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This is part three of the VC Community Series. Check here for Part 1: Rise of VC Community & 2: Building Community.
Quick background, I’m the General Manager at Union Square Ventures. I run our 6+ year old community, the USV Network. The VC Community function has increased in popularity and complexity. VC Network structures are a core part of many similar organizations like Accelerators, Incubators and Professional Organizations. This series is focused on sharing best practices for starting, building, and growing a community in these organizations.
The key to any great product is building something customers want. VC Networks are no different. Design your product to serve your customers. We’ll look at the factors that enable you to make the best design decisions for your network.
Understanding who you are and how you define your community is the first step (refer back to Part 2 if you haven’t defined the characteristics of your org yet). Now that you understand your capabilities, time to understand your audience.
Describe your customers
At USV, we have 60+ technology startups spread across North America and Europe. They are in a number of industries and range in maturity from companies less than a year old to companies that have been in business for over 10 years. All of the companies fit into our investment thesis, but even that can range from doctors sharing serious medical cases to helping developers easily send SMS messages. The companies are varied but many of their challenges are the same: building a team, leveraging network effects, finding customers, and building products.
What are the characteristics of your potential network? How many organizations are you including in your community? Where are they geographically located? What do they have in common? How long have these companies been in business? What is their organizational maturity—or the size of their teams? Are they open to collaboration? Are they tech savvy? Let’s start with a few easy ones:
Where is your community located?
If you have a physical space with all of your members in one place, easy, you have a gravitational pull in that spot. If your members are spread out, you need to think more strategically about how to connect them.
How tech savvy is your community?
There are fantastic tools in the market to manage communications, contacts, and organizational discussions. However, tools are worthless if no one is willing to use them.
What is your budget to manage the community?
Sometimes it’s hard to know how much money you’ll want to budget for your community outreach and network building. Having a rough estimate around the size of your budget will be a good constraint to understand how you serve your customers.
Who is your audience within the community?
Even if you’ve defined your organization, you have to make the design decision about the participants you plan to serve. You can modify this over time but defining the initial scope will help focus resources.
Not all of these design decisions may have clear answers at this stage. Just as we teach entrepreneurs, it’s key to “get out of the building” and talk to customers. Setup a few conversations with your new customers and get to know what they’re looking for. In my experience, entrepreneurs and operators will ask for help with lots of challenges in those conversations. Be patient, define your customers before you commit to what you’re going to provide.
Not all communities are created equal
Given the growing number of VC Community roles, Accelerators and Incubators, there is a lot of existing advice about how to serve your community. Understanding the differences between your network and the next one will allow you to make smarter decisions for your unique community.
After 50+ conversations with Network or Community building peers, here are the common benefits and challenges of serving these different types of networks:
Serving an Institutional VC Community:
Benefits:
Challenges:
Serving an Incubator/Seed Stage Community:
Benefits:
Challenges:
Serving an Accelerator Community:
Benefits:
Challenges:
Serving a Professional Group’s Community:
Benefits:
Challenges:
The key to success is finding what works for you. In the next part of the series we will look at how to get started, stories from the experts, and how to measure success.
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This is part two of the VC Community Series. Check here for Part I.
Quick background, I’m the General Manager at Union Square Ventures, where I run our 6+ year community, the USV Network. The VC Community function has increased in popularity, and is also a core part of many other organizations like Accelerators, Incubators and Professional Organizations. This series is focused on sharing best practices for starting, building and growing a community in these organizations.
Building the right community for your organization
The landscape of VC communities is varied, especially when you include accelerators, incubators and other groups that have similar dynamics of peer professionals learning together. Deciding the scope of how to serve your community is a key product decision.
Specifically, what is the goal of your organization? What is your relationship with portfolio companies? And what is the timeline of those services? These are pieces of your community product that should be decided early on.
To help get you started, here are a few examples of the different relationship expectations, timelines and goals for different types of organizations. You can use this framework, whether you’re a VC, accelerator, incubator, or a professional network.
