More and more venture capitalists firms are looking to sink their money into young, promising entrepreneurs‘ operations, but too often the small business owner or startup firm doesn`t leverage the full power of the VC partnership. While the CEO of Xfund Patrick Chung is able to sign a check for thousands of dollars to his young partnerships, he is also able to offer a wealth of knowledge and experience in running a company and developing a plan for the future. As an entrepreneur, you should be looking at your investors for more than just a paycheck.
Expand Your Opportunities
If you want to really exploit the additional benefits of partnering with a venture capitalist, you need to fully embrace their presence as a part of your team. Not only that but diversifying your investor base can bring several VCs from different industries and levels of experience into your decision-making and company direction. If you leverage the portfolios of these other companies you will find tremendous value and expanded opportunities. Here are some of the other ways your VC partnerships will benefit your startup.
- Introductions To New Consumers
Your VC partner will undoubtedly have a full portfolio of customers that you can align into cross-selling opportunities. As a startup, look for ways to bring your VCs into your corporate events as sponsors or featured guests. These events will open up ways to pitch your product to the current consumer base of your VCs firm. You gain the benefit of an experienced business presence to lend credibility to the event, but it also brings in loyal customers from these other firms.
Part of your ability to attract and retain new customers will rest on how well your services or product meet the needs of your customers. If you have fully disclosed your vision and goals with your partnerships, you have given the VCs the information they need to figure out which customers will benefit from your company. They can help pitch your idea to potential consumers, as they know the customer and what they are looking for.
- Expert Advice and Insight
You won`t be able to fully dictate how involved a VC will be with your company. After all, the larger the check or investment, the greater the expectation or requirement that a leadership or advisory position be established. This isn`t a bad thing. If you have looked for investors within a specific industry, you will have access to expert insight and advice relevant to the direction you are taking your company.
Many investors are happy to step in and provide assistance, whether you are asking for advice on decision-making or looking to fill a role on the board. You don`t want to assume that everyone is willing to get involved, so play it safe by always asking your investor about their willingness to help. If they don`t want to get involved, don`t push the issue. Work with the VCs who are willing to share their time and experience.
- Guidance in Sourcing Good Talent
Your VC partner generally has a lengthy list of other portfolio companies that they have helped get off the ground, which should have developed an extensive list of resources for the labor needs of startups. From hiring agencies to contracted labor, your VC partner should have some good recommendations about where to source the right talent. You may find you need to work with an offshore calling center or technical team, and your VC partner may be able to call up other clients to get you a reliable agency. They may also be able to refer individuals for part-time CFO or other leadership positions.
- Tips for Additional Investing
Your VC isn`t working in a vacuum, so many times you will find they have a deep bench when it comes to working deals with other VCs. Venture capital firms will diversify their portfolios in order to keep a good mix of risk and return. This means they have connections in other industries or areas of expertise. The VC environment favors collaboration, especially in markets that are undercapitalized. It can reduce the amount of time and effort spent on outreach and fundraising, as your VC partner can share your needs and generate interest among the VC network.
You may find this networking potential one of the biggest benefits you can take from your partnership. As your company begins to grow or encounters new opportunities, you will likely require additional investors and capital to keep going. These verified VC relationships can be utilized more quickly, reducing lag time for company growth.
It is important to keep your company financially alive during start-up. However, you can rely on a VC investor for more than just financial benefits. There is a wealth of information that comes from the right partnership, as well as networking and sales opportunities.