


  • We can help portfolio companies with announcements, PR strategies, crisis management and so forth.
  • We also run internal events often where we connect entrepreneurs to share knowledge.
  • Early-stage and first-time entrepreneurs often value advice in the full marketing mix including blogging, content marketing, positioning, branding and customer acquisition that a senior marketer has done for years.

Partner Leverage

  • These tasks are very time consuming and have huge frequency
  • Most of our partners are very experienced at marketing but if you’re trying to help between 10 other tasks you’ll never be as focused as you may want. Also, clearly having a senior marketing exec who is an expert in that function would do better than a partner who does the function occasionally
  • We also get leverage because a head of marketing could better manage relationships with the press, with conference organizers, with PR firms, with SEO consultants, etc that can be valuable across many startups
  • And by freeing up partner time from this activity and doing a better job serving the marketing portfolio needs of our investments we also free up partner time to work with portfolio companies on other pressing needs.

Internal Operations

  • In addition to helping with portfolio companies and partner leverage there are several operational improvements we can make to how we run Upfront overall. For starters we want to better survey investors and entrepreneurs about how we’re perceived and how we need to change and adapt.
  • We also speak a lot about the role that executive coaches can play at companies in improving management coherence and alignment and we want to bring in outsiders to better help us work as a team. Kerry will spearhead this initiative.
  • We regularly communicate with our investors and we run semi-annual meetings for our investors and all of this requires communications expertise and from somebody who is financially numerate and strong.

We will continue to invest our firm’s dollars into platform resources. We have done so in the past and we will slowly and pragmatically increase our non-investment personnel to meet the three objectives of better serving our investors, our portfolio companies and ourselves to make us a more effective operation with taking away from the time all of us — myself included — has to spend with our portfolio companies.

For now, please help me welcome Kerry Bennett to Upfront. And perhaps consider following her here on Twitter.

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