The concept of a "platform" may be unfamiliar to some, particularly those new to venture capital. However, the activities involved in platform development have been in practice since the mid-1900s, when the first modern venture capital firm was formed.

Throughout their existence, venture capital firms have driven innovation and economic growth, providing much-needed funding to startups with high growth potential. But over the years, startup founders have come to require a variety of crucial services in addition to capital. These activities are essential for business development and have necessitated the emergence of platforms and platform teams. Although the term 'platform' is relatively new, the activities it encompasses are not.

In this beginner's guide, we'll delve into the fundamentals of VC platforms, exploring their role in the venture capital ecosystem, how they operate, and their significance for fund managers and aspiring heads of platform.

Are you eager to dive in and learn more? You're in the right place.

Let's start with a simple question.

What exactly does a VC platform mean?

In simple terms, "VC platform" is an umbrella term encompassing various pre and post-investment services that funds offer their portfolio founders. When trying to understand VC platform is, the key idea is to think about the term 'value creation' from the perspective of the fund manager and the entrepreneur looking for help to grow their startup.

Most founders today want more than just a check to fuel their startup financially. They are looking for resources, support, guidance, training, and mentorship. Fund managers recognizing this new demand are seeking better ways to differentiate themselves and attract top-notch founders by including desirable post-investment platform services, creating a win-win for all stakeholders.

From a fund manager's perspective, there are three primary reasons to go all-in on building a vc platform today.

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1. Platform attracts better-quality deals. As previously mentioned, founders don’t just need capital - they want to know what value-added services the VC can provide. The more value founders receive, the more they spread the word about the firm. Hence, a VC platform works to improve the firm's reputation and word-of-mouth recommendations. 
2. Increase the chance of startup success by supporting them through their growth challenges, from seed to series A. 
3. Optimize, streamline, and even automate internal workflow, thereby freeing up other partners to focus less on value-add and more on work like sourcing new deals.

The VC fund's platform can take different forms depending on factors such as the size of the fund and the specific needs of its portfolio companies. For instance, a specialized platform may be set up with a large team that is dedicated to providing various services to the portfolio companies. Such a team may include professionals with diverse skills, such as marketing, legal, and financial experts, who work together to offer tailored support to the companies.

In contrast, a generalized platform may be operated by just one individual who carries out a variety of tasks for the portfolio companies. This person may be responsible for performing tasks such as developing marketing strategies, managing finances, and offering legal advice.

Belle Raab, director of Growth at Visible.vc, defines platform as: 

Formalized post-investment support and services that VCs provide to their portfolio companies to help increase their chances of success and differentiate the VC firm.

Depending on the VC and its goals, it might be known as community, business development, network, talent management, or portfolio success. Ultimately, the choice of the platform team and structure depends on the VC fund's strategy and the needs of its portfolio companies.

Why does a VC platform exist, and what does it do?

A VC platform usually encompasses a mix of business development, talent, events, operations, community and network, content, marketing, and communication. While the platform roles are focused primarily on conducting post-investment activities where value creation is becoming increasingly important, many also get involved in pre-investment activities such as branding and marketing to boost the fund's public image.

VC platforms play a crucial role in developing a startup ecosystem within a firm by providing a comprehensive suite of services that streamline and optimize the operations of both the firm and its portfolio companies.

By leveraging the collective knowledge and experience of other successful startups, emerging startups can avoid costly mistakes and accelerate their growth. Through thoughtful investment in a suitable platform, fund managers can ensure that their portfolio companies are putting their resources and energy into the strategies that are most likely to succeed, ultimately leading to greater success and profitability.

How platforms can serve a VC firm:

1) Efficiency:

Platforms can serve as centralized hubs where VC firms can efficiently discover, evaluate, and invest in promising startups. They are transforming the way startups and investors connect and interact. Such platforms provide a wealth of resources and tools that enable VC firms to streamline their investment process and identify high-potential opportunities more quickly and effectively.

By leveraging the platform's advanced algorithms, analytics, and data-driven insights, VC firms can make more informed investment decisions and maximize their returns. This eliminates the need for extensive manual research and accelerates the due diligence process, allowing VC firms to focus more on building relationships with founders and growing their portfolios.

2) Deal Flow Management:

For any venture capital firm, deal flow is a crucial part of pre-investment activities. It involves identifying and evaluating potential investments before they are made. However, this process can be time-consuming and complex, especially for firms that receive a large volume of potential investment opportunities.

Some VC platforms offer a more structured framework for managing new deals to simplify this process. Such platforms can help firms track the progress of potential investments, communicate with entrepreneurs, and prioritize investment opportunities based on their criteria and portfolio objectives. By using these platforms, firms can streamline their deal flow process and make more informed investment decisions.

