You’re starting a Venture Capital internship. What should you know about portfolio company management?

A major overlooked question to ask around investment thesis is "What is our firm's ownership target?". This is much more indicative of the firm's strategy than asking their target investment stage. If your firm invests $1m checks on average and targets 10% ownership at a minimum, that means that for the most part companies raising at a valuation of above $10m do not fit the firm's investment thesis.

To successfully navigate the world of venture capital, consider the following questions. How does each portfolio company's investment thesis align with the VC firm's overall vision? What are the key indicators that demonstrate a startup is meeting or exceeding the expectations outlined in the investment thesis? In what way can you, as an intern, contribute to the effective evaluation and communication of the portfolio companies' progress? These questions are fundamental to deeply understanding the role of investment theses in effective portfolio company management.

As a Venture Capital intern, it’s essential to understand the lifecycle of investments, from sourcing deals to exit strategies. You should be familiar with the metrics used to evaluate a company's performance, the importance of building strong relationships with founders, and the various ways VCs provide value beyond capital, such as strategic guidance, network introductions, and operational support.

Understanding the investment thesis in portfolio companies is crucial for making informed decisions as an investor Start by analyzing the investment thesis, which outlines the rationale behind investing in a particular company. This involves examining the market potential, competitive advantage, growth prospects, and overall business model. Additionally, evaluate the management team's capabilities, track record, and alignment with the investment thesis. Conduct extensive due diligence, including financial analysis, market research, and industry trends, to gain a comprehensive understanding of the company's potential risks and rewards.

Navigating the Venture Capital landscape? Grasp the heart of each portfolio company: their investment thesis. This compass guides VCs through the tumultuous sea of startups, pinpointing why a particular venture stands out. Think of it as the startup's DNA—detailing the problem it solves, the unique solution, the market it aims to conquer, and the competitive edge that sets it apart. Mastering this blueprint not only sharpens your analysis of company progress and hurdles but also polishes your pitch to the world. As an intern, dive deep into these narratives; they're your playbook for championing innovation and steering conversations with stakeholders. #divineintervention #gabenfreude

For example, during board meetings, an intern can observe how investment strategies are discussed and how the board navigates complex challenges facing the company. This offers invaluable insights into the decision-making process at the highest level. Additionally, by assisting in the preparation of documents for board meetings, such as analyzing financial performance or compiling market research, an intern not only supports the process but also gains a deeper understanding of the critical factors that influence a company's direction. These experiences are crucial for anyone aspiring to understand venture capital and company management at a fundamental level.

The board of directors in a portfolio venture capital (VC) firm plays a critical role in overseeing and guiding the firm's investment activities and portfolio companies. Comprised of experienced professionals, industry experts, and representatives from the firm and its investors. The board provides strategic direction, governance, and accountability for the firm's investments. They are also responsible for setting investment policies, evaluating potential investments, and making decisions on behalf of the firm and its investors. The board also provides valuable insights, networks, and helping navigate challenges, make strategic decisions, and maximize their growth potential.

I attended board of directors meetings a lot of times with Crunch Media and startups in in5 Dubai and the most big one during my work in bank of Pension Fund as BPMN QA director on bank guarantee pipeline that issued billions. All this meetings have clear agenda and people always concentrate on EARNINGS (you need to talk billions if you building big projects) and AUCTION (Milgrom and Wilson New Economic Theory) theory that will help you generate more value with good strategic vision. Make clear agenda and always use best practices in business process modeling (from ITIL).

In the chess game of venture capital, the board of directors is your queen. This elite squad, blending founders, the CEO, and VC luminaries, charts the company's strategic voyage. As a VC intern, your seat at this table—be it as an observer or scribe—offers a front-row view into the cerebral core of company governance. Savvy interns will decode the dynamics, decisions, and critiques unfurling here, turning boardroom insights into wisdom. Dive into preparatory rites: dissect financials, metrics, and updates like an oracle interpreting signs. This is where strategy meets substance, a critical arena for those shaping the future. #divineintervention #gabenfreude

What a VC intern should know: Observation and Learning: While interns typically do not interact directly with the board, understanding its dynamics and decisions can provide invaluable insights into strategic management and venture capital. Confidentiality: Discussions and decisions at the board level are sensitive. Recognizing the importance of confidentiality in these matters is crucial. Impact on Operations: Realize how board directives influence the company's operations, strategy, and culture. This understanding can enrich an intern's perspective on how startups navigate growth and challenges. Networking: Board directors are often leaders in their fields and can provide mentorship and career opportunities in the future.

VC value creation involves providing strategic guidance, network building, operational expertise, and industry knowledge to portfolio companies. These services help them grow and succeed, making VCs active partners in their companies' success. This not only benefits the companies but also increases the VC's chances of a successful exit, such as an IPO or acquisition.