Institutional VCs
Note: For Institutional VC firms, whether you invest early stage or in later stages, a company would join the core community right after the investment and stay through the exit of the company.
Incubator, Seed VC or Angel
Notes: An Incubator, Seed VC or Angel investor may structure their involvement or investment with a company so that they pull back once the company makes it to the next investment stage.
Accelerators
Notes: An accelerator is designed to provide a high concentration of support in a short period of time. They will likely focus all community efforts in a few months with a small buffer after demo day.
Professional Network Groups
Notes: For professional network groups, the purpose is to learn and grow in your career. Typically members join a group and stay until they change careers or decide to leave the group. There is less of a firm “conclusion” date.
You may agree with these constraints for your organization, or decide to change the relationship to be shorter or longer to fit with your firm’s expertise. My advice would be to start small before committing to too many things.
How will you define the scope of your network?
How long are your members “in network” or “part of the community”? This helps to figure out who you are serving and for how long.
Look closely at the start and end dates of the formal relationship commitment you’re making. In venture capital, the companies you invest in are part of a larger ecosystem of entrepreneurs, and beyond that, a part of the larger industry. Where do you draw the line in where your community starts and ends?
At USV, we speak with a lot of companies before we invest in them, I wasn’t sure if those companies should they be part of the community or not. Equally, we have companies that exit, are we going to continue to serve them as part of our community after they leave? These questions can be answered on a case-by-case but I found that prioritizing the core of my community, I knew how to better spend my time.
There is no right or wrong way to serve the community, the choice is unique to each firm. Here’s how a few examples of how different communities have defined the boundaries of their networks.
What defines your community?
Members only
At USV, we focus 95% of our resources on companies already part of the portfolio. We do continue to include ‘alumni’ companies in our community events, but we are more passive than active. We don’t focus the USV Network on including pre-investment companies. We engage with those companies as a firm, but we do not include them in the scope of the USV Network.
Potential and existing members
Founders Fund runs an annual event called F50. They invite portfolio companies and other curated guests from their community. Not everyone has to be a potential investment, but they actively engage and work with their pipeline in addition to their members.
Members and alumni
YC offers a platform to allow continued networking for their accelerator alumni. Their program is a few months long, but access to the network is on-going. They connect with potential companies through HackerNews but the majority of their community efforts are for those connected into YC.
Lifecycle
FFVC ensures they are connecting with entrepreneurs at every step of the lifecycle. They plan social events that include members of the general tech community, high potential investments, their investments and past investments. They engage a wide group of people to add benefit to their founders and the firm.
Each organization will be different, so figure out where you are interested in focusing your efforts. There is value in all of these approaches, the only differences is how you allocate time and resources to support the breath and depth of how you define your community.
Organization Outline Recap:
You should now have a better understanding of your operating constraints. Create your community outline that answers these questions:
- The thesis and culture of your organization.
- The next steps your community members are trying to reach.
- The timeline you are defining to engage your community.
- The boundaries of community members you’re focusing your support.
Now that you’ve defined the characteristics of your organization, we’ll use these in the next blog post to define and address the needs of your customers: the organizations you’re serving.
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This is part one of the VC Community Series.
Since 2010 year, there has been an increased focus on how VCs can deliver more value to portfolio companies. Whether a firm is interested in developing more value-add to compete for deals against other firms or if it’s to provide resources to help ensure better outcomes of the existing portfolio, it doesn’t matter. There is a growing focus on expanding value.
One of the fastest growing signs of this is the rise of the VC Community role.
Traditionally, VC firms were comprised of investment roles and administrative roles only. Their responsibility was to find great businesses, write checks and, depending on the firm, join the board to help those companies grow to a successful exit. Partners and investors were expected to provide their expertise and advice to portfolio companies, but those services were limited by Partner time. Entrepreneurs were encouraged to tap into external networks to find peers, seek professional expertise, and to hire talent. Venture Capital firms were experts in writing checks and were evaluated on their ability to get deals done and provide strategic advice.
