There is no one way to manage portfolio companies. In some, we are on the BOD and in almost daily contact with the founders; in others, we are a passive investor getting quarterly updates, and in others somewhere in between.
Why the difference? Some companies need a lot of help, especially if they are fast growing, hiring people, bringing on new customers, etc. It helps to have an investor in these situations that are able to devote time to assisting the founders in making decisions. It also helps if you have been there before with other companies and know what to do next in a variety of situations.
In other companies, if we think the founders have all under control, we can be ‘on-call’ and let them run with their companies. We are always ready to help, but if we feel the founders have all under control, then we don’t want to take time away from the business by getting unnecessary updates.
In all cases, you invest in a team and a business plan. If execution is going well, then let them do their thing, but be ready to jump in if problems arise.
We admit that we are more trusting than many VCs who insist on daily calls with founders. We are not sure that creates a lot of value in a startup unless requested.
Here are a few ideas on managing your relations with your portfolio companies:
- On-Call--Let them know you are always available for a call, visit, review of a proposed deal or contract, new strategy initiative, etc. If they tend to do things you may not agree with (and not contact you beforehand), then assert more control until you feel comfortable.
- Not Intrusive--Many of my fellow VCs are micro managers. In many cases, that may make the CEO/founder more risk adverse/not willing to change that is needed for success.
- Make the Plan and Work the Plan--work hard on the plan forward with your founders, agree on a rollout process and get bi-weekly updates on progress. If corrections are needed, repeat.