How can you increase value in your portfolio companies? (2024)

Key takeaways from this article

• Boost metric velocity:

  Focus on increasing the speed at which your portfolio companies achieve key performance indicators. Quicker growth, efficiency, and customer satisfaction can skyrocket value without much added cost.

• Harness expert networks:

  Connect your companies with a global pool of experts. Their guidance can shape strategies, pivot operations effectively, and open doors that might otherwise stay closed, fostering growth and innovation.

This summary is powered by AI and these experts

• Katrina Klier CEO | GTM Leader | CMO | Former…
• Helen McCormack Founder and CEO @ Voitheia BioScience…

• Helen McCormack Founder and CEO @ Voitheia BioScience Ltd | Clinical-stage biopharmaceuticals

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  Having a network of various global experts to support the asset growth is pivotal to success. This expertise can help shape, pivot when necessary and provide 'smart money' necessary for companies in their development strategy. By working together, in synchronicity can often lead to lasting and beneficial relationships, and doors that would often remain closed, can be opened and stay open. Ultimately, investors require a return on their investment, and working in partnership can lead to the vision, goals and expectations for the company being met. Open and honest communication from day 1 is key, trust and support will be achieved and a word of advice to founders - accept the help!

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• Fazlur Shah LinkedIn Top Voice| Love writing on Startup and Venture Capital| Startup Advisory| Growth-stage Investing | Investment Banking| Fundraising| Deal Sourcing| Venture Capital|

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  A VC can increase value in portfolio companies like this:Example: VC Firm & E-commerce StartupStrategic Guidance: Suggest expanding into niche markets, like eco-friendly products.Network Access: Introduce the Startup to major retailers for distribution partnerships.Operational Support: Streamline supply chain for cost-efficiency.Talent Recruitment: Help hire a CMO for marketing expertise.Fundraising Help: Connect with other VCs for Series A/ B funding.Exit Strategy Planning: Plan for acquisition discussions with a large e-commerce player.Risk Mitigation: Navigate regulatory changes for international sales.By offering more than just capital, the VC Firm increases Startup's value, aiding its growth and profitability.

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  Increasing value in venture financed portfolio companies is a decision point…Is the company’s strategy and business/operating model working? If yes, do nothing but listen, refer business, and review the financials. If the answer is no, start playing Socrates… have more frequent discussions with the founders and ask them probing questions about business challenges. For example, what do our largest customers like and dislike, what is the size of the untapped market that is a similar to our largest customers, are we in the right market with the right solution…why or why not. These are easy questions…the answers require some thought, data, and analysis. We have found being more than a Capital Partner is appreciated.

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• Geraldo Lamounier Managing Partner at ETRNTY Family Office

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  The importance of looking at a portfolio as a whole, you gain a comprehensive view and complete understanding of its content and purpose. This allows you to identify connections, patterns and interactions that might not be obvious when looking at isolated parts alone.

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• Jack Eadie Venture Capitalist

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  Alignment of vision is critical to success for both founders and venture capital investors. Importantly both investors and founders should be transparent with desired outcomes upfront. Ensuring all are bought into an outcome and will continue to be focused on delivering the outcome over time. All decisions the business takes should be guided by this future ouctome focus. Most VC funds are looking to back companies which deliver outlier returns and return the fund. At later stage rounds, I think it can help to align founders to deliver larger outcomes if they have had secondary capital in a transaction.

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• Jivraj Singh Sachar India's #1 Business Podcast - Indian Silicon Valley || General Partner @ISV Capital ($5Mn / 30 Startups / $150K Cheques) || Venture Partner @Tribe Capital || Startup Enabler @Masters' Union || Ex AngelList India

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  As a podcaster, I have access to a larger community of people who can help with a lot of things. It is important to have a pool of resources in your network. If you keep track of how you can help them, you will understand a lot of things. This will teach you a lot of things and a repository of knowledge. This will help you understand deeper insights before investing.

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• Katrina Klier CEO | GTM Leader | CMO | Former Accenture, Microsoft, HP | Board Director | NACD.DC Directorship Certified | Private Directors Association

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  Having a network of various experts to support the portfolio company's growth is very helpful. These experts can help shape, fix, or build the needed processes and approaches inside the company. Also a network of influencers and buyers to drive top line growth can accelerate value creation.

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  One easy way to help is introducing them with people who they can hire, good companies will be hiring at some point and that is where you can really help.

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• Usama Qamar Nizami Investment Lead - Equity Markets | Fixed Income | Venture Capital

  (edited)

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  Good founders need to be open to input from investors, who may have a broader view in terms of the sector or economic landscape. Investors might have insights on why certain strategies have worked for companies in other geographies or why something may not work in case of the founder's home market. For markets where the vc ecosystem is young, investors can also help founders access capital much more easily.

