types of VCs that make great bigco partners
We are passionate about new technologies and its impact on corporate growth, as I’ve written before. We spend alot (too much?) time connecting corporations with VC’s to learn, grow, and test new technologies. Through this, we’ve worked with over 500 funds and we’ve found that there are certain VC’s that make amazingly value-added partners to our corporations and, then, there are some that do not.
There is always alot of latent value in these relationships for both the VC and the BigCo. This is obvious in cases where an introduction from VC to bigco develops into an acquisition of a portfolio company. However, even in the less obvious cases where value takes longer to emerge, maybe months or years after an initial introduction. Over the course of that relationship development, there may be mutual information sharing or beta testing, there might be co-development or referrals to other bigcos. For the VC, this now becomes a long-term relationship they can lean on to do diligence, discover new pain points, and provide more direct introductions for new portfolio companies. More often than not, these relationships take a while to develop, but, at the end of the day, can drive meaningful value.
Given our focus as a strategic fund of funds and the importance we place on meaningful connections for our bigco partners, we look for a few critical factors that help determine whether or not a VC will be a strong partner to our investors.
“We are passionate about new technologies and its impact on corporate growth. We’ve worked with over 500 funds connecting corporations with VC’s to learn, grow, and test new technologies. Some funds are really amazing value-added partners. ”
# 1 among these is HUSTLE (bold, underline, underline, underline!). VC’s come with varying skillsets and personalities, but chief among those that succeed is hustle. Not all VC’s have it and I’m of the mindset that its not something that can be taught or coached. We all see those VC’s that seem to be everywhere, seem to know about every deal, and can hold on when they catch a tiger by the tail. They are both students of their industries and coaches to their portfolio companies. They lean in, they get into great deals, and they eventually emerge from the pack in the lead, but with some bruises and scars. These are the same VC’s that will work tirelessly to connect their companies with potential customers to help them test, build, and scale. And these are the same VC’s that will stay the course to help corporations understand and engage with new technologies. (NOTE: Expect a full length blog on this soon. This is so important it cannot be understated.)
Which leads to…
#2, Steadfast Patience. The speed at which corporations are able to make decisions is quite the opposite of the speed at which startupland operates. Corporations tend to be slow, put up lots of roadblocks, and involve multiple decision makers. While they have a process and get through that process at different rates, it can frustrate the fast-moving, nimble startup and their VC investors. VC’s that have reasonable expectations on the speed of decision making are able to stay the course and act as a patient coach through the process. These VCs win in the end. However, I can’t stress enough how much this takes patience and staying power to get through the hurdles of the corporate decision-making obstacle course.
#3. Experience is key. Most of the VC’s that have the staying power to guide a startup <> corporate relationship have had experience already with these types of interactions. They’ve typically seen the value corporations can provide and, therefore, are able to prioritize relationship building for longer-term value generation. From experience, they know if a relationship doesn’t bear fruit right away, it will over time as the right startup and the right technology comes along. From experience, they are more easily able to see the future state of value from corporate partners.
“They’ve typically seen the value corporations can provide and, therefore, are able to prioritize relationship building for longer-term value generation.”
#4. Platform teams are the most effective. Venture funds that can afford to hire a platform specialist to field needs of portfolio companies tend to be much for pro-active on developing corporate relationships, staying close to their needs and appetite, and providing connections and introductions in a timely manner. Not all VC’s can afford to have platform teams, but as funds grow and scale, it becomes a critical part of helping portfolio companies do the same. It also frees up the time partners otherwise have to spend on corporate development, relationship building, and being pro-active vs. reactive to portfolio company needs. As an LP, I love working with platform teams on relationship building with our corporations as this is what they do, its their core skillset and they typically know how to do it way better than others.