In 2010, USV planned to expand their team to better connect their existing portfolio companies. They created the first General Manager role at USV,
“It will be the job of the GM of the USV Network to build on our early work to create a useful and sustainable connection between the portfolio companies. Think of it as a community manager for the USV portfolio. The community is small, and private, but populated by people and companies who are having a big impact on the web.“
In June 2010, they hired Gary Chou, the first General Manager of the Union Square Ventures Network. A mouthful of a title, but it was one of the first internal early-stage VC roles that was focused on building community among portfolio companies.
Five years later, there are now 30+ VCs with a dedicated team member focused on community. Out of the top 50 ranked early stage VC firms, the majority have one or more people focused on community efforts. A number of angel groups, accelerators and incubators are increasing their focus on connecting their portfolio companies to each other.
USV Network Evolution
Today, I run the USV Network at Union Square Ventures. I’ve been growing our community for over three years and my predecessor, Gary Chou built the role from the ground-up for three years prior to that.
Since building a community in VC is an emerging field, there is a lot of conversation about why this is important, who should create one, and how to get started. I’m often asked for advice on how we’ve built the USV Network, our community of portfolio companies.
Questions aren’t limited to VCs, I’ve also been approached by accelerators, incubators, professional organizations, and non-profits, looking to build a community among their members or portfolios. The goal of the role is to support a group of individual companies at scale, through education, connections and resources.
So whether you’re trying to figure out if you should build this role in your organization, where to get started or if you want to take community organization to the next level, this blog series will walk through the process of building from scratch.
Creating a VC Community thoughtfully
There is a definite benefit for companies and VCs alike who create this type of service and that it is increasingly becoming a point of competitive differentiation. The risk is that if the community is not created with intent, it can be detrimental to the firm (too much overhead) and to the company (overwhelmed or too dependent).
The rapid growth of the VC Community role across firms is a strong signal of the importance, but comes with a few warnings. Quality support is important but too many communities can be a risk to the portfolio companies, the VC’s reputation, and the perspective of LPs.
If you’re going to create a new community, here are some guidelines to make sure you’re setup for success:
Should you start a community for your portfolio?
If you’re thinking about expanding your community role or building one from scratch, consider what your VC firm offers, understand what the culture is, figure out how that applies to your role.
The best place to start is to look at the unique characteristics of your firm in order to figure how to leverage those to create unique value add.
What should you evaluate first?
Before anything else, state the thesis of your organization. Your company culture matters. What is your investment thesis? What do you believe to be true? Use those to apply them to your own network.
At USV, we believe in networks.
Thesis 6/8/11:
Thesis 12/14/2015:
We’ve applied our thesis, the belief in networks to empower bottom-up, emergent behavior, to the way we serve our network, hence the name USV Network.
What is the goal of your organization?
Every VC, accelerator, and incubator is different. To best serve the community, it’s important to understand both the scope of your services and the characteristics of the companies you serve.
First, define the scope of your services. If you are an accelerator, you may only work with companies for a short time. If you’re a VC, you may remain with a company for several years. Defining the relationship expectations of your organization to the community is the first set of constraints.
For USV, we work with our companies when we make an investment all the way through to an exit. Whether that exit is an IPO, an acquisition or a shut-down, we continue to work with those companies. We anticipate we’ll work with a company around 10 years, in a few cases, even longer.
Looking at our portfolio, here are some things we kept in mind when we were getting started:
Solve problems in your community
Take a look at your community. Do you have things in common with ours or do you have the opposite scenario?
Take some time to spell out the unique components of your organization. Understanding what works for you will be the key to getting started successfully.
In the next post in this series, I’ll provide next steps and examples of how VCs, accelerators, incubators and beyond are serving their communities.
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