How do you navigate conflicts between founders and investors in underperforming portfolio companies?

When handling conflicts between founders and investors in underperforming portfolio companies, I always begin by facilitating open and transparent communication. This allows both parties to express their concerns and perspectives. I then mediate to find common ground and focus on shared goals, such as improving the company's performance. By providing data-driven insights and potential solutions, I aim to align everyone on the best path forward. Additionally, setting clear expectations and fostering a collaborative approach encourage cooperation and a united effort to turn the company around.

When you take a portfolio approach, it's very common to see that not all your companies perform well and that may be due to several factors. Operational factors include poor product, team conflicts, trying to scale too quickly etc. Financial factors include running out of cash, inappropriate pricing, and unstable business model. Market issues include lack of market need and not reading your competitors well. Legal factors include intellectual property disputes, regulatory issues etc. All of this should be assessed deeply and addressed by investors with empathy and domain knowledge.

O melhor VC é aquele que traz, além de dinheiro, inteligência de negócio. Certa vez estava conversando com uma startup investida por uma aceleradora que conhecia e eles estavam elogiando exaustivamente o apoio que receberam. A primeira pergunta que a Aceleradora fez para os founders foi: como posso te ajudar a vender mais? Isso é muito fantástico por que no final, tudo é venda. E nem todos os empreendedores s?o experts em vendas ou na área financeira por exemplo. Apesar de que podem ser excepcionais técnicos. Ent?o o principal fator de uma startup que está em baixa performance pode ser falta de perfil técnico de vendas ao invés de um produto ruim. O VC com uma esteira de acompanhamento focado em vendas n?o tem dor de cabe?a.

When addressing conflicts between founders and investors in underperforming portfolio companies, it's crucial to emphasize the importance of a shared understanding of the root causes of underperformance. Encourage open dialogue and collaboration to identify the underlying issues, whether they are operational, financial, market-related, or team-related. By working together to understand the challenges, both founders and investors can develop a more effective action plan to address them, ultimately leading to a higher chance of turnaround and success for the company.

As a venture capital investor, a key part of our role is communication. At the end of the day, we are all in the business of people not just money. Being a natural mediator and great listener always helped me to find solutions in conflicts.

The most important thing in working with anybody in a professional environment, is to align interest. To some degree, there is always going to be different incentives, yet when there is a common understanding and goal, we can all work much better together. Having a good dialogue between founders and investors upfront, to make sure that there is a good fit between the two is critical. Sometimes we assume what other people want, and that can lead to challenges down the road. It is also important to have frequent communication and re-alignment, to make sure our common understanding is still intact.

Founders and investors should also have open lines of communication regularly to address performance metrics, expectations, and concerns. Potential conflicts can also be avoided by developing a governance structure with regular reviews and explicit dispute resolution procedures. By taking proactive measures to address legal and communication issues, you can cultivate a cooperative atmosphere that serves both parties' interests and helps stabilise and expand underperforming portfolio companies. This all-encompassing strategy is essential to venture capital financial management and guarantees long-lasting and amicable relationships.

Creativity is a must. An attitude towards mutual benefit is always important. You need to think strategic and ahead of the game.

Informed decisions is key. However I do use my intuition more and more as I grow older. Sometimes we underestimate the value of listening to your inner guide and energy around you.

Furthermore, think about putting in place a performance review system that evaluates the business's advancement against predetermined benchmarks regularly. This method offers an impartial foundation for decision-making and assists in determining when strategic reorientations or other interventions are required. In the context of venture capital financial management, this kind of system guarantees that choices are transparent and data-driven, promoting collaboration and trust between investors and founders. In the end, this organised process of decision-making supports the stability and long-term success of underperforming portfolio companies.