general manager of clean energy companies, a venture capital firm that invests in companies that commercialize disruptive clean energy technologies.
After months of hard work to get financing, entrepreneurs can finally catch their breath when the money is in the bank. But once the check is written, comes the most interesting and rewarding part. While I’ve seen hands-off companies that list their names but avoid board seats gain momentum, as a budding investor in climate technologies, nothing is more important to me than supporting the leadership teams I rely on and capital behind.
With new hurdles around every corner, investors can step in to guide young startups toward commercialization and shape the company’s ethos, resulting in a win-win for both. According to an study from Harvard Business Reviewinvestments by well-managed corporate venture capital firms can outperform investments from independent VC firms.
But what should investors do to be considered “hands-on”? As a venture capitalist who has led dozens of start-up companies across the gap from early research and development to high growth rates and exits, I’ve found these six areas are the most important.
Be a cheerleader and a coach.
Instead of reaching for the stick and pushing entrepreneurs to reach the next milestone, hand out roots (also known as support) to build a foundation of trust. Something I often ask the CEOs I work with is, “How do you sleep?” As simple as it sounds, the response can provide an accurate picture of their well-being.
Investors need to know and understand their CEOs when to push support, such as interviewing a key new hire or waiting for the pull. Amid various challenges, investors can act as a sounding board and build a culture where asking for help is not only accepted but expected. For example, as part of my strategy and responsibility for my portfolio, I provide a third-person perspective on the market, company and team in a way that encourages practical problem solving without sacrificing well-being.
Bridge the recruitment gap.
Even if you’re working with the brightest founders in history, a small team will always need help with responsibilities that range from go-to-market to human resources to marketing to finance. It may be difficult to figure out which shoes to fill and in what order, but that’s where hands-on investors can provide insight.
Investors can help innovators understand the missing links in the fence and help make connections by serving as a living, breathing and connected resource. Not only does this save teams time during the hiring process, but it also serves to quickly hire to find the ideal team member with the right background, skills and passion for the role. Personally, I believe in VC companies adding a job board to their websites; nothing beats bringing together very capable people in your network and seeing it pay off on both sides.
Gather the right people in the right space.
Novice investors who work side-by-side with the founders must be selective in bringing in new investors and executives into the company and provide catalyst opportunities. In addition to connecting companies with strategic and financial investors and partners, an investor can introduce CEOs to other industry leaders – something I see and do all the time.
Connecting a new-to-the-game company with other companies that have overcome similar problems can be a game changer. Putting hundreds of heads together – through workshops on relevant topics such as overcoming supply chain hurdles or a real-time Slack channel discussing diversity, equality and inclusion strategies – can achieve unparalleled synergy. VCs have an obligation (and incentive) to share best practices across their portfolio, and today we’re lucky enough to have accessible huddle capabilities without all of us getting on the plane.
Formation of a lead brand.
Beyond financing and customer acquisition, an often underestimated element of a hands-on investor is the ability to accelerate brand recognition. VCs should lead the way from setting up a website to pitching the company for speaking opportunities to offering connections for company announcements. All these activities together create a strong awareness and stamp of approval for the company and the technology in the market.
In addition to connecting with outside networks such as a web designer or PR firm, an investor’s expertise in what has worked for companies scaling up sales can be extremely helpful to budding founders.
Get your hands dirty.
The days of investing small amounts in a large number of companies are still popular with some VC firms, but today many investors appreciate the value of assessing dozens if not hundreds of companies within a single industry to bet on the technology that will conquer the market. by thunder. To help teams stay ahead of the trickier elements of starting a business, an investor’s substantive expertise can help with market mapping, IP expansion, mitigating supply chain risk, and more.
I find that the in-depth due diligence process guides founders in refining their go-to-market or technical development journey, and it often connects them with partners who can play an important role in their growth journey. The more an investor understands a technology, even to the extent that he co-authors patents, the more an investor can align with teams, and vice versa, about the future direction of a company, such as speed of hiring, raising capital and market strategy.
Fill in the gaps.
I’ve been through everything from the dotcom boom to the Cleantech 2.0 resurgence. The most important thing I’ve learned is that startups often don’t know what they don’t know. Investors play a big role in guiding these companies through the labyrinth. Now more than ever, amid growing economic impacts, the uncertain environment for raising capital and the realignment of the global supply chain, investors can use their networks and skills to pave the way with the tools and guidance needed to navigate a challenging market. That’s why I believe that the relationship between a company and its investors goes far beyond the value of their check.