When we meet with startups, among the many things that we are evaluating, there are two big questions we are working to answer that we’ve written on before — “Can we achieve alignment?” and “Is this team coachable?” Sometimes we can get conviction on these two questions quickly, sometimes it takes months or more, but we ask it for a good reason.
To attract investors and startups, VC firms must have their own differentiated strategy or factor that causes them to shine when compared to other VC firms — just like a startup has to have a unique value proposition, so does a venture fund.
One of Squadra’s unique value propositions is our post-investment support, which we call Portfolio Operations. When we invest in a startup, it’s just the beginning of a deeply collaborative partnership. We’ll spend many hours working together to help you grow your business, stay on track with strategic initiatives, and find and close the right customers. We call this the Joint Strategic Plan.
Post-investment, portfolio ops divides our work together into four areas of impact — the basics, go-to-market strategy, transformational hires, and transformational introductions. In this article, we’ll walk through these four areas of impact.
Getting “The Basics” Right
Squadra has found that whether we are working with just a founder and an idea or a fully staffed organization, close adherence to “the basics” of business serves as an everlasting foundation for your company to grow upon. Basics are the foundation — finance, operations, and culture — those fundamental things that meaningfully contribute to the regular, sound operation of a company. These initiatives could include the development of internal communication processes, regular accounting and forecasting done by an outsourced CFO, and establishing organizational processes and selecting tools. Portfolio Ops bolsters the startup’s progress by providing support through bi-weekly or monthly CEO management updates meetings, board meeting prep and follow-up, and 1:1 coaching of management team members.
In pre-seed and seed stage companies, working on these basics can consume more Portfolio Ops’ time than Series A stage ventures. The amount of time or effort spent on the basics is not seen as negating time that could be spent on going to market or other categories. Instead, Squadra believes that a strong foundation in the basics prepares an organization to take on the trials and tribulations of growth in a more efficient and profitable way. A company that has appropriately divided customer success duties will implement feedback quicker, or a company with transparent and established HR policies will be less likely to suffer from issues in the future.
Developing the Go-to-Market Strategy
Pre-seed and Seed investments often lack revenue, but they have great value propositions and plans to accelerate growth. This means that a large part of the transition from a Seed Stage venture to Series A or Series B is increasing revenue and, in essence, proving market viability and traction. Developing and executing a solid go-to-market strategy is essential to a startup’s success and one of the main focuses of the Portfolio Ops team.
Typically, this means training or hiring sales/business development/customer success employees, analyzing value-prop and aligning that to key customer personas, adding of an outsourced marketing team, and many other strategic initiatives. A common beginning to Squadra’s go-to-market planning is a persona workshop where key potential stakeholders or “champions” are identified. The startup’s sales strategy is tailored around the needs of those projected buyers.
A Founder’s ability to bring goods to market is the axis upon which your venture will succeed, flounder, or fail, so it must be handled diligently and built upon repeatable processes. By working with you to deeply understand your business’s value proposition, customers, and key stakeholders, Portfolio Ops can help you triangulate onto a provable process that will serve as an engine for growth throughout the company’s lifetime.
Getting Ready for Transformational Hires
We get it, joining a small team is a big risk. Early-stage ventures are often helmed by founders and a few other employees that they convinced to join in early. While founders and entrepreneurs are undoubtedly highly competent and nearly always have the best intentions for their businesses, they cannot be experts in all the disciplines and minutia of business.
At some point, there must be an honest accounting of the current team’s strengths and weaknesses with an eye toward adding employees to fill not only competency gaps but to achieve the targets set. This might mean hiring a dedicated marketing employee, but for Squadra portfolio companies, this means making transformational hires, which bring new skills to the table in a way that will jettison the business onto a new path toward growth. Instead of hiring someone to make social media posts in-house, you hire a marketing agency and a director of marketing. Yes, both the marketing agency and the director position will cost more than an entry-level employee, but if your business is on the precipice of gaining momentum in your industry, the high-level direction from a seasoned professional combined with the efforts of a dependable agency could push your business to the next level.
Additionally, the Portfolio Ops team regularly vets highly qualified candidates from our network to be potentially placed at portfolio companies. We are here to help identify the need early, find great candidates, and help you start building a strong relationship before the missing skill set becomes a problem.
Maximizing the Value of Transformational Introductions
Early-stage ventures’ revenue and sales can be augmented and propelled by partnerships and the advice of key stakeholders. It is exceedingly difficult for small or new businesses to gain access to key stakeholders at potential clients or similar market makers. Part of Squadra’s advantage over other VC firms is our extensive network within the cybersecurity and national defense spaces.
The Squadra team includes subject matter experts in these two areas of focus and are responsible for making introductions and helping the company navigate the complexity of sales in these markets. Our ability to introduce your business to influential individuals is paramount to whether or not the relationship is a good fit, if there is great alignment. After Portfolio Ops gains a better understanding of the goals of the portfolio company through the co-creation of the Joint Strategic Plan and “the basics” are tended to, the team is responsible for strategizing a list of introductions and facilitating those meetings.
In addition to providing the entrepreneurs with business development guidance, Portfolio Ops often leads a prep session beforehand to ensure each party maximizes the relationship. The primary vehicles to make these introductions are what we call our Venture Partner and Operators Networks. Venture Partners are a collection of cyber and national defense industry leaders who aid Squadra in diligence and customer validation, amongst other important areas. Operators are highly skilled experts in their field who serve as mentors. The Operators Network is available to all employees at portfolio companies, as we have found that coaching at all levels can have a massive impact on a startup’s growth.
Achieving Alignment between Founder and Investor
Squadra works with you to obsess about the plan, the execution of the plan, and the vision. All the work described in the four areas of impact stems from a Joint Strategic Plan created collaboratively between Portfolio Ops and the startup. So what does a Joint Strategic Plan look like when working with Squadra?
At the end of the due diligence process, the Company Founder, the Investment Team, and the Portfolio Ops Team meet and discuss the major goals that we all believe the company needs to achieve over the next 18–24 months. These plans cover specific things like product improvements, hiring new team members, and getting a deeper, more data-driven understanding of customer personas and the long-term implementation of the entrepreneur’s vision.
The Joint Strategic Plan is a living document that serves as a guide and will be reviewed regularly, serving as a record of accountability for both the entrepreneur and the Squadra team ops. Above all else, the Joint Strategic Plan creates long-term alignment and a commitment to working together.
The Joint Strategic Plan allows for a smooth transition into post-investment operations and for the Portfolio Operations team to truly kick into high gear on their core competencies and responsibilities to you as your investor and partner.
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