VC's should be doing this
By Jess Price
I had the opportunity to meet with an investor last week at one of the larger Chicago-based Venture Capital firms. At the conclusion of our discussion he was kind enough to suggest that I attend one or two of their CEO dinners, where their portfolio CEO's meet to discuss issues with each other and interact with the firm’s leadership.
His description of these dinners reminded me of the Y Combinator dinners I used to attend. They were incredibly valuable both in getting to interact with other founders in a "safe space," and hearing war stories of the successful entrepreneurs Y Combinator would invite each week to speak.
I am sure VC's of any size now do this type of event for their portfolio company leadership or minimally share out thoughts/analysis their analysts have produced on a regular basis.
Yet I would argue there is a fundamental opportunity VC's are missing to improve the performance of their startups.
Amongst the leadership teams of the portfolio companies at any medium to large investment firm, there is an incredible amount of experience, wisdom, and perspective that is not collectively being taken advantage of.
Imagine a top VC like Sequoia setting up a private crowdsourced forecasting site accessible by a select number of people each portfolio company appoints to represent them. Both Sequoia and the companies themselves could pose forecasting questions: "We're launching this app, how many downloads will it get in the first 30 days?" or "When will the uptake of technology X reach Y level?"
The advantage for all the portfolio companies is at least three-fold:
Get what are hopefully accurate signals and early warnings about events that affect them as a key input to the strategic decisions they're trying to make;
Bring awareness to all the leadership teams about some of the key factors influencing their business; and
Give them the ability to anonymously dialogue with their peers in the context of these forecasting problems.
For the VC, they would also get the valuable insights this "crowd" would produce, and they would understand what companies are good at forecasting and what they don't seem to know. The firm could then focus their attention on those gaps, making them an even more valuable "partner" and creating a sort of insurance policy on their entire portfolio. The VC would be guaranteeing that its companies were both aware of external factors that will influence their performance, and will have the credible, un-biased perspective of their very knowledgable peers on their own business issues.VC's should be doing this