Considering Venture Platforms
When most people hear the word platform, they probably think of something like this:
Platform: a horizontal surface raised above the level of a surrounding area
The venture capital version of platform — built with a purpose true to the definition above — has become an influential and impactful addition to the org charts and operating strategies of many firms. Broadly, a venture platform (also called network) is the cumulative efforts of a firm employee(s) or team(s) creating and managing non-investing initiatives to raise the value and profile of the firm and its portfolio. While increasingly prevalent, venture platforms aren’t yet standard issue. Given a still formative stage, existing venture platforms come in a variety of shapes and sizes with a varying degree of formal announcement and public expression.
I get the sense that for some in startup land outside of the firms themselves, venture platforms have been at times difficult to decipher. So, I want to share my thoughts on the extraordinary power and endless potential of the venture platform and why defining it properly is an evolving process. Spoiler Alert: this is one of those posts the various parts and drafts of which have been wandering around in my head for awhile, and this manifestation is nothing more than my own thoughts, making no claim to expert or influencer status on the subject.
There are some common motivations I’ve heard from firms building out a platform and team: to formalize a firm’s existing efforts to support its portfolio; to share and amplify a firm’s investment theses and POVs on emerging sectors and technologies; to promote and differentiate a firm with quality thoughts and memorable services. I believe there’s also intrinsic benefit to platform as a complimentary source of proofs of work done over a fund’s lifetime. The time-stamped record of the contributing parts — the content, programs, partnerships, announcements, and events — can help mark a legible, if not always expected, path taken through the mercurial swings in startup investment activity and the illiquid nature of investing so early.
I’ve always envisioned the venture platform as quilt or mosaic, sort of like this tiled table top:
Distinct as the tiles above, each platform effort, in itself, and as part of the collective support of the whole, is intended to elevate the identity and awareness of the firm as a valuable partner to superlative entrepreneurs seeking capital. Generally, those initiatives fall into five value-additive disciplines:
Talent, Content, Community, Mentorship, Public Relations
Within these categories, a cornucopia of platform initiatives can shine. Below are just a few specific examples of platform efforts that I’ve experienced or encountered.
Independent while often interrelated and interoperable, these initiatives create a platform that can play host to inventive and curious experimentation. Certain initiatives last longer than others, some are inevitably more impactful than others, and some more easily replicated. Fluid while thorough, determined while nimble, and always optimistic — characteristics of many dynamic investment teams — are qualities shared by innovative platform teams.
And it works!
The subject of venture platforms and platform impact truly deserves a more celebrated and wider circulated deep-dive analysis. It’s undeniable that the rise of venture platforms has advanced the venture capital industry, helping firms become more transparent, clear, direct, and available to founders. At peak performance, a venture platform can have an amplifying effect on a firm’s reach to new and future founders shown in the visualization below. A note that the anonymous figure icons represent founders.
Contributing to some misunderstanding of VC platform definition is a mismatched method of assessment. Going from future founder to funded founder is an unpredictable series of events with many variables beyond any one firm’s ability to influence. Trying to attribute unique platform data points to a new investment, let alone successful exit, is susceptible to interpreting correlation as causation. Highlighted in the diagram and text below are three stages that can impede linear attribution of platform efficacy.
Stage 1: Engagement Timeframe
It’s often years in between an entrepreneur’s first interaction with a firm’s platform and their decision to start a company. Keeping comprehensive track of every entrepreneur or tech operator who hits a venture platform is a harrowing endeavor as the external variables that can influence those individuals’ decisions are many.
They might become a follower of your firm, they might chew on a few startup ideas but not take the plunge, they might work at 10 different startups but never start one, they might start a company and raise from other firms, they might move to another industry. Platform attribution is challenging in a firm’s active operating process. Despite the shape of the diagram on the left, at the pre-fundraising stage, a venture platform nurturing entrepreneur relationships rarely resembles a funnel or pipeline.
Stage 2: Competition and Firm Alignment
At the stage that a platform-identified entrepreneur begins to fundraise for a new company, there’s less information asymmetry as in Stage 1. Specifics about the company and round can fill in alongside known founder profiles and platform touch points. This hinges on said founder communicating the NewCo raise to the firm. A new set of variables emerge that can cloud sourcing attribution.
