For Fund Managers: Decoding the VC Platform role
At first glance, a VC platform may not seem like a big deal to fund managers, but having a solid platform strategy is quickly becoming a criterion that LPs look for when deciding who to invest in.
Why the sudden talk about platform roles within a VC firm?
Much of it has to do with the growing evidence that funds that go that extra mile to become exceptional partners to their founders tend to rise to the top quicker.
If that piques your interest and you're currently looking into investing in a platform team, this post is for you.
Why does the platform role exist, and how can it benefit VC and portfolio companies?
A VC platform role is essential to the VC ecosystem. It provides a bridge between startups and the larger financial markets, supports the growth of companies, and helps them scale up.
To help you better understand current role of the Platform, we'll discuss the general and functional type of role, different VC platform Approaches, Hiring your Platform crew, writing a platform role job description, and setting up your team for success.
The support structure your startups need:
Platform roles are invaluable for helping founders identify potential partners and build relationships with industry leaders.
This is also where founders receive guidance on legal and regulatory matters which often helps them avoid costly mistakes. But even more critical is the assistance a startup gets when working out its marketing strategy, mapping out its go-to-market game plan, and choosing its tech stack.
With the increase in competition in the VC space, the need to differentiate and demonstrate that your fund has that winning edge has become necessary.
Focusing on business development and setting up a platform team that will enable you to support founders with talent, business development content creation, and more could be the thing that gives your fund a winning formula.
General vs. function-specific platform roles
The two main approaches to Platform are a general Platform and a function position. Each has particular requirements of its own.
The general Platform role includes strategy, setting up and marketing the fund's services, ensuring customer success, developing metrics and KPIs, program management, and possibly building a crew.
The path to a function-specific job is more clearly defined than a general Platform role. Candidates for function-specific positions come from a wide range of industries. Still, their backgrounds are more or less in line with how they support portfolio companies and the fund. A few of these are product development, event planning, marketing, talent, and business development.
The TOPSCAN VC platform approach
VC fund managers take different approaches to Platforms based on resources, portfolio needs, and strategies. Each approach has advantages and disadvantages. The proper method for a particular fund manager will depend on their business model, financial goals, and individual risk tolerance. While there's more than one way to map your platform strategy, we will cover the TOPSCAN method, as it serves as a valuable tool to draw from as you define your game plan.
The TOP SCAN METHOD is a venture capital platform approach that focuses on identifying and funding innovative startups that have the potential to be successful. This approach utilizes a combination of quantitative and qualitative analysis to identify promising opportunities.
The focus is on discovering startups that have the potential to be disruptive, those that hold a competitive advantage, and demonstrate a clear path to profitability.
The framework includes seven essential management techniques:
- Team building: creating and forming human capital, the most valuable asset
- Operations: establishing the framework for the organization's administrative and business processes, such as its legal or accounting capabilities
- Perspective: determining the scope of the product and the business's competitive positioning on the target market
- Skill building: actively supporting the managerial expertise of startup entrepreneurs, which is necessary for the transformation of the startup idea into a rapidly expanding professional company
- Customer development: identifying and contacting the target customer segment
- Analysis: the performance of the startup is appropriately measured, understood, and reported
- Network: access to the investor's networks, particularly to potential customers and future investors
The unique characteristics of a startup investment—investment into highly uncertain projects in a fast-moving business environment, combined with the factor of technology-oriented first-time entrepreneurs makes this approach one of the best ones for early-stage startups. In light of this, proactive and standardized use of the TOPSCAN framework may add significantly to the value of the portfolio companies.
The TOPSCAN METHOD begins with a rigorous evaluation of potential projects. This includes an analysis of the team, the technology, the market opportunity, and the financials. During this stage, the venture capital platform roles will evaluate the startup's potential for growth, the risk involved, and the potential return on investment.
Once the evaluation process is complete, the head of platform will create a customized investment strategy to ensure the project's success. This includes providing resources, capital, and mentorship. The venture capital platform will also ensure the startup can meet its milestones and reach its goals.
