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Founders often ask about the value early-stage VCs can add
Reflecting on 4 years in venture, I’ve found it generally falls into the below categories
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Reflecting on 4 years in venture, I’ve found it generally falls into the below categories
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1/ strategic advice
VCs work with multiple companies and have seen them through different stages of growth; they can share learnings to augment your strategy and prevent you from making the same mistakes as others (we advise a lot on GTM)
VCs work with multiple companies and have seen them through different stages of growth; they can share learnings to augment your strategy and prevent you from making the same mistakes as others (we advise a lot on GTM)
2/ future financings
Early-stage VCs will have relationships with later-stage VCs so have a sense of the milestones needed for a successful future raise; they can also advise on the best firms/partners for your space
Early-stage VCs will have relationships with later-stage VCs so have a sense of the milestones needed for a successful future raise; they can also advise on the best firms/partners for your space
3/ customer intros
Founders can tap VC relationships to get intros to the right stakeholders at potential customers (particularly for large enterprise)
Founders can tap VC relationships to get intros to the right stakeholders at potential customers (particularly for large enterprise)
4/ recruiting help
Founders can tap their VC’s network for hiring, particularly VP and above or outside board members/advisors; VCs can also help sell candidates
Founders can tap their VC’s network for hiring, particularly VP and above or outside board members/advisors; VCs can also help sell candidates
5/ relationships with service providers
VCs will have relationships with debt providers, law firms, the press, bankers, PR firms, media agencies, real estate brokers, etc. that their founders can leverage
VCs will have relationships with debt providers, law firms, the press, bankers, PR firms, media agencies, real estate brokers, etc. that their founders can leverage
6/ hiring plans + compensation benchmarking
VCs can advise on and provide comparable data for hiring plans based on what they’ve learned from other relevant companies and from databases like VCECS (ie. the going % FDE for VP Eng at your stage/location/sector)
VCs can advise on and provide comparable data for hiring plans based on what they’ve learned from other relevant companies and from databases like VCECS (ie. the going % FDE for VP Eng at your stage/location/sector)
7/ financial model benchmarking
VCs can provide benchmarks for key metrics (retention, freemium conversions, etc.) and orient you on what metrics matter; sometimes they can also help build/tweak the model if you ask nicely
VCs can provide benchmarks for key metrics (retention, freemium conversions, etc.) and orient you on what metrics matter; sometimes they can also help build/tweak the model if you ask nicely
8/ bridge capital
Sometimes things don’t go as planned, your early-stage investors can extend runway so the team doesn’t have to fundraise during a challenging time or accept unfavorable terms from an outside investor; they can also help think through a venture-debt strategy
Sometimes things don’t go as planned, your early-stage investors can extend runway so the team doesn’t have to fundraise during a challenging time or accept unfavorable terms from an outside investor; they can also help think through a venture-debt strategy
9/ events + networking
VCs host events for functional areas (marketing, sales, etc.) and for specific topics (D&I initiatives, etc.) that can provide relevant insights and access to a community of other founders and functional leaders to learn from
VCs host events for functional areas (marketing, sales, etc.) and for specific topics (D&I initiatives, etc.) that can provide relevant insights and access to a community of other founders and functional leaders to learn from
10/ market perspective
VCs can be your second set of eyes monitoring competitor activity and M&A in your space; they may also have relationships with potential acquirers (we recommend getting to know these folks early, reality is most companies get acquired vs. IPO)
VCs can be your second set of eyes monitoring competitor activity and M&A in your space; they may also have relationships with potential acquirers (we recommend getting to know these folks early, reality is most companies get acquired vs. IPO)
11/ voice amplifier
Some VCs have a fairly public presence so can get your announcements out to a broader audience
Some VCs have a fairly public presence so can get your announcements out to a broader audience
12/ trusted ally
Finally, being an early-stage founder can be a hard and lonely job; having someone you trust to bounce ideas off of and RIFF with can be super productive (& help keep you sane
)
Finally, being an early-stage founder can be a hard and lonely job; having someone you trust to bounce ideas off of and RIFF with can be super productive (& help keep you sane
)
