Elevating Startups: The Pivotal Role of the Head of Platform For VCs

In the high-pressure, high-stakes game of venture capital, the ability to stay ahead of the curve is paramount to achieving success. As the industry continues to evolve, VC firms are increasingly recognizing the crucial role played by the Head of Platform.

This strategic position is responsible for developing and executing the kind of post-investment support that fosters innovation and drives growth. In this in-depth guide, we will delve deep into the reasons why VC firms must invest in this pivotal position. We'll explore the ways in which a Head of Platform can bring about positive change, enhance efficiency, and facilitate success within the firm's ecosystem.

Today, Platform is the fastest growing role in VC

A Forbes writer shared her enthusiasm for this rapidly growing space when she recounted how, within a span of four years, a VC platform summit that hosted 50 heads of platforms grew to 1000 members who would meet to collaborate, exchange ideas, and learn from each other on how to make the platform role more successful at their respective firms. VC stack similarly shares that 52.8% of venture capital firms have moderate (up to 10% of the core staff at investment periods) in Platform roles or significant (more than 10 % of the core team members for the investment periods) in platform roles. We anticipate this number to grow exponentially with each passing year.

The Changing Profile of a VC Team

In the last two decades, the venture capital industry has undergone significant changes. The number of entrepreneurs and investors has increased, and the structure of teams has evolved. For larger teams, the average size of a venture fund's core workforce has grown by 124% between 2000 and 2020, with a total of 398 people employed across the industry.

The most notable change to teams has been the increase in the number of Platform Professionals. This trend has been constant, regardless of the amount of money being invested. Larger firms, with higher AUMs, have more Platform specialists than smaller firms. In 2022, the median venture capital firm had 12% Platform specialists, while larger investors with more than $100 billion in AUM had a higher percentage of 15%. Further details on the effects of this trend will be discussed in future pages.

But why is the head of platform role growing so fast?

The Head of the Platform is a senior-level role with a wide-ranging set of responsibilities that cover different aspects of the investment process. The position is responsible for a variety of activities that range from pre-investment operations to post-investment support for founders.

One of the key responsibilities of the head of platform is fundraising. This includes identifying potential investors, building relationships with them, and assisting in crafting compelling investment proposals that secure funding for the firm's investment activities.

Another important responsibility is organizing networking events. This involves identifying potential partners, creating opportunities for founders to interact with investors, and facilitating conversations that lead to strategic partnerships.

The Head of the Platform is also actively engaged in business development and forging strong partnerships that enhance deal flow for the firm. Besides being versatile enough to drive deals and build relationships that serve the firm, the head of platform is also key in offering supporting founders as they move through their startup journey with the various challenges that include talent acquisition, identifying and recruiting the right hires, vendor management and building mutually beneficial relationships with the right third-party service providers and ensuring the startups are getting the best deals.

ESG, or Environmental, Social, and Governance, is another area of responsibility. The Head of the Platform must ensure that the organization's investments align with its ESG policies and values.

Finally, the Head of the Platform is responsible for creating mentorship and support structures for the founders. This includes identifying potential mentors, creating mentorship programs, and providing support to help founders navigate the challenges of building a successful startup.

To have an individual with a small core team of people who can address and successfully execute on all these roles is extremely profitable for a VC firm. Naturally, the position requires strong communication skills, strategic thinking, and the ability to build and maintain relationships with both internal teams and third-party service providers.

Why a director of platform must work on forging active communications and an engaged community within her portfolio companies

Venture firms operate in a highly competitive and dynamic environment where partnerships and strong communication are critical to success. The director of platform plays a pivotal role in facilitating this communication and building an engaged community within the portfolio companies.

A skilled relationship manager is aware of the importance of clients and is committed to providing tailored solutions to address their business problems. The platform team builds on these principles to create an effective platform strategy that promotes relationship building and supports founders in a safe and supportive environment.

