It’s often overlooked but venture capital is more than just a financial investment. Beyond the cash infusion, venture capital theory is that a venture capital investment should often be an investment of capital and management support. Founders can therefore legitimately expect to be provided with some level of management support. This article highlights some of the non-cash support you can expect from your VCs.
1.Strategic Guidance: VCs provide high-level advice on company direction, including business strategy, product development, and market positioning. They may serve as board members or advisors, but often offer strategic guidance without needing an official role.
2.Operational Support: VCs assist startups in optimizing day-to-day operations, offering expertise in areas like supply chain management, technology infrastructure, and customer service, ensuring operational efficiency.
3.Talent Acquisition: Through their networks, VCs help startups hire key personnel, from senior executives to specialized talent, ensuring they build a strong leadership team and workforce.
4.Business Development: VCs connect startups with potential clients, partners, and suppliers, helping to expand their customer base and improve market presence.
5.Fundraising Assistance: VCs provide support for future fundraising, connecting startups with investors and advising on capital-raising strategies to fuel further growth.
6.Financial and Legal Support: With expertise in financial planning and budgeting, VCs also guide startups through legal challenges like intellectual property and compliance, ensuring long-term stability.
7.Mentorship and Coaching: VCs offer mentorship, with experienced investors providing personal advice and leadership coaching to founders, helping them navigate challenges and grow as leaders.
8.Networking Opportunities: Leveraging their industry connections, VCs introduce startups to key players, from potential customers to industry leaders, broadening their reach and opportunities.
9.Exit Planning: VCs assist in planning and executing exit strategies—whether through mergers, acquisitions, or IPOs—ensuring both the startup and the investors achieve successful outcomes.
It’s crucial for startups to manage their expectations, as not all VCs are equipped to offer post-investment management support. Management costs is often the consideration.
Ideally, your cap table should include a mix of VCs, balancing those who bring funding with those who can offer strategic support.
This publication is not intended to provide legal advice and is not prepared with a specific client in mind. Kindly seek professional advice specific to your situation. You may also reach out to your usual Balogun Harold contact or contact us via support@balogunharold.com for support.
