How can VC firms add value to portfolio companies?

Transcript

Peter Ackerson Hi, I'm Peter Ackerson, and I'm a general partner at Audere Capital.

Maggie Sprenger Hi, I'm Maggie Sprenger. I'm a general partner at Audere Capital.

Peter Ackerson Audere Capital is an early-stage venture company focused on investing in five areas of critical technology that are on the cusp of what we think will be a significant multi-decade long run of impact.

Maggie Sprenger We invest into early-stage technology companies focused on the intersection of national security and priority, deep tech and VC, of course.

Peter Ackerson One of the things that makes venture capital distinct as an asset class is that you can influence the outcomes achieved. So when you look at a bond portfolio or investing in public equities that are huge companies, as an investor, there's very little you can do even at scale to influence the performance of those companies. That's very different than what the landscape looks like when you're a venture investor.

When you're investing in companies that have four or five, ten, maybe 20 companies in the early side and where you take a board seat or even if you don't have a board seat, can have a very active dialog with a company and can be making introductions. You can be advising them on product and technology strategy, sales, and go-to-market strategy, potentially merger and acquisition or acquihire activity. There's an awful lot of things as a venture investor that you can do to be really deterministic about some of the outcomes that companies achieve.

The best venture partners have a very clear understanding of where their strengths lie, whether it is offering operating support and having deep expertise in an operational or a technology capability. There are some firms that are excellent at due diligence, and so the fact that they really do a thorough job attracts other investors to come alongside a company because everybody knows that that's a good signal.

There are others that are great and have deep networks of relevance in terms of supporting portfolio companies with accelerated penetration into a large corporate customer or through a government process or agency. There are others who are very effective at helping businesses prepare to expand internationally or to prepare for an exit, whether that's through a merger process or through an IPO. And so typically what you, you know, what you want to understand when talking to different venture investors is, you know, and it's somewhat stage-specific because there are obviously things that are more impactful earlier versus things that are more impactful later, but understanding what is the superpower of this venture firm? What do they bring to the table? Why would a founder who has a solid business and a great reputation want to be in your portfolio as opposed to in some other venture capitalist portfolio?

I think it's not well recognized outside of the business that we are competing not just for investors to give us money to invest. We are also competing for the opportunity to be on the board or on a cap table at companies. And the better that we can express and explain why we should be on that table, what we can do to help make people successful, what we have done in the past, becomes a very important capability, and other investors also like to understand that. So there are firms that I have certainly called because I go, you know, who would be excellent as the next seat on this board or who has a great reach or had great understanding of this market or who has navigated successfully into through these types of technologies, is this or that firm.

And a lot of the industry functions on that basis. And so I think that's something to really understand. In addition to simply what are you investing into is the broader question of how are you investing, how do you show up for founders, can I talk to some of them and understand what a working relationship has been like?