Global Themes

On Globalization & Venture Capital

What’s a Biz Dev guy doing pretending to be a VC?

…aka “putting the value-add back in VC”

I dont have these words in my designation but I would like to think that I am part of the “value add” in Amadeus – something that every VC firms claims to do…some are true to their word…others use it to look good in front of entrepreneurs.

So how does one add value?

In the good old-fashioned way…by offering counsel, introductions and advice…and also, by  staying out of the way when it is more appropriate to do so..

The entrepreneur (mgmt team/ VC relationship is a fine balancing act at the best of times…and when entrepreneurs need help, they usually ask for it after a great deal of reluctance and when they do ask for it, they usually prefer actionable advice to homilies and platitudes…

How has it worked? From what my team tells me (and from what our companies tell us), pretty good so far…it helps that I have the team’s support and the work is not seen as an “adjunct” or “peripheral” to the investment activity…and I am very pleased that we now have a few case studies where it has been possible to trace the impact of my involvement (& this activity) on the company’s strategy, performance or both…

As Seth Levine wrote in one of his posts “…ultimately everything I do is judged by their success – and by extension, my ability to help them become successful.”

I cannot agree more.

Why are others not doing it?

To be fair, several others are doing this…even in Europe…where VCs have historically come from non-operational backgrounds…3i has a Biz Dev Director as also Quester…and of course quite a few firms have Venture Partners who I assume get similarly involved…

The main point though is that I see this activity as becoming an increasingly critical element of the core skills that an investment team must possess to deliver above-average returns…

In the end, exceptional performance is usually based on doing something differently….and I am sure this work serves as a key differentiator for us…not just in perception but also in terms of performance…

January 25th, 2007 Posted by | Venture Capital, What VCs really do | 3 comments

3 Comments »

  1. Shantanu, this is very interesting. I worked on a project to advise the EC on regulatory reform for innovation financing (VC to you and me) and a large stream of work emerged on what we called ‘non-financial’ value-add which covered what you discuss here..

    PS: My father says there has got to be something wrong with a sentence that claims to make complex points by running into several lines.. 🙁

    Comment by Shefaly Yogendra | January 26, 2007

  2. I think it’s even more critical for UK VCs – who traditionally don’t tend to have any operational experience. Accountants and investment bankers don’t make the best VCs- and the UK historical returns prove that- 0% returns or a loss, depending on the period you’re looking at.

    I think venture funds could do with more biz dev guys (and more ex-CEOs, COOs, CTOs)…

    Comment by Jason Ball | January 30, 2007

  3. Thanks, Jason, for mentioning that about UK VCs. And I am glad some VCs openly admit this is a gap which needs to be filled.

    Where would you like me to sign? I bring to the table a good head on shoulders, hands that aren’t scared to get dirty, experience that spans ‘greenfield’, operations and mentoring and education in engineering and management. 🙂

    Comment by Shefaly Yogendra | January 31, 2007

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