As our portfolio grows I am discovering new challenges of the venture businesses. One of them is being up to date with what is happening across all the companies in the portfolio.
When we started out with the fund — during the first year we made around 5 investments. Our approach was to get involved with the companies we financed. With three partners and five companies we kept close with the founders. It was very easy to follow key metrics, hiring and sales&marketing efforts. With only 5 companies we didn’t really need any fancy tools or workflows. It was more like a close partnership.
As our portfolio grew in the number of companies, I started seeing some new kind of problems/challenges. Suddenly we had many more companies and founders to keep in touch with. Their businesses took on different velocities — some were growing at an expected rate, others needed work around the business model.
At the very beginning we have formed a practical thesis on how we would like to work with portfolio companies. The “tools” we decided on were:
- one 2 one mentoring sessions every two weeks
- operational sessions every 6–7 weeks
- strategic sessions when ever there would be a significant milestone approaching
This platform worked for some time. But as our portfolio grew again, it got difficult to service all the companies the same way with only three partners. Another thing that has changed were the companies themselves. This change forced us to iterate again on our support platform. The companies could be organically devided into three groups:
- no help required
- more pull than push
- close relationship
Another thing that also came somewhat naturally is the division between partners. Each of us is very different and we are drawn to different companies. This has allowed us to allocate some of the companies to each partner. We were back on track with staying up to date. Internally we had our regular portfolio updates so that the information could flow between all the partners.
We have also introduced a new tool to our support platform — portfolio meetups. This was our answer to the growing needs of our portfolio as a whole. We decided to host these internal meetups on topics that were common to most or all of our portfolio companies. These meetups are starting to work really well.
Now we have grown yet again. In order to stay on top of all the companies we work with I feel the need for regular investor updates. As I have experienced it over the last four years — this isn’t something that founders/CEOs like doing. It takes time they could spend on building the product or doing sales. There are millions of excuses for not updating investors on a regular basis. I am sure that many VCs experience a similar reaction from their portfolio companies.
I must say that Marcin Treder (Co-founder and CEO at UXPin) is a master level ninja at investor updates. Once a month Marcin sends out an email with a PDF updating all investors on the current state of the company. The PDF includes key metrics, new reference customers, product updates, challenges, wins and plans. Spending 30min on that PDF is more than enough to be up to date with the company. I wish more founders would do that.
An investor update is not only a good thing for the VC but first and foremost for the founders, and this is why:
- having to prepare a written report makes you think about the business
- it is an opportunity to close the door to your office and leave all the bustle out
- spending few hours reflecting on the past 30 days will give you a chance to see a much bigger picture and check if your ship is sailing in the right direction
- it will also allow you to plan the next 30 days and correct the course if needed
- putting eveything together in a report will structure your thoughts around the key aspects of the business
There are many formats for Investor Updates. I would like to share with you one resource that I find valuable. RRE Ventures (investor at Base) has put together a neat website called www.updatemyvc.com. On this page you will find an email template you can use for your investor updates. There are also some links you can check out. As we are coming to the end of March and Q1, it may be a good time to make use of this resource.
Originally posted at martech.vc