The platform team works tirelessly to form the appropriate connections, ensuring that founders stay on track and meet the planned goals of the foundation. Their efforts contribute to the success of the portfolio companies and the overall growth and development of the venture firm.

Can a community assist in generating new deal flow?

Although platform leaders are not actively involved in generating revenue, they are always on the lookout for methods to assist their fund managers in increasing deal flow. A head of platform can act as a bridge between the firm and its growth, providing the necessary support to ensure the fund's growth is successful through the partnerships they help forge and the networking opportunities they create.

It is crucial to view the platform strategy from a broad perspective and more like an ecosystem that serves as a setting for networking, collaboration, talent development, content, and opportunities to drive growth for both the fund and its founders.

Functions of Platform: Pre & Post Investment

We discussed the various activities that a head of platform can undertake both before and after fundraising and the value that brings to the fund and its founders. This is why the demand for such roles is increasing among venture capital firms. Activities that include marketing and brand building, hosting events and workshops, community building, and development of mentorship programs are best executed by a dedicated platform team.

As a result, we are witnessing a rise in the number of core team members within VC firms, including smaller ones, who are looking to provide additional value to their portfolio companies.

It is important to note, however, especially for small firms, that the development of platform and the hiring of platform roles must be approached strategically. Just because other firms in your industry are announcing significant investments in their platform teams doesn't mean that you should adopt a cookie-cutter approach to your platform team.

Instead, consider your firm's needs, portfolio companies, and the resources you can allocate to build a team that can successfully execute your vision. The size of your team is not important; what matters is the efficiency of your platform team and the results it delivers.

The Risks of Not Having a Head of Platform Role

There are plenty of advantages to hiring a head of platform, and we've outlined several throughout this post, but let's address some of the ways a firm may lose out if it continues to ignore the shift to platform development.

Venture capital fund managers often have limited time and resources to provide direct guidance and support to all the companies in their portfolio. Additionally, each startup has unique needs and requires access to different vendors and partners. As the number of startups in a firm's portfolio increases, it becomes more challenging to cater to each one at the highest level. This is where the platform team comes in as a solution. They act as a bridge and create an ecosystem that promotes open communication, sharing, automation, and other non-financial support to founders, thus providing each startup with the necessary resources and support to succeed.

Another key challenge VC firms face is the increasing expectations of founders. No longer satisfied with mere monetary infusion, founders are now seeking more holistic support from VCs to help them navigate the complex and competitive startup environment. That means that VCs need to provide much more than just financial backing to their portfolio companies.

In this new paradigm, founders are looking for VCs to offer additional value, such as a strong platform team and exclusive founder mentorship and training to help them achieve long-term success. This is particularly important as the business landscape becomes more crowded, making it increasingly difficult for new ventures to stand out and attract customers.

If VCs fail to provide this additional support, it will ultimately impact their deal flow, as founders are likely to seek out firms that can offer more than just funding.

To stay competitive, your VC firm must adopt a more holistic approach to supporting the portfolio companies, moving beyond the traditional VC-founder relationship that is limited to financial support only. This will enable your firm to demonstrate its unwavering commitment to the success of its founders and build long-term partnerships based on trust and mutual benefit.

The Role of Platform And The Broader Impact on the VC Ecosystem

The role of the head of platform in a venture capital firm extends beyond just supporting individual startups. They play a vital role in shaping and improving the firm's overall ecosystem. The Platform Head is responsible for identifying and implementing strategies that enhance the success rates and reputation of the VC firm.

By doing so, they help to reduce the workload for the firm's partners, allowing them to focus on identifying and investing in promising startups without having to worry about other aspects of the business.

Since the head of platform also serves as a liaison between the firm and its portfolio companies, they provide the leadership team with valuable resources and insights they wouldn't otherwise have. For example, they can support investment operations in an ongoing fashion with investment enablement and data-driven sourcing.

