VCs: More than just capital
Securing funding for your startup marks a pivotal moment, but the true measure of success lies in the growth and scale achieved thereafter. This is driven by the investors’ return target, which for institutional investors is typically 5-10x. Therefore, raising investment from a venture capital (VC) fund is not appropriate for all businesses.
Venture capital investment is not merely about capital injection, it is a commitment from investors to support your journey toward achieving sizable returns. This support, often referred to as "adding value," is diverse and can significantly impact the trajectory of your startup. We will explore the tangible ways in which venture capitalists, particularly those committed to delivering on their promises, can enhance your startup's prospects.
Demystifying "Adding Value"
The phrase "adding value" often appears vague, but its principle lies in the concrete contributions venture capitalists make beyond financial backing. Understanding this distinction is crucial, especially considering that not all VCs deliver on their promises. A recent survey published in sifted revealed that 61% of founders felt their VCs provided less added value than promised, with nearly half attributing this shortfall to a lack of industry-specific knowledge. Hence, selecting investors with relevant expertise is vital.
At Pembroke, our investment focus spans over the consumer, technology, and business services sectors, backed by over a decade of experience investing at an early stage. This specialisation equips us to offer hands-on support to founders and management teams, drawing from firsthand insights and fostering invaluable connections.
People Power
Backing individuals is central to our investment strategy. We meticulously assess the talent driving the companies we invest in and actively engage at the board level to help design organisational frameworks and strategies. From designing optimal structures to facilitating key hires, our involvement extends to every aspect of human capital, ensuring robust people strategies that drive growth.
Networking Opportunities
Partnering with a VC opens doors to a network of like-minded founders within the portfolio. Beyond capital, you gain access to a supportive community for advice and collaboration. At Pembroke, we facilitate connections through events tailored to our portfolio companies, fostering skill development and peer-to-peer networking.
Governance and Strategy
Effective governance is often overlooked by early-stage founders focused on growth. However, it is a vital aspect that can enhance your start-up's appeal to future investors. Pembroke brings expertise in designing governance processes and structures, ensuring best practices tailored to your stage of growth.
Partnership Approach
We prioritise compatibility with founders, emphasising a collaborative approach. As a fund forged "by entrepreneurs, for entrepreneurs," we strive to create synergies between founders and leverage our extensive network to drive success. Competitive deals are won through introductions to our portfolio companies, providing firsthand insights into the partnership dynamic.
Partnering with a venture capitalist goes beyond financial backing, it is about unlocking growth opportunities, gaining industry insights, and fostering collaborative relationships. By aligning with investors committed to adding more than just capital, startups can confidently navigate the complexities of growth, ultimately realising their full potential.