A Tool to Build & Benchmark Your VC Platform Strategy
This article is part of a series of posts for venture capital platform leaders and investors introducing strategic frameworks to more effectively design a VC firm’s platform strategy.
In venture capital, platform has become a quickly adopted, yet still rarely understood term. The truth is that platform can mean a lot of things to a lot of different firms, and in fact, that is by design. At a high-level, platform can be summarized as the set of strategic activities, services, and initiatives that a venture firm carries out, outside of direct investment activities, that source new investments and support portfolio companies.
Platform serves as the connective tissue for everything that occurs within a venture firm, from building and establishing a firm’s brand to drive awareness and dealflow, to supporting portfolio companies with specific operational challenges, to fostering relationships with key stakeholders that can enable all of the many parts of company building and investing.
Similar to how there are many of different categories of VC communities, there are dozens of unique value-add services and activities that firms choose to engage in related to their platform. I have always found this broad range of potential activities as a source of confusion for firms and entrepreneurs. And so, I set out to simplify and categorize these platform activities into a single framework.
A few years back, I first shared the VC Platform Strategy Matrix (which I formerly referred to as the platform maturity model) at the VC Platform Global Community Summit. It is a framework I had developed and used internally when I was Head of Platform at Underscore VC. Since then, dozens of firms have adopted this as a benchmarking tool for their platform strategy — often using it as a roadmap for which areas they want to actively focus on.
Given the broad adoption of this tool, I wanted to publish a new and improved version with an interactive tool to for firms to design and track their own strategy matrix. Over the last few years, I have received tons of feedback, which has helped to further improve this framework.
To develop this model, I categorized potential platform activities into ten general components in order to provide structure around the question of “what does platform consist of?”. I also arranged these ten components based on their primary objective in relation to a fund’s platform goals, with sourcing new investments at one end of the spectrum and supporting portfolio companies at the other:
- Scouts and Venture Partners: Programs to select well-networked individuals with good investment judgement to source investments on behalf of the fund, sometimes with capital to invest directly.
- Content: Usually focused on brand building and establishing topical thought leadership, typically written content or podcasts to share opinions and best practices around relevant topics, sometimes educational in nature.
- Fellowships and XIRs: Programs focused on engaging individuals who have unique skills and receive support, space, programming, and/or funding in exchange for supporting the firm and portfolio companies.
- Incubators and Office Space: Free office space provided by firms to individuals or early stage companies, sometimes accompanied with organized programming, mentorship, funding, and curricula.
- Events and Workshops: Small private dinners, workshops, social events, community events, social events, webinars, and more to support and engage a firm’s portfolio companies and the broader startup ecosystem.
- Online Forums and Platforms: These include email listservs, slack channels, social network groups, and sometimes custom-built online platforms organized for a firm’s portfolio companies or functional peer groups to provide them with resources and a community of contributors for peer support.
- Expert Networks: Typically highly curated groups of experienced executives and entrepreneurs who act as mentors or advisors for portfolio companies as needed, sometimes with the potential to recruit them for executive roles.
- Corporate Relations: Relations with decision makers at Fortune 500 companies to connect to portfolio companies as potential customers and strategic partners.
- Talent: Efforts to help portfolio companies hire qualified individuals to join their companies, including direct recruiting support as well as providing training and resources that support their hiring priorities.
- Expertise as a Service: Internal consulting and service-based organizations that provide design, finance, marketing, strategy, etc. services for free or for a fee to portfolio companies from functional subject matter experts that provide tactical support beyond what lead investors typically provide as board members.
In addition to organizing these ten components, what the VC Platform Strategy Matrix intends to provide is a single unified framework for firms to easily express and benchmark their platform focus and level of development in comparison to their peer firms.
For each component, I have defined five development stages that describe the firm’s current efforts in each area with a detailed rubric to standardize against. While the actual framework has much more detail on each stage (which you can see on the interactive tool linked below), the five stages in general are:
- Stage 0: None
- Stage 1: Informal & Ad Hoc
- Stage 2: Unified & Informal
- Stage 3: Formal
- Stage 4: Dedicated & Validated
To be clear, there is no “right” matrix, as every firm has very different goals and objectives to support their fund strategy. Moreover, the expectation should not be for any firm to be strong across all ten of the components. Rather, most firms will identify two to five of the components that they want to focus on getting to Stage 3 or Stage 4, and will have a number of components that they want to keep at Stage 0 or Stage 1 — that is typical. In fact, it is recommended for firms to have a number of components identified as Stage 0 or Stage 1 as a way to consciously acknowledge what components of platform are not within their core set of priorities.
Since every firm is unique in their goals, approach, and objectives, every matrix will be different by design. For the sake of illustration, let us take a seed-stage VC fund that targets single-digit ownership in 20+ companies they invest in per year. They may have a strong content and event strategy, but minimal formal portfolio support. That firm will have a very different matrix than a well-established corporate venture firm who invests in a small number of companies at later stages and provides significant, focused support to their portfolio, while working within corporate constraints and not hosting events or producing content.
As you can see, this model can be used as a tool to effectively highlight the differences in platform strategy that a fund takes, and showcase their chosen areas of focus across the ten components with a visual representation of where time, energy and resources are being allocated. Over time, funds can use the framework as the blueprint of their longer-term platform goals and aspirations by identifying areas of growth and continued focus across each axis of the matrix.
My hope is for this framework to continue to evolve, and to serve as a skeleton for firms across the industry as they develop and expand their platform strategies, as well as a way to provide more transparency and context of how firms approach developing their platform strategy. Click the link below to use the interactive tools to build your own platform strategy matrix based on the questions and parameters outlined for each of the ten components of VC platform.
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Thanks to Lindsay Knight, Rachel Yee, Laurel Woerner, Kalee Gardella, Keji Mustapha, Katie Mulligan, and Katie Belding for helping to review this post and contributing to the evolution of this framework with invaluable feedback!