3) Portfolio Management:

One of the primary reasons for a VC platform is portfolio management post-investment. The platform works to provide a comprehensive suite of tools and resources to the startup founders. The platform team is tasked with the responsibility of developing a platform strategy that best serves all stakeholders, ensuring specific non-investment functions are effectively handled for the young founders.

One of the most crucial services provided by the platform professionals is monitoring the performance of all portfolio companies. This includes tracking key performance metrics, such as revenue growth, customer acquisition, and retention rates.

In addition to monitoring performance, the platform function also facilitates communication between investors and entrepreneurs. This is critical for building strong relationships and ensuring that all parties are aligned on the goals and objectives of the investment.

Platforms often offer features such as messaging and video conferencing, enabling investors and entrepreneurs to communicate seamlessly and stay connected.

Another key service provided by VC platforms is vendor management, an aspect that's often time-consuming, confusing, and a potential money suck for entrepreneurs who often don't know what the right tech stack is for their current needs or the right service providers to contract. By developing the right platform strategy and integrating solutions that help streamline these mission-critical relationships, portfolio, and firm management become less daunting and more systemized.

4) Community Building:

In recent years, the concept of building community as a value-add has taken root in the VC industry. Platform support that fosters a sense of community among VC firms, entrepreneurs, and other stakeholders in the startup ecosystem is now a must-have. This is one of the more sustainable measures many venture firms are taking to ensure growth and collaboratively elevate all players within the fund.

Through networking events, discussion forums, and collaboration opportunities, these platforms facilitate knowledge sharing, mentorship, and partnership-building, ultimately enriching the VC firm's experience and expanding its network of contacts and resources.

The Role of Head of Platform in VC

The success of a VC platform is highly dependent on the effectiveness of its leadership, and the Head of Platform plays a crucial role in driving growth and success of the platform. This key position is responsible for overseeing all aspects of platform operations, including managing and coordinating relationships between entrepreneurs and investors.

The Head of Platform is also responsible for ensuring that the platform team remains an indispensable resource for all stakeholders by constantly improving its services and offerings. To excel in this role, the Head of Platform must possess exceptional leadership and management skills and have a deep understanding of venture capital and the startup ecosystem. Moreover, the ability to effectively leverage technology and data analytics is essential for staying ahead of the curve in the ever-evolving landscape of the VC industry.

💡Learn more about what it takes to be head of platform: What hiring managers look for in a head of platform

Where the opportunity lies for those interested in a platform role:

Did you know that getting hired for a platform role is one of the few ways a non-investor can join the game of venture capital, even at larger funds?

Whether you're experienced in marketing, human resources, sales, talent acquisition, or whatever your career path has been thus far, you could join the ranks of other platform specialists, provided you can clearly identify and articulate a value proposition that aligns with the firm you'd like to work with.

And if you're wondering what kind of opportunities there are, consider the most common platform goals that most firms tend to have. To aid you in this, let's explore a tool that's widely used by many VC firms and heads of platforms to determine their platform strategy.

Cory Bolotsky, director at VC Platform, created the Platform Strategy Matrix to help firms better understand platform development and the categories they may need. It contains valuable information that can help firms make better decisions when developing platforms.

The matrix is easy to use and understand, making it a valuable resource for firms of all sizes. Best of all, it can aid you in understanding what a VC platform is and how to build one if you were given the assignment.

The ten components of a great platform strategy:

Cory Bolotsky, a leading expert in developing platforms, has meticulously outlined a comprehensive framework that identifies ten crucial components that are essential for any platform initiative, regardless of its fund size.

Each of these ten components aligns with one of the five stages of development, allowing fund and platform leaders to easily assess their current status in each category. By doing so, they can determine which areas require prioritization, identify any gaps that need to be filled, and ascertain which platform roles need to be hired to deliver maximum value to the portfolio companies. This framework is a valuable tool for those seeking to create a successful platform that can effectively serve the needs of their portfolio companies.

Category 01: Scouts & Venture Partners

The fund has a program to select well-connected individuals with good investment judgment to source investments. These individuals may also have direct capital to invest.

Category 02: Content

The content aims to build a brand and establish thought leadership for the firm through written articles or podcasts. It shares opinions, best practices, and educational information on relevant topics.

Category 03: Fellowships & XIRs

Programs that attract highly skilled individuals who receive support, space, and funding in exchange for supporting the company and its portfolio.

Category 04: Incubators & Office Space

A program offered by the firm to give free office space, programming, mentorship, funding, and curriculum to early-stage startups and individuals.

Category 05: Events & Workshops

Organize dinners, workshops, webinars, and social events to support portfolio companies and the startup community.

Category 06: Online Forums &Platforms

Online forums and platforms are digital communication channels, including email listserves, Slack channels, social network groups, and custom online platforms. They connect a firm's portfolio companies or functional peer groups and provide them with resources and a community of contributors for peer support.

