7 Value-Adds That Every VC Should Execute

The team at OpenView Venture Partners has been experimenting for decades to identify and execute the best approaches to help build expansion stage technology companies. We’ve whittled the list down to seven key value-add areas, beyond the money, that all venture capitalists should apply to their portfolio companies:

1. Develop a really clear set of long-term goals. Clear long-term goals help everyone in and around the company know where the company is intending to go and serve as a measurement stick for how well the company is moving toward those goals. For startups, the goals might be product-based or customer-based and only be set for 3 to 6 months at a time. For larger companies, aspirations (mission, vision and values) can be created and used as the long-term goals.

2. Continuously adjust the senior management, board and network of the company to best address the company’s current state and goals. Companies and markets go through many stages of development and the capabilities of the senior management and board need to stay aligned with the needs of the company. VCs can help by raising the importance of this issue and by helping to identify, recruit and bring on board the right people and network to the company.

3. Get into a management and board rhythm. Develop a clear meeting structure to help management and the board stay aligned on a regular basis and help management and employees execute. The rhythm of goal setting, execution and review with limited distraction helps everyone to achieve the company’s long-term goals faster and easier.

4. Get more clarity around the market targets. Most management teams focus on people, process, sales results and competitors. Unfortunately, they have a less-than-optimal clarity around their target customer segments, users, buyers, influencers, marketing channels and sales channels. The more venture capitalists can help the management to truly understand their market, the easier the company will be able to set and execute winning strategies. These activities could involve introductions to market participants, assistance with market research, and simply making the market understanding a priority at the board level.

5. Selectively help on important issues and opportunities that need special attention. There are a lot of specific areas that either burn a lot of management brainpower (such as things that keep the CEO awake at night) and are opportunities to make a huge difference in the company (building a sales factory or building the sales funnel). The more that VCs identify and help with these special issues, the more quickly the company will achieve its goals. This could involve coaching and mentoring, or it could provide offering up people and a network that can help address the issues and opportunities.

6. Help the company prepare for shareholder liquidity. Most operating managers have managed through few liquidity events and most experienced venture capitalists have managed through many. It is important that investors help by advising the senior managers on the business development, banker, and other relationships that they need to form to set up for an ultimate liquidity event.

7. Be a great coach and mentor to the team in the near-term, but make yourself redundant in the long term. Good VCs are solid coaches and mentors to the board and senior management team and they contribute to the company. Great VCs ultimately help set the company up in a way that allows the company to thrive without the help of the venture capitalist.

This set of ideas is not novel, but I have never seen a company that is great at all of seven of these areas. Getting these themes in place will improve the growth of the company and will make for happier people throughout the organization at the same time.

Scott Maxwell is the founder and Senior Managing Director of OpenView Venture Partners. He can be reached at smaxwell@openviewpartners.com. For more ideas about building great companies, visit the firm’s website at www.openviewlabs.com.