Value-added services in a portfolio venture capital (VC) firm refer to the additional support and resources provided to portfolio companies beyond financial investment. These services aim to enhance the growth, development, and success of portfolio companies by leveraging the expertise, networks, and experience of the VC firm and its team. Value-added services can include strategic guidance, operational support, access to industry connections and partnerships, mentorship, talent recruitment, marketing and branding assistance, and assistance with financial planning and management.

Think of value-added services as the secret sauce of venture capital, elevating mere financial investment to strategic partnership. Beyond the check, VC firms inject expertise, connections, and support across various domains—mentorship, networking, marketing, and more. As a VC intern, you're a conduit of this potent mix, tasked with matching portfolio companies' needs with your firm's arsenal. Your mission? Forge deep connections with founders, decoding their ambitions and challenges. Leverage every resource, every expert in your network to fuel their journey. In this role, you're not just an intern; you're a catalyst for transformation. #divineintervention #gabenfreude

For a venture capital intern, understanding exit strategies is pivotal. Exit strategies, such as IPOs or acquisitions, are the methods through which investors realize returns on their investment. Knowing the different strategies and their implications on a portfolio company's growth and valuation is crucial. Recognize that the choice of exit strategy can affect the company’s direction, employee retention, and investor relationships. Your role may involve assisting with exit planning, evaluating potential buyers or public market conditions, and understanding the legal and financial nuances of each exit path. This knowledge will be invaluable for your development in the venture capital ecosystem.

Track the liquidity events around. Track your competitors LP / GP liquidity events. Always speed up the liquidity events, BUT better always have in pocket couple of variants of liquidity events for your portfolio to always have one step to the capital. The best way to have your own sandbox with LP / GP who ready to make PR / marketing about their portfolio where you will promote your portfolio companies and implement in the promotion preparation and execution of the exit process, train publicly due diligence, negotiations, and closing because your goal is IPO or M&A that have a lot of transparency in “like OSS” approach ;)

The exit strategy: the grand finale in the symphony of venture capital. It's the meticulously orchestrated plan for a VC to harvest the fruits of its investment through acquisitions, mergers, or the coveted IPO. As an intern, knowing the exit cadence for each portfolio company is crucial—each step, from growth spurts to valuation peaks, plays into this ultimate move. Your role? A vigilant scout, eyes on market waves, competitive shifts, and prospective buyers, molding the path to exit. Dive into the trenches of due diligence, negotiations, and closing deals. Here, you're not just witnessing history; you're helping craft it. #divineintervention #gabenfreude

Portfolio analysis is the VC's navigational chart, a deep dive into the currents and undercurrents shaping the fate of investments. Through the lens of revenue, growth, profitability, and more, this analysis paints a vivid picture of where each company stands and where the tides may take them. As an intern, your command over data—crunching numbers, crafting dashboards, and distilling insights—is your wand. Uncover the magic within the metrics, spotlighting strengths to amplify, weaknesses to address, and uncharted territories to explore. Your analysis doesn't just reflect the present; it maps out the future. Here, you're not just an observer; you're a visionary. #divineintervention #gabenfreude

"Balance of Interest" is definitely one important lesson to be learned as a VC intern. A startup founder need to understand truly what the interest of the VCs beyond profiy-making. Some VCs "want it their own way" especially on issues of crucial decision-making. How to navigate these negotiations to reach a beneficial compromise is an important lesson for startup Founders...

For a VC intern, understanding portfolio diversification is key to managing risk and maximizing returns. It involves investing in a variety of startups across different industries, stages, and regions to mitigate the impact of any single investment's failure. Recognize the balance between seeking innovative, high-growth potential startups and spreading risk. Learn to evaluate potential investments not just on individual merits but also on how they fit within the portfolio's broader strategy. Observing this practice will enhance your grasp of risk management and strategic investment planning in the venture capital space.

There’s the best diversification: horizontal… like you need some support in 1) CO-MARKETING and sales, 2) organic growth, 3) mentorship, 4) networking, 5) recruitment, 6) legal, 7) operational, and 8) technical support. VCs need to invest in this directions ?? in this line from 1 to 8 where 1 as co-marketing is the most important one because this will help your FOUNDERS to grow faster in different niches and markets and 8 like tech support is important too but only if you market your tech product to right audience (even if this is LP / GP / MFO or even Government, they will give you time/material for the journey through all this 8 steps)

If you are an intern you probably know nothing about how to run, support or turn around a portfolio company and that’s totally fine. No one comes out of undergrad knowing it. But you can add tonnes of value by focusing on the value drivers, analysing them rigorously and speaking your mind about it. Be smart about it and uphold your obligation to dissent.

Unless you've successful built companies before, don't image yourself advising/guiding entrepreneurs, or expect to sit on board. Be humble. Every VC talks about how entrepreneurs must spend time developing relationships with VCs. I think it's bull. Entrepreneurs should focus on building great businesses and VCs will always invest in a great business even if we just met. VCs must focus on building relationship with great entrepreneurs. Pretending to know anything about building a business just because you are on the investment side is a great way to show entrepreneur you are a fool.