Category 07: Expert Networks

Expert networks are groups of experienced executives and entrepreneurs who mentor and advise portfolio companies and potentially may get recruited for executive roles.

Category 08: Corporate Relations

Connect portfolio companies with Fortune 500 decision-makers as potential customers and partners.

Category 09: Talent

Provide portfolio companies with direct recruiting support, training, and resources to help them hire qualified individuals who align with their hiring priorities.

Category 10:Expertise As A Service

Expertise as a Service involves providing portfolio companies with specialized design, finance, marketing, and strategy services. These services are offered by internal consulting and service-based organizations, either for free or for a fee, and are provided by subject matter experts who offer tactical support beyond what board members typically provide.

Examples of successful platforms and what makes them successful

1) Backstop

Backstop Solutions provides an all-inclusive cloud-based platform specifically designed to simplify operations, improve productivity, and facilitate better decision-making for alternative asset managers, particularly venture capital firms.

By offering VC firms a comprehensive platform to streamline their operations and improve their decision-making capabilities, Backstop Solutions enables these firms to achieve greater efficiency, transparency, and value across their entire investment lifecycle.

Here's why Backstop Solutions is a successful platform solution for VC firms:

1. Centralized Data Management: Backstop provides a centralized platform for managing critical data related to investments, portfolios, contacts, documents, and communications. The platform serves as a single source of truth, enabling VC firms to consolidate and organize data effectively, reduce data silos, and improve data accessibility and accuracy.
2. Deal Flow Management: Backstop offers deal flow management tools that allow VC firms to track and manage investment opportunities from sourcing to execution. The platform provides deal pipeline tracking, deal evaluation workflows, collaboration features, and document management capabilities, helping firms streamline the deal origination and execution process.
3. Investor Relations and Fundraising: Backstop supports VC firms in managing investor relations and fundraising activities efficiently. The platform offers investor relationship management (IRM) tools, fundraising CRM, capital raising analytics, and investor portal capabilities, enabling firms to nurture investor relationships, track fundraising progress, and communicate effectively with investors.
4. Portfolio Monitoring and Reporting: Backstop facilitates portfolio monitoring and reporting for VC firms, providing tools to track portfolio performance, analyze investment metrics, and generate customized reports. The platform offers performance measurement, attribution analysis, benchmarking, and reporting automation features, enabling firms to monitor portfolio health, track investment returns, and report to stakeholders effectively.
5. Document Management and Compliance: Backstop includes robust document management and compliance capabilities to help VC firms manage documents, contracts, regulatory filings, and compliance requirements. The platform offers document storage, version control, document workflows, and compliance tracking features, ensuring firms adhere to regulatory requirements and maintain compliance standards.
6. Integration with External Systems: Backstop integrates seamlessly with external systems and software tools commonly used by VC firms, such as accounting software, CRM systems, market data providers, and document management platforms. This integration ensures data consistency, streamlines workflows, and enhances productivity across different functions within the firm.
7. Scalability and Customization: Backstop's platform is scalable and customizable, allowing VC firms to tailor the platform to their specific workflows, preferences, and business needs. Whether managing a small portfolio or a large and diverse set of investments, firms can adapt Backstop's solution to accommodate growth and complexity over time.

Source: Information gathered from Backstop Solutions' official website, customer testimonials, and industry publications.

2) Carta

Carta has established itself as one of the leading solutions for portfolio management in the venture capital industry. As a cloud-based platform, Carta empowers venture capital firms with the tools and features they need to streamline portfolio management, from tracking investments and valuations to managing cap tables and investor relations.

With Carta, venture capital firms can gain a comprehensive overview of their portfolios and make data-driven decisions to drive growth and success.

Here's why Carta is a successful platform solution for portfolio management:

1. Comprehensive Portfolio Management Tools: Carta offers a suite of tools specifically tailored to the needs of venture capital firms, including portfolio tracking, cap table management, valuations, and financial reporting. These tools provide VC firms with a centralized platform to monitor the performance of their investments and make informed decisions.
2. Real-Time Data Updates: Carta provides real-time updates on portfolio performance, allowing VC firms to access the latest information on valuations, ownership stakes, and other key metrics. This real-time visibility enables firms to stay agile and responsive to market changes, facilitating proactive portfolio management.
3. Streamlined Cap Table Management: Carta simplifies cap table management, allowing VC firms to easily track ownership stakes, equity transactions, and dilution effects across their portfolio companies. This streamlined process reduces administrative burden and ensures accuracy in managing complex ownership structures.
4. Investor Reporting and Communication: Carta offers investor reporting tools that enable VC firms to communicate effectively with their limited partners and stakeholders. The platform provides customizable reporting templates, secure document sharing, and investor portals, facilitating transparent and efficient communication with investors.
5. Integration with External Systems: Carta integrates seamlessly with external systems and software tools commonly used in the VC industry, such as accounting software, CRM systems, and financial data providers. This integration enables smooth data flow across different functions, eliminating manual data entry and ensuring data accuracy.
6. Compliance and Security Features: Carta prioritizes data security and compliance, offering robust security features such as role-based access controls, encryption, and audit trails. The platform complies with industry regulations and standards, providing VC firms with peace of mind when managing sensitive financial information.