Furthermore, a well-designed and executed platform strategy can have a ripple effect throughout the entire firm's ecosystem. The efforts of the platform team can lead to increased deal flow, higher-quality investments, and better overall returns for the firm's investors.

Where to Start: Building Platform

Sometimes the easiest way to get started right is to learn from those that are already successfully executing what you want. Take Allie Mullen as an example. She serves as platform director at Wireframe Ventures. Allie is the only non-investor employee at her fund and created the platform functionality from scratch, working more as a generalist covering various areas. We at proven agree with her definition of the term platform given that different people use it to mean different things, but as Allie Mullen puts it:

Platform is a catch-all term in VC. It could mean different things in different firms, but in general, this role is typically a non-investor operator role for the firm, which means you work really closely with the portfolio companies. Under the umbrella of platform are marketing, investor relations, HR and recruiting, operations, community, business development, and portfolio support.

Before you can begin developing platform, it's important to have a clear understanding of what it means to you and which areas you want to prioritize. Typically, small VC firms take a more generalized approach where one person oversees multiple areas such as marketing, business development, community, portfolio support, and operations. A good example here would be Allie Mullen who is a team of one at her VC firm, Wireframe Ventures.

In contrast, larger VC firms have more specialized platform teams, with each team member focusing on specific platform functions. This means you might come across titles such as community manager, who is responsible for building and engaging with the community, or talent acquisition specialist, who works as a full-time recruiter. The platform teams at larger VC firms are designed to be more efficient and effective, with team members having clear and specific responsibilities. By contrast, smaller VC firms tend to be more flexible and adaptable, with team members juggling several responsibilities and working closely with senior leaders and founders.

Platform team development and specialization

When starting with platform development or hiring for platform roles, it is critical to have a clear understanding of the firm's goals, needs, vision, and expected results. It is essential to align the development and goals of the platform with those of the firm so that it does not operate in isolation.

To ensure that everyone is aligned and executing a single vision, we recommend using the Platform Strategy Matrix developed by Cory Bolotsky. This tool is an excellent starting point for any head of the platform. It provides a solid strategy that is essential for the success of the platform and the achievement of desirable results.

The Platform Strategy Matrix is a framework that can be used as it is or customized to align with the needs of your firm. It categorizes the platform into ten distinctive areas, which are Scouts and Venture Partners, Content, Fellowship & XIRs, Incubators and Office space, Events and Workshops, Online Forums and Platforms, Expert Networks, Corporate Relations, Talent, and Expertise as a service.

Categorizing platform into these ten areas ensures that all aspects of the platform are considered and accounted for in the development process. It also helps platform teams recognize and prioritize areas that best align with the firm's goals, needs, vision, and expected results.

1) Scouts and Venture Partners

The category of scouts and venture partners entails identifying individuals who possess valuable connections and have the potential to invest a substantial amount of capital directly. These individuals play a significant role in the investment process by providing their expertise and financial resources to support promising ventures.

2) Content

One of the most effective ways to establish brand recognition and thought leadership is by creating valuable and informative content in various formats such as written articles, podcasts, or video recordings. This approach helps in fostering a culture of continuous learning and knowledge-sharing, thus enabling entrepreneurs to gain insights and implement best practices that contribute to their success. By producing high-quality content, your firm can position itself as an expert in venture capital, increase community engagement within your ecosystem, and establish a competitive edge compared to other VC funds.

3) Fellowship and XIRs

Fellowship and XIRs, which stands for eXecutive-in-Residence, refer to a category of individuals who possess exceptional skills and expertise in their respective fields. These individuals are provided with a range of benefits, such as financial support, workspace, programming, and resources in exchange for their assistance in supporting the firm and its portfolio companies. The goal of this program is to create a mutually beneficial relationship where the fellowship recipients can access the support they need to further develop their skills, and the firm can benefit from their unique talents to drive growth and success.

