The next Silicon Valley Venture Capital Trend: Collaborative Dashboards and Shared Metrics.
Many of us here at upBOARD have built our careers in the startups of Silicon Valley. As the years have gone by, we’ve developed working connections—and friendships!—with investors, small and large. While we’re not actively seeking investment right now (sorry, but thanks for asking), we still have a lot of conversations with VCs and angels. The Valley is small, and we like to stay connected.
The advantage of being on the investee side of the relationship is that you get to see how all the investors run their shops. You see what works, and what doesn’t. Best practices become clear. You also see emerging trends. In our current talks, we see a big new trend on the rise.
Across the spectrum, we’re seeing investors talk about the concept of “process standardization.” They use different terms, or focus on different aspects, but we see similarities in what everyone wants. They might talk about a common dashboard, or milestone spreadsheets, but in the end they’re trying to accomplish the same goal. Investors want a set of tools, templates, and processes that can be deployed across their portfolio companies.
There are many advantages for both parties when it comes to standardized transparency. First, investors can add real value, aside from dollars and connections. VCs form an investment thesis as they build their fund. To execute successfully, they develop expertise, which they then use to screen opportunities. We’re hearing people talk about ways to deploy this expertise across companies using a more formal, structured approach.
As an example, one sector-focused VC firm we know possesses extensive knowledge of energy startups. They see the opportunities and risks at an industry level, and possess far greater insight on industry dynamics than most entrepreneurs who run a single company. As a result, they see the value of developing a collaborative process around exploiting market opportunities which they can then deploy to their portfolio companies. The investees gain the benefit of deep market knowledge that holistically depicts the full market landscape—a real, clear value.
As people who sit on the investee side, we can tell you that this kind of value stands out and is especially important in times like this, when money is (relatively) easy to get. Another advantage that comes from a standard playbook with common milestones is that the VC now has a tool to objectively compare and aggregate company performance across their portfolio. Partner meetings become more predictable. Also, when a company is behind on milestones, the issues are clear to all, and the VC team can focus on fixing the problem instead of trying to find a common language to describe and understand the problem itself.
Selfishly, from the entrepreneurs’ perspective, when this type of template is the backbone of the company-to-investor conversation, we can spend less time preparing for board meetings. We’ve all seen legions of executives get mired in the board-prep frenzy that occurs a few days prior to the meeting. Instead, if the process tool is integrated into operations and standard reporting, the data is already in place. The CEO doesn’t spend valuable hours gathering and formatting information. Of course, in our world, the ideal outcome would be an always-up-to-date playbook that shows everyone the current state of the business so you don’t need to meet at all—the whole point of “No Meetings”!
Given this big trend, here’s the question to our VC friends: how are you defining your templates and metrics in a standard way that can scale to all of your investments? Are your approaches highlighting the skill gaps in your startup teams and providing best practices to fill them? Are your processes given your partners laser focus to target the specific places where portfolio companies can benefit the most from your help?
Here’s the question to our fellow startup executives: are your investors helping you define your business through truly value-added expertise? Personal conversations and mentorship are great, but proven “fill in the blank” tools and dashboards are what accelerates success.
We’re always happy to share what we’ve learned and hear about new tools and approaches. If you’re reading this and think we can share learnings, feel free to reach out to us. Of course, if you need a tool to help capture and share your collaborative process, we can help with that, too.