PS#038: My Playbook for Building Your VC Network (Part 2)
Last week, I kicked off the series about my playbook for building your VC network.
Today, we’re going to outline two things:
YOUR value proposition
The process for creating & maintaining your network
Without further ado, let’s get into it.
YOUR value proposition.
As I’ve mentioned throughout my work, I think that you should provide value first AND often.
You’ll hear me repeat this over and over again because I believe it is the ultimate secret to any form of success in venture capital (or in life for that matter).
With that as foundation, let’s talk about our different network categories and the value we can provide to them as an investor…
Operators
Let’s start with founders.
Most of these connections will come through your sourcing efforts. Depending on whether they are currently operating or have previously operated, your value proposition may change. As an example, a founder currently raising will be potentially looking for capital, market intelligence, and connections to other investors. On the other hand, previous founders may be looking for their next opportunity (i.e., market intelligence or startup connections).
Alongside founders, I’ve found it incredibly helpful to build connections with startup executives and employees. To be frank, you never know who is going to decide to start building or who might be the missing piece for one of your portfolio companies (or another startup).
For the most part, your value proposition will reside in market intelligence and connections within the ecosystem (assuming the founder or someone else has the fundraising piece covered). In this scenario, it’s all about helping them perform their job better, whether that’s introductions to customers/vendors, connections to experienced individuals, partnership opportunities, operational guidance, market standards, etc.
Investors
Again, for investors it’s all about deal flow and introductions.
That’s how you’ll initially prove your value. As you continue to build the relationship, your market intelligence and insights will become another component of that value. If done properly, these relationships can turn into excellent thought partnerships, where you can battle through (i.e., “steel man”) your theses.
Another key part of your value proposition can be making connections to other investors in the space. As your network grows in a specific industry or space, you can bring the investor community together, allowing you to see all the deal flow being shared.
One more important point – you’ll want to build your investor relationships throughout the capital stack (i.e., from the earliest investors through acquirers). We’re going to talk in more detail about why this is so valuable in the next few issues.
Ecosystem
The ecosystem includes individuals who are operating in the space (outside of startups) and those who are very knowledgeable about how the space works. With that in mind, your ability to highlight new products/solutions, market intelligence, and connections becomes very valuable.
The startup and venture ecosystem is all about creating the big companies of tomorrow. For someone working in this space or a subject matter expert, that information can allow them to stay ahead of the curve in their industry.
Even better, if you can provide introductions for those individuals (i.e., customers) to up and coming startups, you’re providing value to multiple parties in your network.
The process for creating & maintaining your network.
OK, now that we understand our value proposition for each of the main categories, it’s time to discuss the process. I use the following approach…
Identify
Categorize
Determine value proposition
Outreach & connect
Determine appropriate cadence
Review & repeat
For the most part, these steps are relatively straightforward. However, there are a few things I’d like to call out …
Identify: Build a list of leads in each category, just like you do for sourcing
Categorize: We’ll cover more specific categories in the next few issues, hang tight
Value proposition: Be specific, figure out how you can provide value first
Outreach & connect: prepare, prepare, prepare – first impressions matter
Appropriate cadence: not every relationship requires a weekly conversation, figure out what works best
Review & repeat: your network needs will change over time, constantly evaluate where you are spending your time and resources
Ultimately, the secret to this process is consistency.
Just like sourcing, this needs to become a regular part of your weekly workflow.
In the next two issues, we’re going to cover my subcategories for investors and ecosystem players. I’ve found this has helped make sure that my network is well covered and provides everything I need for my role as investor.