4) Incubators and Office Space

The category of "Incubators and office space" pertains to an arrangement where firms offer more than just free office space to individuals or early-stage companies. Along with the office space, these firms provide a variety of resources and opportunities designed to support the growth and success of the participating entities. These resources may include organized programming, mentorship, funding, and curriculum. Essentially, the aim of this arrangement is to foster innovation and entrepreneurship by providing a conducive environment and the necessary support.

5) Events and Workshops

The Events and Workshops category is a crucial part of platform development to support and engage both your portfolio companies and the wider startup ecosystem. This category involves meticulous planning and organization of various events, ranging from small private dinners to interactive workshops, social events, webinars, and community events.

The aim is to provide a platform for your portfolio companies to connect with each other, exchange ideas, and learn from experts in their respective fields. Additionally, strive to create meaningful opportunities for startups to engage with their peers and the broader business community. That will foster a collaborative and supportive environment for innovation and growth.

6) Online Forums and Platforms

Similar to collaboration through events and workshops, this category focuses on continuing that collaboration and open communication through emails, slack channels, social network groups, and sometimes fully custom online platforms organized for a firm’s portfolio companies or functional peer groups to provide them with resources and a community of contributors for peer support.

7) Expert Networks

This category refers to a group of highly experienced professionals who are curated to act as mentors or advisors for portfolio companies. These experts typically possess a wealth of industry knowledge and are able to provide valuable insights and guidance to companies as needed.

In some cases, portfolio companies may even recruit these experts for executive roles within their organizations. Expert networks can be a valuable resource for successful founders seeking to leverage the expertise and experience of seasoned professionals to drive growth and success.

8) Corporate Relations

This category involves building relationships with Fortune 500 companies and developing the right connections with decision-makers who can possibly become customers or strategic partners with the startups in the portfolio. Introducing founders then becomes an easy and natural process through private events and other social gatherings.

9) Talent

This category is focused primarily on offering support to portfolio companies in their hiring efforts by providing them with a range of resources and services. These include direct recruiting assistance, which involves identifying and reaching out to potential candidates who meet the company's requirements.

Additionally, the platform manager can offer various training programs to help startups enhance their recruitment process and hire the most qualified individuals. The resources provided are specifically tailored to help companies prioritize their hiring needs, ultimately helping them build a talented and reliable team.

10) Expertise as a Service

This involves bringing internal consulting and service-based organizations that provide specialized services such as design, finance, marketing, strategy, and much more. These services are offered either free of charge or for a fee.

The organizations providing these services are staffed with functional subject matter experts who offer tactical support beyond what lead investors typically provide as board members. This means that portfolio companies can benefit from the hands-on expertise of these experts, who can help them navigate complex challenges and make informed decisions. In turn, the startups stay competitive and increase their chances of success in their respective markets.

Now that you have a better understanding of the VC Platform Matrix Strategy feel free to build the tool customized to your firm's needs here, or better still, hire your head of platform and let them develop the right platform strategy for your firm.

The Core Functions of a Head of Platform

So, what exactly does a typical day look like for a Head of Platform? Well, it's anything but mundane. This versatile role encompasses a myriad of responsibilities tailored to meet the diverse needs of portfolio companies. And the following are just some of the advantages your firm stands to gain by bringing on a head of platform.

1) Corporate Development:

The Head of the Platform plays a crucial role in overseeing various aspects of your firm's operations. They are responsible for managing external communications, which involves maintaining positive relationships with stakeholders and promoting the firm's brand. In addition, they spearhead business development initiatives, identifying potential investment opportunities, and working to secure deals that align with the firm's investment strategy.

Moreover, the Head of the Platform plays a significant role in fostering the growth of both portfolio companies and the VC firm itself. They work closely with portfolio companies to provide support, guidance, and resources to help them achieve their goals. Additionally, they play a critical role in providing strategic direction to the VC firm, helping to shape its long-term vision and goals.

