4 Considerations for Your 2024 VC Platform Strategy
The end of the year is prime for building out a VC firm’s platform strategy. As you head into 2024, here are 4 considerations to help you, regardless of your firm’s AUM, team size, etc. It’s part of the playbook we’ve developed at M25 to annually refine the ways we’re serving our portfolio and our firm. While firms vary by AUM, team size, industry, portfolio size, and a host of other factors, these 4 considerations will help your team gain clarity on strategies and goals for the upcoming year and set you up with a clear focus that will benefit your sanity and your portfolio companies alike.
Read on for more on how to create and assess your annual platform strategy, and what we’ve learned in 3 years of a formalized process.
Take Inventory
For some teams, this may be the first time you’ve formalized a platform strategy. For others, it’s time to annually revisit your platform efforts. We’ve found it helpful to take a full inventory of the platform team’s daily tasks (or even someone partially handling platform capabilities on a small team) to see what patterns or themes emerge.
In the past, we’ve literally gone through the calendar and taken note of every single meeting or block scheduling task and written them out in full, moving them into related categories. The result? A clear picture of what M25’s platform capabilities are (and more importantly what they aren’t).
By writing out and categorizing the year’s tasks, you can be empowered to focus on specific areas of platform support and drive the conversation with the investment team around what your platform team is capable of doing. In addition, we’ve used this practice to identify areas where an intern or next hire can be particularly beneficial and to make a case for why additional support is necessary to grow our efforts in any of these areas.
At M25, we can confidently say our platform team focuses on 5 specific aspects of portfolio and firm support based on the inventory of tasks we’ve tackled annually. In addition, we’ve been able to expand our team by knowing which of these areas required additional focus.
Poll the Audience
End-of-year surveys may seem like an unwanted obligation to your portfolio, but we’ve found that we can garner a high response rate from our portfolio founders by simply asking two questions: “What was the most useful thing M25 did for you this year?” and “What’s one thing you wished we were doing to help you this year?”
The survey takes a couple of minutes to complete (ideal for busy founders), but it also allows patterns and themes to reveal themselves in open-ended responses. M25’s early talent efforts were born out of end-of-year survey respondents saying they wished they could get help with hiring, and in 2023 it continues to be one of our founders’ favorite offerings within our platform team.
If you’re hesitant to send out a survey but find that you or members of your investment team are frequently in contact with founders, it would also be easy to work those questions into catch-up calls or recurring 1:1s, but be sure to collect the data somewhere as it rolls in. Additionally, if your portfolio is relatively small and you’re just starting to develop an idea of what your platform of support will look like, take the time to do 30-minute meetings with as many of your portfolio companies as you can over the course of a quarter or so. Use any recurring themes or patterns to guide your areas of focus and your future goals.
Create Some Basic Goals and Metrics
Now that you’ve effectively categorized your existing efforts and learned more from your companies about what else they’re looking for, you’re ready to create some goals and metrics for the next year. It’s important to keep your goals simple and achievable, especially in your first year and if you’re adding any new capabilities. You can add some stretch goals, but don’t overextend yourself or your team. You can re-evaluate quarterly and adjust if needed.
In addition, you might find you don’t yet know how to track some goals or what the proper metric for them might be. Don’t include those in your official KPIs or OKRs, but do keep record of them. We’ve found that some metrics reveal themselves over time.
As an example, here are some goals and metrics the M25 Platform Team has explored in recent years:
Talent: X new members added to the talent network quarterly; X calls with prospective talent for our companies per quarter; X posts about open roles on LinkedIn; consistent sending of bi-weekly talent newsletters
Events: X successful happy hours hosted in target cities; X investors attending our annual Club M25 Summit; X dollars raised for our portfolio companies from introductions at our Summit
Marketing/Brand: X% increase in followers on LinkedIn/Twitter/X; X posts per quarter on our blog; X new subscribers to our Midwest Startups Newsletter
General Platform Support: 100% of companies onboarded within 2 weeks of investment; $X in new discounts/portfolio perks per quarter; successful launch of a new quarterly newsletter
Note that some items are simply “did this get accomplished or not?” and others are numerical. That’s fine, especially when adding new capabilities to your platform responsibilities. In some cases, our metrics evolved from “successful launch of X” to more sophisticated metrics as we learned.
These starting metrics and goals will allow you to periodically evaluate what’s working and what’s not. We’ve found that even cases where we didn’t hit our metrics were still valuable for either identifying a better metric or for helping de-prioritize based on capacity, resources, or how useful that goal or metric is or isn’t to our portfolio companies.
Review, Assess, and Repeat
Continue to track and evaluate your goals and metrics quarterly if you can, and if possible, share updates with the investment team as well. Not only does that help demonstrate the value of platform to the rest of the firm, we’ve also found that sharing goals and metrics with the investment team leads to their participation and input in the process as well.
Don’t be afraid to make your goals more or less ambitious as you learn what’s achievable, and if there are any areas of portfolio support that you’re thinking about adding to your platform capabilities, use this model to introduce new programs or initiatives or areas of focus. If any new programs or initiatives gain traction, feel free to add related goals and capabilities, or use the traction to make a case for additional team members to support your efforts.
Also take stock of the macroevironment and adjust the next year’s goals if needed. For example, if you anticipate fewer hires for your portfolio in the new year, you might choose to focus less on talent than you. If you think your companies may need to stretch runway as much as possible, you might consider spending more time on relevant perks, benefits, and credits for software your companies commonly use. If your investment team anticipates lower dealflow in the new year, you might consider working with them to refocus efforts on business development or other operational help within your portfolio. Whatever the case, don’t feel as though your goals and strategies need to stay the same year-over-year.
Your platform team (whether it’s just you or a team of dozens of specialized workers) will grow and evolve over time — make sure you’ve got the strategic framework in place to adapt with it. More importantly, make sure that whatever you’re doing can be explained and measured. It benefits your platform team, but even better, it benefits your portfolio in the end.
Congratulations on making it to the end of 2023! If you’d like to learn more about getting started with your platform strategies in the new year, send a note to Katie — katie@m25vc.com.
For reference: M25 is a sub-$100M AUM venture firm that invests in Midwest-headquartered companies. We have 138 companies in our portfolio and a full-time platform team of 2.
