How We Support Our Portfolio Companies
Our approach to being a value-add investor
October 12, 2020
This is the third and final part in our three-part series to provide improved transparency to founders about Dynamo Ventures and how we operate. Over the series of posts, we cover (1) what we invest in, (2) what our investment process is and (3) how we support founders and their startups post-investment.
Dynamo Ventures as a sector focused fund managed by ex-operators and specialist investors is very focused on adding genuine value beyond our investment. If you are only looking for an investment, we are definitely the wrong investors. As part of our investment process, a key consideration is our ability to make a difference to your startup.
In this final post, we outline what founders can expect from us as investors including full transparency of our investment memo, our preferred approach to communications, and ongoing support.
If we haven't been sufficiently clear around the process, please do call us out on Twitter, LinkedIn or by email (hello at dynamo dot vc). Your feedback would be welcomed (but please be gentle).
Within venture capital many funds describe themselves as being a value-add investor, however, we thought it would help to provide an overview of how we at Dynamo Ventures really do help support beyond just making an investment. This overview will help founders to decide whether or not Dynamo Ventures is the right investor for your startup.
Our focus provides Dynamo Ventures with a deep subject matter expertise in this supply chain and mobility, as well as long-standing relationships with many of the key stakeholders within these sectors. This is best highlighted with our weekly Dispatch newsletter and Future of Supply Chain podcast. Alongside these, there are numerous other events that we run to help support the ecosystem - that are outlined below.
Starting with Transparency
We believe that it is important to start any relationship with transparency and hence we present each of our newly invested startups with our Investment Memo that outlines our rationale for investing.
We present the startup’s founders the Investment Memo prior to our first (post-investment) meeting - outlined below. This approach provides maximum transparency and provides a level-set between ourselves as investors and the founders to ensure that there are no misunderstandings.
Our aim for providing the startups with our Investment Memo is to highlight how we think about all the different elements of the startup including the team, market opportunity etc. But probably most importantly, a core part of our Investment Memo is what we perceive are the key risks associated with the startup during the current funding round and how we think about mitigating these risks.
It is the “risk” part of the memo that provides the greatest opportunity to debate and reconcile the differences that might exist between ourselves as investors and the founding team. This might not be resolved but helps to ensure that both parties understand each other's point of view and opinion.
In addition, the Investment Memo also highlights how we believe Dynamo Ventures can add value based upon its knowledge, experience and networks. By explicitly providing this we make ourselves more accountable to the founders.
Building a Relationship
We believe that maintaining open lines of communication is key to ensuring transparency and clarity, as well as ensuring we remain responsive. We aim to achieve that in one of two ways.
Immediately after investment, we set up a What’s App group or Slack channel (depending upon the founders preferred channel) with all the Dynamo Ventures Partners and the startup’s founders. This approach is aimed at sharing information between all the parties without unnecessarily clogging up their inboxes. It is meant to be informal and helpful rather than an unnecessary burden. Different startups have a different cadence and approach to using the group/channel.
In parallel to this, we also set up a weekly 30 min check-in for the first 8 to 12 weeks post-investment. This naturally tapers down to once every 2 weeks after this initial period. It is our preference to have shorter and more frequent discussions every couple of weeks than operate on a monthly cadence - things change quickly in a startup!!
This initial weekly cadence is learned from Jon Bradford’s (one of our partners) time at Techstars which operated a weekly check-in. This has a number of benefits:
- Getting to know you and your startup better. No matter how much time we spend with you and the due diligence we undertake during the investment process, it is no substitute for working alongside you to better understand the nuances of the team and your startup. We believe that leaning into that relationship early allows for greater transparency and trust. The calls allow us to stay up to date but more importantly allow us to provide timely support as appropriate and have contextually-relevant and meaningful discussions around the problems and opportunities you face as a founder
- Introduce our industry network and expertise. As is identified in our Investment Memo, we expect to help by leveraging our long-standing contacts and networks within supply chain and mobility as well as the experience and expertise of the Dynamo Ventures team. This can help further customer development and/or secure new customers, as well as helping with hiring from the industry. Furthermore, we actively support our portfolio to raise follow-on funding from our investor network
- Agreeing on the metrics required for the next investment round. A good investor will be able to provide good insight into the metrics required for your next investment round - based upon historical data and also prevailing market conditions. Aligning expectations early allows us to better understand not just the targets for the next round but also the month to month growth that is needed - thereby allowing us to flag up any shortcomings early and help course-correct as needed
In addition to the above, Dynamo Ventures provides other ongoing support including:
- Founders Camp. Annually, we operate a one-week “Founders Camp” where we bring together 20 startups with 20 potential corporate customers with the objectives of accelerating sales and customer/business development, as well as connecting with other like-minded startups. This event is not exclusive to the Dynamo Ventures portfolio but is focused on similar Seed and Series A startups. That said, portfolio companies do get priority
- Portfolio Day. Once a year, Dynamo Ventures hosts a portfolio day in New York. While we cover many topics from comparable portfolio days, we deliberately bring a “supply chain and mobility” flair with speakers who have direct experience and expertise from this sector - whether that is sales, marketing or engineering
- Dispatch Newsletter. Dynamo Ventures publishes a weekly email newsletter targeting technology and innovation in supply chain and mobility with a readership that includes some of the most influential organizations in this sector. This newsletter helps to promote our portfolio company’s product launches, fundraising announcements, and recruitment
- Future of Supply Chain Podcast. Alongside the above, Dynamo Ventures also hosts a weekly podcast that invites key players from across the industry. This allows portfolio companies to get their message out as well as providing Dynamo Ventures access to some of the most influential decision-makers in the sector
Read Part 1, What We Invest In
Read Part 2, How We Invest. What's Our Investment Process?