First, firm and startup idea may simply be misaligned. A firm may not be active in that sector or a founder may be prioritizing firms with sector specialization. As a side note, this isn’t the fault of platform teams or investment teams. I think it’s actually a healthy sign of both operating as intended.
Second, competition for fundraising founders’ attention is fierce and unrelenting, especially at the point that a round is being discussed, ahead of asking for commitments. Here, a founder(s) might just forget to reach back out to your firm. Their fundraise may simply move quickly from their first few pitch meetings and close without a chance to participate or let your firm know about it. A founder may have had an unremarkable impression of a firm-platform and so it slips through their fundraising cracks.
Stage 3: Hindsight and High Pass Rate
And finally, there are attributional challenges for vc platform tracking along the firm’s decision to pass or invest. Net new entrepreneurs whose interaction(s) with a firm’s platform eventually result in them pitching the partnership should be a well-oiled platform doing its job, regardless of the final investment decision. Hindsight can also obscure clear “sourcing” attribution. Relationships outside and inside a firm overlap endlessly, people come and go and come back again. Understandably, the firm’s priority in real-time is that fundraising founders seek them out. Though a sourcing maze of touch points, relationships and introductions and an always high ratio of passes to term sheets can minimize or obscure total platform contribution and impact.
I don’t have breakthrough or profound ideas to end with really. I’m just hoping to shed some light, share some praise, and express the nuances of the phenomenon of the venture platform that I’ve experienced.
Nonetheless, some parting attempts at meaningfully conclusive thoughts:
Linear cause-and-effect is a mismatched method for attribution of any one platform activity to a new investment or successful exit for a firm. If the venture industry often thrives on the counterintuitive – POVs, product ideas, timing to market, entrepreneur profiles, investment theses and decisions – then venture platforms may be in the best position to succeed when viewed through a similar lens.
If a platform intent and strategy doesn’t involve the portfolio, don’t do it.
If a firm is or has added a platform because it feels like it has to, it doesn’t! There are virtually zero pre-requisites in VC. Competition is fierce, intellects are driven, and value-add is imperative. The customers firms are competing for, however, are intelligent human beings who are discerning and alert to bs platforms. Authenticity matters.
If there aren’t enough resources at a firm – time, focus, energy, or capital – to commit to a full-assed platform, don’t do it. It will end up being a drain on resources anyways that frustrates more than it elevates. This approach can also result in a firm cycling through many hires to run platform, if the role is poorly defined or not prioritized.
If a firm wants to do pieces of what I’ve called platform above – or any of the other parts I’ve not thought of – do them! A platform doesn’t have to be called a platform – see Network and Community – and doesn’t have to be called anything at all. There are myriad ways to help the portfolio and see great, new deals. A platform doesn’t guarantee performance. Many firms have excellent returns without one. As stated, a poorly executed or underpowered platform can impede more than it elevates.
Each every platform activity is a potent opportunity to stand up and stand out as a firm.
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Like so many wonderful, weird avenues in this industry, platform is grand. An on-going experiment in the vanguard of the profession’s functional evolution that’s delivered new value from the jump. As with building any new thing, there are blind spots and growing pains to creating and delivering palpable value and the form-factor may not retrofit to traditional methods of assessment. The VC platform quilt comes malleable and yet stitched together. There’s as much feel-gut as there is available, informative data to put to each initiative, in deciding how to do it and whether to double-down on it or even expand it further. Another unmistakeable similarity between a venture platform and the investment decisions it enables.
Note:
While platform has not been in my official venture titles to date, I have spent time throughout my career contributing to venture platforms and value-add generally. At Nextview, while my primary role was a venture capitalist on the investment team, I was also responsible for creating and managing the NYC-focused platform for the firm. With the brilliant guidance of Jay Acunzo and Ginny Mineo, I dove in and did my best with our platform initiatives. These came to included a NYC Tech Guide website, a State of NY Seed research report, a NYTech podcast series called Gotham Alpha, dual large-scale and small scale events programs including the NYCode Conference, launching and managing the NY Talent Exchange, a vetted candidate referral program for the portfolio , and at least one love letter to entrepreneurial New York. I’m not one to brag, humbly or otherwise, I just feel that it’s important to produce my venture capital platform credentials along with this post.