The One Thing Accelerators, VC & PE Firms Must Do Now

June 19, 2019

Running a company is lonely.

You need advice, help, empathy, camaraderie and that feeling that you’re part of something bigger. But instead you’re surrounded by people who want to know everything’s okay, and that if it’s not okay, that you’re “on it.”

I know the power of a supportive network. I’ve been an entrepreneur, a VC, worked in private equity and now do startups again. When I did Jive, there was no network to help me. I had to cobble together resources on my own.

When I was a Board Partner at Andreessen Horowitz I witnessed the birth of the “VC as platform” phenomena. They assembled a massive community of execs, coders, founders, buyers, recruiters, experts and everyone else needed to make a startup successful. That model is now the basis of great investment firms.

Even though this idea has taken root, I still see many VC’s, Accelerators and PE Firms thinking about their network as a glorified email group — an afterthought. It’s an incredible opportunity for a firm to differentiate their offering in a VERY crowded ecosystem, boost the likelihood of portfolio success, keep tabs on the market, save themselves time (from doing all introductions directly), source deals and just do the right thing for founders. And they’re blowing it.

Yes, I’m selling a solution. But I’m passionate about this idea. It’s the right thing to do, whether it’s with Mobilize or you build your own. A community moves you from being a checkbook, boardroom pontificator and occasional-introduction-maker into a thriving, supportive ecosystem.

I hosted an event recently on Building Powerful Portfolio Networks with some smart people who have done this work: David Wehrs (Bessemer), Ron Yerkes(Former SAP.iO Fund & Foundry), Anne Cocquyt (Founder & CEO at The Guild) and Mike Kreaden (Salesforce Accelerate). I acquired some great ideas from them and have assembled with our own below.

How do you build an amazing network?

  • Hire a Great Leader: A full-time community manager is ideal. Half-time is okay. But no less. Someone needs to be preparing the community, and ensuring all parties are getting the right content at the right time, staying engaged, playing by the rules.
  • Blend Live with Virtual: Live events are great for forming bonds. But engagement can fall off a cliff afterwards. You need to ensure the community integrates with those events to bridge the gap between the offline and online.
  • Allow for Off-topic Discussions: Support the ability for members to go off the books and talk about what’s really going on for them, whether in private or public conversations. It drives the sense of belonging they need to stay engaged.
“Make it natural to go from public to private conversations.” — Mike Kreaden
  • Support Organic Networking: Help people find each other through rich profiles, search and the ability to engage each other in private connections. If I want to find “CFOs with an interest in blockchain” or “advisors who know GDPR” it should be easy.
“Make it incredibly easy for them to network amongst themselves. They all have unique abilities. Just get out of the way and let it happen.” — Anne Cocquyt
  • Make it Easy: People are busy. Let them just use email or a mobile app if that’s what works best. Don’t force them to authenticate on a browser and learn a new tool.
  • Focus on Talent: This is the biggest element of whether a startup thrives or dies. Make it easy for people to post job opportunities, share prospects and ideas for recruiting. The bolder firms can even allow talent to be a part of their network and connect with portfolio companies to express interest through this “pre-vetted” format.
“Hiring, hiring, hiring. The portfolio network won’t thrive without talent.” — David Wehrs
  • Support the Lifecycle: Align to the startup’s goals and help with future funding rounds, with built-in support such as content, advisors and even outside investment firms. See Mike Kreaden (16:20 in the video) from Salesforce Accelerate talking about a portfolio company getting Series B meetings without involving the Accelerate team.

How do you measure success?

A healthy community will contribute to a firm’s traditional success metrics (IRR, TVPI, etc.), but how do you dig deeper to know if your network is working well? Here are a few key measures to monitor:

  • Connections: In addition to traditional engagement metrics, pay close attention to the behind-the-scenes networking connections being made and number of private conversations. See Figure 1.
  • Belonging: How connected do people feel? What would it be like to not have the community? We use the concept of a “Member Belonging Index” and also look at member commitment over time.
“One of the biggest benefits is helping entrepreneurs not feel so alone. They have so much on their shoulders and often feel like they are the only ones who feel that way.” — Ron Yerkes
  • Engagement: How active is the community. Beyond just numbers of posts and replies, look at all activities compared to the relative size of the community, how users stack up in categories of engagement (leaders, participators, passives, etc.). Firms on our platform see a wide range: between 21–90% engagement across their members (measured by how many users are actively participating on a quarterly basis). The difference is based on how serious the firm is about community and how they structure their network (e.g. accelerators that only include their current class will have very high levels). See Figure 2.
  • Question Resolution: Are founders getting their questions answered? The ideal ratio to look at here is the number of comments to posts. Healthy communities see about 3 comments for each post. See Figure 3.
  • Event Attendance: How active are your events? What percentage of members are attending events? How is it improving?
“Two events per year for each group is perfect.” — David Wehrs

Just like selling products in this era, great investing is no longer just a financial exchange, but a human one. Help founders and leaders be better people and success will follow.

By creating a supportive environment, founders will be connected to you for life, and not only drive financial outcomes, but help the firm however they can. They will feel part of something larger, and nothing builds loyalty more than that.

The metrics above are an illustration of that connection — the strength of your network. And that is the heart of the successful firms of the future.

VC investment is now 20X the levels it was in 1996. PE growth is even higher. There’s too much money and too much competition to invest. Not all firms will survive when the returns start rolling in. Now is the time to embrace the future and build a great network.

Figure 1: Net Connections
Figure 2: Engagement Levels
Figure 3: Posts to Replies Ratio

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