We Asked Founders For Feedback, Here’s What They Said
In honor of the one year anniversary since closing our fund, we wanted to take a step back and evaluate how we are doing. But what is the best way of tracking success for a young venture capital fund?
When I first started in venture capital I didn’t appreciate how long the feedback loop is. It takes years to know if you are any good at this business based on the one true measure of success — cash and stock distributions to your investors. Sure there are plenty of other financial metrics that are touted by funds such as IRR and TVPI, but these metrics can easily be misleading when it comes to answering the fundamental question: “are we doing a good job?”
Venture capital is a long game. Calling the outcome on funds that are less than 5 years old, where many of the portfolio companies haven’t even shipped their products, based on non-uniform, point-in-time valuation metrics, is like reporting the Superbowl winner based on the result of pre-season NFL games or even training camp scrimmages. Scott Kupor (a16z)
When Ground Up was founded, we decided that we wanted to be a different kind of firm. Since the very first draft of our fundraising deck, we told LPs that long before our IRR would be meaningful, the true measure of our success would be our Net Promoter Score among our portfolio company founders (“NPS” i.e. how likely are they to recommend Ground Up to other founders). Capital is a commodity, so our entire orientation was around how do we create a user experience for our portfolio companies that maximizes their satisfaction with having chosen us as one of their investors.
Our motto to founders has been “think of us as an extension of your headcount.” If you need help chasing down leads on LinkedIn, we’ll hit the horn. If you need design help, we’ll hire a graphic designer (see our latest Design Sprint). And if you need help raising follow-on capital, let’s brainstorm who we can connect you to from the 350+ VCs in our network.
It’s a lofty goal and one that we hope we are living up to.
A Midas List member and VC veteran of 25 years recently told me when we were discussing the long feedback loop in venture capital: “Are your founders sending you deals? If so, that is the best signal.” Fortunately, they are. And that speaks to the underlying sentiment that NPS tries to measure. But without having a quantifiable metric, it is hard to track this sentiment over time and hard to be motivated to wake up every morning thinking about how you can get that score even higher.
So now that we have reached a certain critical mass of portfolio companies we decided to run our first NPS survey. We also figured that we might as well make our findings public since anyways when we compete to get into deals we tell founders that they can talk to any of our portfolio companies during the diligence process.
I’m really proud to share that our NPS score is 89. While I haven’t seen benchmark data from other VCs, that’s higher than Apple, Nike, and Amazon.
But more than providing a number on a scale, we asked our founders to share why they gave us the score they did and the responses were awesome:
- “Ground Up has been incredibly supportive. They’ve provided introductions, thoughtful insight, and other such levels of support. I’m very appreciative for their partnership and would recommend them to many entrepreneurs seeking capital.”
- “Ground Up is one of the funds on our cap table that I know spend time on a company even if things are not looking good.”
- “Founder friendly fund. Will be there when you need them.”
- “You guys bring tremendous value to the cap table. In mentoring, assistance and mentality. We feel like we brought an additional founder that helps us in our journey.”
- “Because you are awesome. Let us do our thing and always there when we need you.”
While we’re many years away from understanding our financial success, this NPS survey helped us understand that our approach is working.
Honesty, transparency and being helpful is the only way forward in this business and we’re excited to have partnered with amazing founders that are creating a real impact on the world.
Ground Up Ventures is an early-stage venture capital firm that invests in pre-seed and seed stage startups in the United States and Israel.
