Investors Who Survey the Landscape While Protecting the Focus of Their Startup Teams
Investors must walk a fine line between gathering information for their startups and distilling that into actionable intelligence while still protecting the focus and time their startups must sustain to actively build value.
One of the great values of venture investors is that they see a lot. In fact, they work full-time surveying the landscape. They see hundreds of opportunities for each one they decide to invest in. Their perspective can be incredibly valuable to their portfolio companies because it is like having a competitive intelligence team on the hunt all the time. I appreciate the insights that my VC investors are able to share about the environment for fundraising, the trends in new companies, and others who are seeking to solve the same problems that we are via different routes.
The trick for the VCs is in translating all that perspective into distilled trends that help startup teams understand how their environment is evolving while not distracting them too much with what other people are doing at the expense of what they are doing.
The very reality that it takes practically full-time effort to build up that enormous amount of context that VCs develop also poses a significant challenge. To solve the myriad problems that lead to value creation means that startup teams must maintain a relentless focus on doing what they control to build a successful company. Maintaining that focus means saying no to distractions and not allowing too much time to be spent on exploring the full range of other things going on. Down that path is endless distraction. Here are some food-for-thought suggestions for investors who are seeking to add value to their portfolio companies:
VC investors can play a critical role by gathering information and synthesizing it into valuable nuggets for their portfolio companies. Simultaneously, investors must be attentive to always protecting the focus of their startup teams. Each time they have an idea or question, they should be mindful of whether it is worth it to ask their startup team to focus elsewhere rather than on the critical path. Sometimes the nugget or insight is absolutely worth it, while many times it is not or is only if combined with other information before being shared. Since a VC’s portfolio company executives cannot ignore their investors’ questions and recommendations, it is important that the investors take care to filter their ideas and questions appropriately, so the potential benefits outweigh the costs of distraction and context changing.
Some investors want to make frequent introductions between leaders of different startups, and because of who is asking, we all feel compelled to follow through on those introductions and try to see if there is something to be gained. At the very least, we want to be able to say that we did as requested. My unfortunate experience is that the vast majority of the time, we have one brief meeting. But, if turns out that the two startups are in sufficiently different spaces or are pursuing sufficiently different paths that it ends up being a distraction rather than a benefit for both. While it is usually fun to talk with other entrepreneurs, it is also taxing on our most precious resource – time. Unless it is clear that there is true bilateral synergy to be had, ideally, we would do fewer of these VC-instigated meet-and-greet meetings. There are other groups and opportunities for entrepreneurial leaders to engage with one another as time permits, and many of us genuinely would like to help each other out, but, in my experience, the most fruitful of those relationships develop outside of investors’ nudges as entrepreneurial CEOs encounter and naturally engage one another.
The bottom line is that our VC investors can bring tremendous value by surveying the landscape and synthesizing what they see to help their portfolio companies while wisely still protecting the focus of their portfolio company teams from extraneous distraction.
