Let me know how I can be helpful? Foregone VCs spoke this so often to founders it became a platitude for the industry that effectively translated to ‘Please f*ck off.’
As capital becomes more commoditised, every fund has had to step up their offering or go extinct. Some folks took the purist approach and decided they’d just be the capital provider and sell their money at a discount. Others leaned into the #valueadd services approach. Another group is sticking with the boutique hands-on style.
Regardless of what your angle is, VCs now legitimately have to be helpful to survive and it turns out many people still suck at this.
On the flip side, a lot of first time founders also don’t know how to get the best value out of their VCs. Just like most Tiger backed founders don’t know what to do with Bain & Co consultants.
I’ve only been doing this job for 4 years but I thought I’d pull together some of the easiest non-controversial things that VCs, particularly early career/young VCs can do to help startups in their earlier days.
It’s a two-way street, if founders never ask their VCs for anything it’s unlikely they’ll get much from them. These are a few tips where the relationship and ‘helpfulness’ can be highest leverage.
Employees / Hiring
Literally just help companies hire 1 person at a time
As an investor your job is to be well networked. You also have the privilege of knowing the up and coming companies, hopefully you’re invested in some of them.
The most rewarding part of the job is connecting a company in need of talent to a person looking for a new opportunity. Sit down with your founders and ask them what is the most important hire they need to make right now. Think through your network and go talk to the people who might be a fit. If you do this job well enough (people start getting rich off options) then people will start actively coming to you for the tips on the next cool company to join.
Top of Funnel
Senior talent with startup experience are getting hammered with outreach on Linkedin at the moment. From recruiters, talent teams and interns logged into the founders profile. It’s a lot. One profile they never get messages from are board members or investors. Seeing a unique profile ping, asking if they’re on for a conversation can pique people’s interest. Your network is the best place to start but the next best thing is helping warm up the cold outreach for those key roles.
You were able to persuade your founders to part with their equity, you should be able to convince someone else to get paid to take it. Closing candidates is bread & butter work for investors. You are able to take an insider/outsider view and answer a lot of questions from a perspective very similar to the how the candidate will be thinking about things.
I’ll always ask the candidates if they’d like to read my diligence notes & edited memo. It’s work you’ve already done as an investor and sharing it with the candidate is a great way for them to see the bull case & the risks for the company. Honest, informed conversations yield good results, who’d have thunk it.
Lunch n Learn
VCs & board members are viewed with this strange mysticism by a lot of folks. In my experience, employees want to get exposure to the company’s investors. A good way to scale this as the organisation gets bigger is doing a lunch and learn. Pick a topic that you know is of interest to the team — trends in the market, stock options, startups and wealth creation etc… Then open up a Q&A.
Making yourself available to teams is good for your career. Employees of today are founders of tomorrow. Getting to know and helping out your companies teams is the biggest no brainer in venture.
In certain ecosystems and for second time founders its easy to build a network of peers going through the same things as you. But for a lot of founders it can be a pretty lonely experience. You might think that you’re so soft and cuddly that they’ll come to you about anything, doubtful. Having peers your founders can confide in is invaluable to making their journey that bit more manageable.
We do a similar set up at Frontline with pods of founders and it’s really easy to organise. Pick four founders at a similar stage. Introduce them and make sure they all vibe. Set them up with a recurring calendar event in their diaries and follow the steps Peter Reinhartd lays out in his thread.
Spending time chasing customer intros in my experience, tend to be a big misallocation of time. Strategic introductions to key customers can work but generally for the ask — ‘can you help get us customers’ — I’ve never found direct intros to be that effective for the company.
Figuring out why a company needs customer intros in the first place is usually a better place to start. Have the founders done sales before? Do they have a good inbound strategy? Would hiring a good BDR help? Customer intros feel good but don’t have the long term benefits a change in positioning or a person full time on the ground will have.
When things go wrong
You might not be the person they share everything with, but you need to be the person they can go to when things go haywire and founders shouldn’t be afraid to share bad news.
Co-founder issues, employee issues, personal issues. VCs have usually seen it all. Every situation is unique but often people still make the same mistakes trying to resolve them.
So when things are going well for the company your job is to sell them as much capital as you can. When things are going sideways? It’s to step up and try to take some pressure off the founders so they can figure it out.
The way I frame it is that if founders knew everything they needed to do to be successful, they wouldn’t need investors’ money. But they don’t. No one does. You need a budget to go make mistakes and figure out how to build a product, a company and learn how to become a great founder. A large chunk of our capital is that budget for mistakes so they shouldn’t be stressing if it’s going sideways. As long as they’re learning something that’s what the money’s for in the first place.
Lastly and most importantly — your key job as an investor is to make sure you can get access to capital from your own fund and from other investors. It really is the one area where you should know a hell of a lot more than your founders. You see it every week — they do it a handful of times in their career.
The guide I sent to our founders pre-process is detailed below — it’s designed to optimize for a good result. To hit the YC number that says you need to take about 30 first meetings to be statistically likely to get a Series A term sheet. It’ll vary stage to stage but for Series A this covers a lot.
Series A Plan — Timing & Materials
- 3 weeks of full CEO attention— 3 weeks part time — you need to block the time off in your calendar from other activities. This is a full time affair.
- Use a Raise CRM — Google Sheets usually best — list of investors you’ve spoken to / would like to speak to sorted by relevance and with notes on who can give the warmest intro. We will provide a template.
- Deck + Basic Data Room —Should contain product roadmap / sales pipeline / billing output / basic forecast & financial model / supporting documents — DO NOT DO A MEMO — if you’re Parker Conrad you can do a memo — are you Parker Conrad?
- Blurb with top 5 bullet points — why someone should meet you off the back of an email intro.
- Calendly 30 minute and 45 minute links - + 4 Customers ready to speak to investors for references + 2 personal references per founder.
- Identify key angels - who can spread word of your fundraise or who we can get to commit early — try to read this piece on hype and timing. The reason to do this in this structure is to create a sense of urgency.
- week 0 — practise pitch with existing investors & sharpen deck — intros start to schedule for week 1.
- week 1–20 first meetings — 30 minutes — goal of end of week is 10 2nd meetings.
- week 2–10 first meetings (save some top choices for this batch) — 10 2nd meetings (data room share)
- week 3–10 2/3rd meetings — data room shared and pushing for partner meetings — ideally get term sheet by end of week. Don’t give the references until the partner presentation is in the diary.
- week 4 — term sheets and final meetings — calendar should be less hectic here.
- week 5/6 — legals + angels + closing
Once you’ve helped a company fundraise, congrats. There should now be others investors and funds to help with all this stuff too.