Source: Information gathered from Carta's official website, customer testimonials, and industry publications such as TechCrunch and Bloomberg.

3) Proven

Proven's platform provides comprehensive vendor management capabilities along with other functionalities specifically designed for alternative investment firms, including venture capital firms of all sizes.

Here's why Proven is a successful vendor management solution for VC firms:

1. Vendor Relationship Management: Proven provides tools for managing relationships with vendors and service providers. The platform allows VC firms to centralize vendor information, track communication history, manage contracts and agreements, and monitor vendor performance effectively.
2. Vendor Onboarding and Due Diligence: Proven streamlines the vendor onboarding process by automating workflows and documentation requirements. The platform facilitates due diligence on vendors, including background checks, compliance verification, and risk assessment, ensuring that firms engage with reputable and reliable vendors.
3. Contract Management: Proven offers robust contract management capabilities, allowing VC firms to store, track, and manage vendor contracts and agreements securely. The platform provides features for contract lifecycle management, including creation, negotiation, approval, and renewal, ensuring compliance with contract terms and deadlines.
4. Performance Monitoring and Reporting: Proven enables VC firms to monitor vendor performance and track key performance indicators (KPIs) effectively. The platform provides dashboards, reports, and analytics tools that allow firms to assess vendor performance, identify areas for improvement, and make data-driven decisions regarding vendor relationships in real-time.
5. Integration with External Systems: Proven integrates seamlessly with external systems and software tools commonly used by VC firms, such as accounting software, CRM systems, and document management platforms. This integration ensures data consistency, streamlines workflows, and facilitates seamless communication with vendors and other stakeholders.
6. Compliance and Risk Management: Proven helps VC firms manage compliance and mitigate risks associated with vendor relationships. The platform offers features for regulatory compliance, risk assessment, and audit trails, ensuring that firms adhere to regulatory requirements and industry best practices when engaging with vendors.
7. Scalability and Customization: Proven is scalable and customizable, allowing VC firms to tailor the platform to their specific workflows, preferences, and business needs. Whether managing a small number of vendors or a large and diverse vendor network, firms can adapt Altvia AIM to accommodate growth and complexity over time.
8. Cost optimization and Exclusive deals: Proven saves VC firms and their portfolios money by offering exclusive deals with hundreds of popular third-party service providers and SaaS companies. It tracks and monitors all deals to help your team keep track of redeemed packages and cost savings.
9. Startup-community building: Proven provides a platform for peer-to-peer reviews, allowing users to rate vendors and access the best solutions available. It also offers a space for companies to communicate with each other, share tips, and exchange vendor experiences, creating a collaborative community across the entire portfolio.

Source: Information gathered from Proven's official website, customer testimonials, and industry publications.

Conclusion

Whether you're an aspiring platform professional looking to build your career or an investor interested in developing a platform function within your fund, it's important to gain a better understanding of what a VC platform is.

At its core, a VC platform is essentially a set of value-added services provided by venture capital firms to their portfolio companies, which helps them to grow and succeed. These services can include anything from marketing and branding to recruiting and customer acquisition. In today's venture capital landscape, having a platform is crucial to the success of both funds and portfolio companies.

Venture funds of all sizes are starting to realize the benefits of investing in the right platform strategy and having core team members who can execute the game plan.

Fund managers have an array of options at their disposal, with new platforms for pre and post-investment activities emerging daily. These platforms can assist with everything from deal sourcing to vendor management and much more. Your specific platform goals, the needs of your startups, and the overall objectives and vision of the firm should inform the platform solutions your firm chooses.

To maximize the potential of a VC platform, it's essential for both fund managers and aspiring platform team members to realize that the most successful post-investment platform services concentrate on creating an ecosystem and member community for their startups.

At the heart of every platform should be the intention to lighten some of the heavy burdens and obstacles that typically impede growth and efficiency during those critical years of business growth. And with that comes the need to establish and maintain relevant relationships. This requires effective communication and win-win solutions that positively impact founders and fund performance.

So, whether you're an investor or a platform professional, now is the time to get started.

Recommended Read: Why VCs need to hire a head of platform

Recommended Resource: 11 things you can do today to build an engaged founder community

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