Senior Investment Associate
Teamwork is critical to the success of venture capital investing. The VC perspective on teamwork, however, is perhaps more diverse than one might imagine. In any entrepreneurial venture that a VC is considering investing in, there must be a management team. Even the brightest scientific mind or most successful serial entrepreneur must be surrounded by a diverse group of professionals that complement each other in experience and other important character traits. They must also work together as a team – pulling together when challenges arise, aligning interests, and being willing to both offer and accept the ideas, suggestions and criticisms of teammates. I am rarely interested in backing an entrepreneurial venture of one.
But there are other areas of teamwork that are just as critical to the success of a VC firm. Within the firm itself, the investment professionals must work together. The Deal Team at Connecticut Innovations, for example, meets weekly to discuss both prospects and portfolio companies. By sharing the concerns we uncover during our due diligence or the issues discussed at recent portfolio company board meetings, we benefit from the experience and perspective of our colleagues. At times, we have even asked other members of the Deal Team to meet with the prospect or portfolio companies we are responsible for, in an effort to bring another set of eyes and a complementary skill set to the table to assist these companies.
Yet another area requiring teamwork is with VC co-investors. A syndicate of investors can do so much more to ensure the success of an early-stage company than any one investor on its own. Investors share deal flow and help each other with due diligence. Multiple investors working together offer a broader perspective in the portfolio company’s board room and bring to bear a larger network of valuable contacts.
Peter Longo, Chris Penner, who is CI’s newest Deal Team member, and I recently traveled to Boston. While in town, we attended a networking reception hosted by the law firm Goodwin Procter, the New England Venture Capital Association’s breakfast presentation by Facebook COO Sheryl Sandberg, and three separate meetings with Boston-based venture capital firms. Events like this are great opportunities to catch up with old friends and make new contacts, and the meetings with VCs allow us to solidify relationships and exchange investment prospects.
The entrepreneurial environment in the greater New England area, and Connecticut in particular, is thriving. Nevertheless, it is very difficult and can take a considerable amount of risk capital to successfully launch a profitable, sustainable business. CI can support companies only so much, but working together with others, we can accomplish far more. Co-investors can provide part of the capital necessary to bridge a company throughout the inevitable challenging times. Co-investors can suggest management candidates to fill unexpected gaps in the entrepreneurial team. Co-investors can make business development introductions that contribute to the growth of the company. Of course, teamwork among co-investors is more than simply pooling capital. By working together toward a common objective, multiple investors can validate the cliché “two heads are better than one.” Generally, that common goal is to launch and grow a business such that investors can exit in a reasonable timeframe and earn returns commensurate with the investment risk. As an evergreen fund investor, CI relies on liquidity events from previous investments to recycle its capital, fund its operations and invest in future entrepreneurs.
To date, CI has invested alongside more than 60 other VC firms. With the kinds of productive discussions we had during our recent trip to Boston, Peter, Chris and I hope to increase this number, boost our ability to leverage CI’s investments with capital from other firms, and further support promising entrepreneurial companies here in Connecticut.