Belle Raab, director of Growth at Visible.vc, defines platform as ‘formalized post-investment support and services that VCs provide to their portfolio companies to help increase their chances of success and differentiate the VC firm’.
Venture Capital (VC) platform is a department within VC firms that encompasses a wealth of different functions and goes by a multitude of names. Depending on the VC and its goals, it might be known as community, business development, network, talent management, or portfolio success.
Whatever name it is given, platform usually encompasses a mix of business development, talent, events, operations, community and network, and content, marketing, and communication
Though the need for value-added services has been discussed and practiced by various VC firms since the 1990s, VC platform and dedicated platform roles weren’t formalized until 2013. In a broad sense, the role of the platform at a VC firm is to provide their portcos with services beyond the usual investment capital and time spent on boards.
Examples of services that VC Platform might offer include:
Large VC firms, such as Andreessen Horowitz, may offer second-to-none platform services to their portcos, while smaller VC firms may not have the budget or expertise to create a platform that truly differentiates them from the crowd.
Whatever the size, age, and experience of your VC, the goals your VC sets, and the value add-ons you offer are entirely individual, and inseparable from your overall goals as a VC firm.
There are three major reasons for the existence of VC Platform:
Ultimately, platform exists to increase a VC firm’s performance. By supporting their portcos beyond the initial capital investment, VCs can improve the performance of their portcos, and therefore the overall performance of the VC firm.
According to VC Platform, there are four essential questions to ask if you want to know if your VC firm is ready to create its own Platform team.
Examining these four factors will help you understand if a VC firm is truly ready for Platform, and what changes need to be made so that your Platform strategy is successful.
Now that you’ve got company-wide buy-in and the resources to ensure an impactful Platform strategy, it’s time to consider setting measurable, timely goals for platform that are also in line with the overall vision of the VC firm.
There are two factors to consider when deciding what goals to pursue: audience and scalability. This can be easily visualized on this simple two-factor model:
Source: The VC Platform Field Guide, 2016
This graph can help you to decide what goals are important to your VC, and define your platform strategy, by helping you narrow your focus and develop a targeted platform strategy based on the overall goals of the VC firm.
Do you want to appeal to an external audience, or turn your focus inward to your existing portcos? Do you want scalable value add-ons that you can roll out to your entire roster of portcos, or do you want individualised and tailored value add-ons that recognize the individuality of each founder and portco?
By following the two-factor strategy model, there are four different Platform strategies that VC firms can use to strategize and set goals for the platform.
Another tool designed to help VC firms strategize, review and design their platform strategy is the VC Platform Strategy Matrix, created by Cory Bolotsky, an experienced VC platform and community consultant.
It lists the 10 components of VC platform and helps you assess and prioritize the current status of these value add-ons within your VC firm. This resource can help you evaluate your current platform ecosystem, set strategic goals, and prioritize platform resource allocation.
Image by Cory Bolotsky
There’s no school for platform. Platform heads come from various backgrounds and are valued as much for their soft skills as their hard business skills. According to Forbes Magazine,
‘The best heads of platform are storytellers who can increase brand awareness to attract capital and make the fund stand out, relationship management pros who work well with partners and are laser-focused on customer success, and people with network mindsets who can identify and connect the dots between people and opportunities.’
If you’re hiring to fill a platform role, it’s important to recruit based on your specific needs and goals. A quick way to assess talent and understand the role better is to look at the resumes and achievements of your competitor’s heads of platform. It’s a relatively simple way to assess what kind of skills and background you might need for the role.
The most important factor is to hire based on your platform strategy. Are you a newer VC looking to build your reputation and word-of-mouth? Someone with a marketing and communications background might be what you need. Do your portcos often struggle with sourcing and retaining talent? Try looking for someone with skills in recruiting and talent acquisition. Your hiring needs will depend entirely on your strategy and goals, which might change over time.
No matter your needs, and the background of your candidates, it’s important for your new hire to have the following qualities:
The biggest strength of recruiting fresh blood for your platform role is the ability of the new hire to bring a fresh perspective to VC firms.
Sourcing talent and vendors can be overwhelming for founders who are scaling rapidly. The Proven platform streamlines and simplifies this process by listing only trusted vendors chosen by you, and completely replaces airtable, spreadsheets and trails of emails that used to define vendor relationship management.
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Proven is used by top VC Firms, such as NEA, NXF Guild, A16Z, Kliener Perkins, Softbank, Sequoia, Redpoint, TrueVentures, and NEA, and many others to connect their PortCos to the best vendors and professional services providers.
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In spite of these challenges, and regardless of what the 2024 economic temperature and marketplace volatility have in store for the business world, your firm can take proactive steps to address them and greatly improve the overall efficiency, compliance, and cost-effectiveness of the vendor relationships your firm and portfolio companies deal with.
There are many ways your private equity firm can improve vendor relationships. From setting clear KPIs to implementing vendor management software, the right strategies can help you make informed decisions and rise above the competition in a changing market.