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• Heinz Sohm CEO @Blind Creator || Latitud Fellow LF9 || Fintech || Creators Economy || Growth || Product || Entrepreneur || Data Scientist || Angel Investor

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  The power of having a give first mentality helps you find opportunities from unexpected sources. You never know when an intro can be a huge win for your portfolio company

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• Katrina Klier CEO | GTM Leader | CMO | Former Accenture, Microsoft, HP | Board Director | NACD.DC Directorship Certified | Private Directors Association

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  Yes, key metrics measurement is very important. Equally important is the rate or velocity of achievement of key metrics. How can you scale faster? How can you be more efficient? How can you improve customer experience with minimal extra cost? How can you remove friction in any given process? Velocity and impact drive value.

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  While monitoring & measuring the KPI's is important to quantify the growth track. But, having a clear understanding of which KPI's are relevant and defining realistic benchmarks around them is crucial to have a precise visibility of venture trajectory.

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• Raj Snehil Juneja Building Tribe Capital- India | Ex-McKinsey | LSE

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  The question to ask yourself as a VC is what do I bring to the table other than capital? It could be skills around fundraising, product positioning, marketing or customer acquisition strategies. Having good social presence also helps portfolio founders. Whether that's your network on linked in or a podcast, it all adds upto value additive services which demonstrate your true value.

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• Ali Tahir, CFA, CAIA

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  Be the source or forum for shared inspiration: Find synergies between the companies that are in your portfolio. It is inevitable that some may not survive over time, but entirely possible that they might improve their chances through collaboration or through combination. Apart from shared resources and insights, there are opportunities to work on joint initiatives.

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• Jason Barnes Senior Director | Kane Russell Coleman Logan PC | Business Transactions and Securities

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  In many cases I have seen significant upside or time wasted as a result of mismatches between portfolio companies and the service providers the VC can employ. In as many or more cases I have seen portfolio companies desperately in need of better service providers that lack the access or time to find or engage with them. Some of the highest leverage services I have seen employed, in the right circ*mstances, are business development and/or customer-facing service support. One VC I represented integrated all portfolio companies into a network of interconnected service providers and actively developed business amongst them. Very powerful engine for rapid growth following an investment.

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• Katrina Klier CEO | GTM Leader | CMO | Former Accenture, Microsoft, HP | Board Director | NACD.DC Directorship Certified | Private Directors Association

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  Be clear on whether you're providing passive capital (classic investor who writes a check and leaves it mostly to management from there) or active capital (expect to shape or at least influence the strategy and operations of the company)

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  Enhancing portfolio companies requires hands-on engagement. Offering tailored services like legal advice, financial planning, or marketing strategies can make a substantial difference. Consider forming partnerships with industry experts or using in-house resources to provide these specialized services, aligning with the company's growth stages and unique needs.

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  Collaborative creation of Intellectual Property within the company is essential. Intellectual property assets are crucial signals sought by investors. Furthermore, IPAs feature on the company's balance sheet for accounting/net asset worth computation and can serve as loan collateral.

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• Katrina Klier CEO | GTM Leader | CMO | Former Accenture, Microsoft, HP | Board Director | NACD.DC Directorship Certified | Private Directors Association

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  Innovation and experimentation are good in general. They tend to produce the best results when focused in areas connected to the company's strategy and measured in a meaningful way. Without this, innovation and experimentation can be distracting; syphon off valuable resources that slow down core value creation; and confuse the marketplace and employees. Focus is your friend.

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  Culture is super important so along with measuring and evaluating the metrics investors need to be putting some metrics on innovation culture in the company. This is often ignored

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  Innovation & experimentation are necessary to consistently evolve the offering and keep the venture relevant in the market by ensuring the changing customer needs are being constantly met.

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• Yuriy Romanyukha

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  As venture capital investor, it's vital to prioritize collaboration with co-investors beyond just the due diligence phase, extending to partnerships with portfolio companies. Engage actively with all co-investors throughout your portfolio.Undoubtedly, your co-investors possess industry knowledge and connections that can greatly benefit your portfolio companies. The essence of investment isn't solely financial; fostering strong relationships with both founders and co-investors can pave the way for future opportunities.

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• Marco Arcari Professor,CEO, MoB

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  In my opinion, metrics, scalability, etc. are not so important. It's an old way of thinking that was already old when I managed an investment fund 20 years ago. What matters most is the possibility of allowing the investee portfolio to interact in a coordinated manner, almost as if it were a holding company, with the important caveat that since it is a question of different shareholdings in each investee company, it is only thanks to special software that you can get good results. In this case, the boost deriving from the participation of a new shareholder will not only be money (hypothetically) but a valuable aid in accelerating the growth of the single company and at the same time of the portfolio.

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• Johan Richards Business Advisor | Angel Investor | VC Partner | Startup Founder | Board Director | Executive Coach | Mentor | Mediator

  (edited)

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  The two biggest challenges for the venture capital asset class are scale and access. Scale: how to effectively source and evaluate the extremely large volume of deal flow that exists in order to identify the top vc deals; Access: how to secure allocations in the top vc opportunities and the most competitive rounds alongside the best-performing investors.In order to b successful vc funds need to over real value to investors as well as the portfolio companies. It is essential to maintain a balance between these two stakeholder groups. The ability of the fund and its partners to maintain the balance while it overcome the Scale and Access challenge will determine the success it achieves for investors and portfolio companies alike.

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