in finance, Operations and People

Why do startups take VC money? The money aside, is there any other value add? In my experience the typical VC speaking to “why them” typically will state that they “add more value than just the check”. I’ve never taken outside capital so I don’t have a personal story to lean on.

I’ve heard many of my friends state that their VC’s really did not bring much to the table. Perhaps they didn’t get the right VC…perhaps they were right?

It’s safe to say that I’ve contemplated this for some time and so during an event tonight here at our offices I decided to ask a VC:

Can you provide me with some examples of how you specifically have added value to your portfolio companies?

The answer was interesting and made me think of some other conversations with entrepreneurs that I’ve had about their VC’s and said support.

Below are some examples of what kind of specific value I’ve heard VC’s adding in support of making their portfolio firms successful in the USA:

– Facilitation of key-hires: For example helping a portfolio firm find their CTO, 
– Providing the entrepreneur with valuable experience that is key to the strategy of his company: One story stands out: “You should lower your burn rate, take more time, extend your runway”. The VC, a serial entrepreneur, gave this advice to an Entrepreneur who was on a strong growth curve but where monetization was not yet in place. The entrepreneur told me this particular advice was very valuable; he was about to stack the team and go full force, something that may have caused him to “burn out and fade away” too soon, 
– Introductions to key potential customers: No doubt this one is a value added!
– Introductions to key industry experts that allowed the company to accelerate their learning. The impact of such learning can quickly be turned into “dollars saved” if considering the time it would have otherwise taken. 
– Providing the entrepreneur with support when putting the reporting documents, financial models and presentations together, 
– Helping the entrepreneur raise the next round. 
– Providing perspective from other companies and industries, perspectives that can be applied to this company, 
– Support with pricing 

We’re a toolset. We help with which ever is needed to grow the business; VC answer

My personal conclusion from my dialogue with the VC is that the list of value added elements are exactly the elements for which why our clients hire @katapultgroup. We bring expertise from having worked in over 100 industries, with over 350 companies (big and small), having started companies, having sold companies, having built software, having raised money…having gotten our hands deep into the operations and execution. We actually go the extra mile and close deals, hire and fire, file the paperwork…do what ever it takes to grow the business. This makes me grateful and happy. I realize how much value we bring to our clients, besides just closing deals. 

Tonight i’ve gained more respect for VC’s and what they do for their companies. Tonight it’s also clear to me that we are an alternative to VC’s; We can help you grow your business without you giving up 40% of the company. Next time someone mentions that they are looking for VC money I’ll offer up the idea of considering finding someone like @katapultgroup as an alternative.