If you're looking for a practical and easy to implement methodology for your platform, consider the TOPSCAN METHOD. What we most like about this approach is that it ensures the investments made in the startup are best allocated to the right resources and can provide a high return on investment. You can learn about this TOPSCAN METHOD for your platform strategy here.
How to hire your platform team for your VC community
Hiring the right team to execute your VC platform strategy is the second half of your success equation, the first of which is figuring out what system you'll deploy. The team should comprise individuals with the skills and experience to help your venture reach its goals. Here are a few tips for finding and forming the best team for your VC platform:
- Do your research:
Take the time to research the various VC professionals and firms that are available to you. Look for those with the experience and expertise that fit your venture capital industry's goals and needs. Assess your existing team members who are relationship management pros, as they could be the first hire.
- Ask your network for referrals:
Contact your network and ask for referrals from people with VC experience. This can be a great way to find qualified candidates with the skills and insight necessary to attract capital for your venture.
- Look for essential qualities:
As you search for potential team members, look for certain essential qualities. These include strong communication skills, a deep understanding of the VC industry, marketing prowess, and a creative approach to problem-solving.
- Interview several candidates:
Once you have a list of potential candidates, take the time to interview each of them. The interview will allow you to assess the candidate's credentials and experience, ask any questions you may have, and learn more about them in person..
- Consider the cost of post-investment support:
Remember to factor in the expenses when building your VC platform team. Include the salary, benefits, and any other costs associated with formalized post-investment support team during the hiring process.
Now that you're ready to find and hire the best team to ensure the Platform serves founders and builds a community that becomes a value add for your firm, it's time to document the requirements of their platform roles.
Writing the VC platform role job descriptions
It's often a good idea to look at examples from other companies before you begin writing the job description for your first VC Platform role.
Most job boards have detailed job descriptions from various companies (sometimes your competitors). That will give you insight into their approach and expectations. You could also use LinkedIn to search for "VC Platform Manager" or "Director of Platform" to see open positions at other funds.
Once you've made your Platform hire, it's time to develop the Platform and empower your head of Platform with the necessary resources, systems, and structures that will enable them to address the most critical areas.
How to set your VC platform manager up for success
Plenty of responsibilities typically fall into the hands of that first platform hire. They tend to assume a more managerial role and often invest a significant portion of their time in networking events, setting up better systems for operations, facilitating communications community building, and brokering vendor deals. As such, you need that individual to be competent, confident, and trustworthy.
This person must be self-assured and able to juggle many balls without becoming overwhelmed. The venture capital industry is demanding, but this role takes things to a whole new level because it requires a lot of relationship building and people management.
We recommend hiring for both aptitude and attitude. Your new hire will also require the right tools and technology to be efficient. So make, you provide the necessary assets for them to do their best work.
Founders previously had outdated spreadsheets to rely on for support. That inefficiency is no longer sustainable in our data-driven and digital world. If anything, it would hurt the performance of your portfolio companies making it difficult to predict and prove a return on investment.
How do you determine what you need to launch your Platform?
We're here to help you and your founders save time, money, and resources. Book a time with one of our experts to get your desired answers.
Conclusion
The VC platform role has become essential to the Venture capital game. Providing general partners with a value add opportunity increases the chances of success for their portfolio companies and makes buy-in easier for LPs.
For platform roles, working hard to ensure funds are allocated to the best and highest use and that performance is measured and monitored is their core duty. Platform leaders must guide their portfolio companies with a strong focus on providing access to resources and information such as best vendor deals, insider knowledge on tech stack and mutually beneficial insights. Fostering collaborations and strengthening communications with other brands within the fund's ecosystem is one of the best ways to support growth for both fund and investors.
In essence, the VC platform role acts as a bridge between the startup and internal and external partners, providing much-needed reinforcement and unlocking opportunities that would otherwise be missed.
At GetProven, we see the VC platform as an investment that build's toward's your firm's future success. Do you agree? What are your current thoughts or concerns about launching a VC platform? And if you've already set up your team, what do your founders say they enjoy post about using your platform? We'd love to get your insights.