2) HR Management:

The Head of Platform can serve as a vital resource for startups by providing platform support that includes talent acquisition, management, and HR consulting.

Assembling and managing a cohesive team can be a daunting task for any startup, and the Head of Platform plays an important role in ensuring that the workforce is properly supported and set up for success. With their expertise, your startups can navigate the challenges of building a talented team and create a positive work culture that fosters growth and success.

3) Vendor Management:

One of the most important aspects of VC support is vendor management. It involves utilizing the VC's extensive network to connect portfolio companies with necessary service providers. By doing so, the process of acquiring essential services becomes streamlined, which accelerates the path to market for startups. In other words, vendor management helps ensure that portfolio companies have access to the resources they need to succeed.

4) Events and Networking:

The head of platform can play a crucial role in enabling founders to establish meaningful connections with their peers within their respective industries. By facilitating access to relevant events and conferences, the platform head empowers founders to stay up-to-date with the latest trends and developments in their field, while also providing them with ample opportunities to network with like-minded individuals. Through fostering collaboration and knowledge exchange, the platform manager helps founders to expand their professional horizons and drive innovation in their industries.

5) Operations/Supply Chain:

This position is particularly beneficial for startups that offer physical products. As a supply chain optimization expert, your platform leader will be responsible for streamlining the production and distribution processes, ensuring that the products are delivered to customers on time and in good condition.

Additionally, they will have access to a range of platform tools that will help support founders to increase operational efficiency and scale the business. The contribution this platform function can bring to portfolio companies will be instrumental in helping the startups achieve their goals and establish themselves as successful players in the market.

6) Marketing/Branding:

The platform position typically brings a wealth of knowledge and experience in the fields of marketing and branding, which are essential for any company looking to establish a strong market presence and stand out among competitors.

Platform leaders tend to work closely with portfolio companies to help them craft compelling and authentic narratives that resonate with their target audience. They provide guidance on brand positioning, messaging, and visual identity, ensuring that the company's brand is consistent and recognizable across all channels. They also help companies identify their unique value proposition and develop a marketing strategy that effectively communicates it to the market.

In addition to their expertise in marketing and branding, platform leaders bring a deep understanding of industry trends and best practices. They help portfolio companies stay up-to-date with the latest developments in their respective industries, providing insights on emerging technologies and market shifts that could impact their business.

7) Tech stack expertise

Having a team of platform professionals is a huge asset for your VC firm's portfolio as it can provide a strong support system for the founders. These professionals can take care of non-investment functions that are crucial for the success of startups, such as providing tech stack advice. At Proven, we've witnessed firsthand the difference having the right tech stack can make to a young startup and the amount of money they can save while still receiving the top-notch solutions for their business needs.

For founders who are already overwhelmed with multiple responsibilities, understanding and keeping up with different tech solutions popping up in the marketplace can be a daunting task. Having a dedicated and knowledgeable platform leader to help with the broad setup of infrastructure that is the best fit for any given startup can be a game-changer. With a well-established infrastructure in place, startups can hit the ground running with the highest leverage and the lowest cost, saving valuable time and resources.

Conclusion

The head of platform is a key role in any VC firm that can make a significant impact on both the firm and its portfolio companies. This person serves as a catalyst for continuous growth, innovation, improvement, and success, embodying the symbiotic relationship between VC firms and their portfolio companies.

Harnessing the knowledge and expertise of a platform manager means that your firm can unlock new growth opportunities that may have otherwise gone unnoticed. They can help portfolio companies navigate the challenges and complexities of the market, provide guidance on best practices, and connect them with relevant industry contacts.

In today's rapidly changing VC landscape, embracing this pivotal role is not just an option, but a strategic imperative for firms looking to thrive in an increasingly competitive environment. Invest in the right head of platform, and your firm will position itself as a leader in the industry while ensuring the long-term success of both the firm and its portfolio companies.

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