Discussion

“Today, more and more VC firms are focusing on running their own businesses to the same degree they focus on helping their portfolio companies,” said Kendra Ragatz, COO of Aspect Ventures.^[1]

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Yoshi believes that team-building is the key to success for venture capitalists and startups. He states “to get professional money and to make our fund sustainable, the team is key.” By solidifying a solid team, Sozo Ventures has been able to prove their value and leverage their resources to build a successful fund.

GreenSpring has built a team with a diversified experience set across founders, operators, asset management, mergers and acquisitions, limited partner experience, sales and investor relations, growth equity, domain expertise. After sitting on the NVCA diversity board, GreenSpring committed to and implemented an initiative to bring in senior female partners.

Outsourced vs. Insourced
Standish Management (Cervin Ventures)

Tips and Tricks

• Hold open office hours once a week and direct miscellaneous meetings to that time slot. It’s a good way to make sure you spend some time building your network but limiting the amount of time that could take. (Capital Invent)

• Be thoughtful about the positive and negative milestones occurring in your colleagues’ lives. Diligently listen to their needs and be helpful (Greenspring Associates)

Non-Investing Roles

First Round Capital hires Partner Operations Managers (job description here).

Case Studies

Tammi Jantzen on Fund Administration with a Single Spreadsheet

Tammi Jantzen, as CFO of Battelle Ventures, had to internally manage all fund administration. She had the idea early on to create a single simple spreadsheet from which you could visualize the quantitative story of the fund. With a background as a CPA, the insight Tammi brought to the task is a standard accounting principle: the purpose should be to model a fund return based on a set of assumptions, showing cash coming in and cash going out on a quarterly basis throughout the life of the fund.

You can access this single spreadsheet here in Google Drive > KF Class 20 (Public) > Handbook Resources > Tammi Jantzen’s IRR Model

The model follows “tidy” data principles of variables in columns and observations (quarters) in rows.^[2] The essential elements are:

• an input section of portfolio company investments by quarter set on the right of the sheet, each portfolio company is a column.

• an output table on the left, each row is a quarterly date. The summary table is bucketed into Capital Contributions, Cumulative Contributions, Distributions, and Cumulative Distributions. (How tidy is that?!?)

• The rows are ordered from past to future, with a clear division between historical and forecasted information

• Clear key metrics in bold, calculated from the output table to feed a consistent, updated Net IRR and Multiple.

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The Battelle team used this IRR model to prepare for quarterly advisory board meetings, and having historicals and forecasts, fund summary statistics and individual portfolio companies represented, structured the preparation on two conversations: 1) predicting the valuation and capital needs trajectory, as well as the potential exit valuation, of every portfolio company 2) seeing how changes in expectations of portfolio performance created dynamic needs to assure meeting the summary financial goals for the fund.

The unexpected benefits of performing fund administration through this tidy “IRR model” were twofold, it helped the team plan reserves for future portfolio capital needs, and it also helped the Battelle Ventures team plan for capital calls. Many people in venture would be impressed that all important fund information was contained in a single 45 kilobyte excel file. Needless to say, it also made them sound competent and organized for their advisory board.

Highlights

Highlighting Atomico

Atomico operates a structured firm with many team members having functional responsibilities. Co-Founder Niklas Zennstrom serves as the CEO. They have a Chief of Staff, Head of Communications, Head of Investor Relations, Finance Director, IT Director, Portfolio Accountant, and Fund Accountant. Partners and Principals often have identified roles as well, such as Chief Operating Officer, Head of Growth, Scaling Specialist, and Head of Research. They have two major operating divisions: the investment team with a headcount of twenty, and the “value creation” team with a headcount of six plus four Entrepreneurs in Residence.

Highlighting Emergence

Relative to other firms their size, Emergence Capital has a sizable finance team. In a team of around 30 professionals, they have five people in finance: a CFO, a Director of Finance, a Financial Planning and Accounting professional, and then a few “Controllers.”

Highlighting KEF Investments: Investment Committee Management

Prashant Mehta of KEF Investments is in charge of strategic planning and monitoring of the group and largely works on the fixed income side of investing. When dealing with an investment committee, he explains speaking to each member of the IC before the decision meeting is imperative. By listing out the pros and cons individually, problems can be resolved or discussed out before making a decision. If there are surprises in the investment committee board meeting, the deal will most likely not go through, whether it is a good or bad investment.