Breaking the Code — An Emerging Managers Guide to building that bench

As a diverse emerging manager in the venture capital industry, I know firsthand how challenging it can be to break into the deal room. While there has been progress made in recent years in terms of increasing diversity and inclusivity in venture capital, there is still a long way to go. However, even once women have made their way into the deal room, there is another challenge they often face:?building a strong service provider bench.

The service provider bench is a critical component of any venture capital firm’s success. Service providers including law firms, tax advisors, and PR firms can provide valuable expertise and resources that can help firms make better investment decisions, develop better products, and ultimately outperform their competitors. However, for women emerging managers, building a strong service provider bench can be especially challenging.

One of the reasons for this is that the service provider world can be something of a “closed shop.” Many service providers have longstanding relationships with established venture capital firms, LPs or our target assets, and are hesitant to work with newer or smaller firms. This can make it difficult for emerging managers, especially those who are women or from underrepresented backgrounds, to build the relationships they need to succeed.

This is a pity because having a strong service provider bench can make all the difference in the world for an emerging manager’s success. Service providers can provide emerging managers with access to specialized resources and tools that they may not be able to afford on their own.

So, what are the 8 things diverse emerging managers can do to overcome this challenge?

1. Leverage your networks as much as possible.?Building strong relationships with other GPs in the industry and with colleagues who have strong service provider histories, and who are supportive of diversity, equity, and inclusivity can be a powerful way to break into the service provider world. (Shout out to? Tanner McDaniel - Check out his posts on Medium here too Tanner McDaniel) Tanner knows all things service providers and is my sherpa and hero!)
2. Focus on building a track record of successful investments?and demonstrating their expertise and value to service providers, such that they see the potential of the fund as a partner not a ‘job”.
3. Complete those annual PE fund surveys?— they have already short-listed top-tier vendors who can be the difference between a good or bad deal.
4. Build relationships with service providers:?While it can be challenging to break into the existing network of service providers, building relationships with individual providers can help. Attend industry events, join relevant professional organizations, and seek out introductions from your existing network.
5. Seek out diverse service providers:?Just as there are a growing number of investors who are actively looking to invest in underrepresented founders, there are also service providers who are committed to working with diverse clients. Seek out providers who share your values and have a track record of working with underrepresented groups.
6. Be strategic with your resources:?As an emerging manager, you may not have the resources to work with the most well-known service providers. Instead, be strategic about which providers you work with and focus on building relationships with those who can provide the most value for your business.
7. Consider alternative service providers:?In addition to traditional law firms and accounting firms, there are many alternative service providers who can offer valuable support to emerging managers. For example, there are specialized firms that focus specifically on helping underrepresented founders navigate the fundraising process.
8. Be persistent:?Breaking into the existing network of service providers can be challenging, but persistence can pay off. Stay focused on building relationships and seeking out opportunities to work with service providers who can help your business succeed.

In conclusion, while the service provider bench can be something of a “closed network” in the venture capital industry, women emerging managers should not be deterred.

Leveraging your networks like Global Women in VC , 2X Collaborative , Coolwater Capital and your University Alumni can be life saviours in critical growth phases of your firm.

Building a strong service provider bench is critical to success in the venture capital industry, and there are steps that emerging managers can take to overcome the challenges they may face. By leveraging your networks and building your track records, as a diverse emerging manager you can build the relationships that you need to succeed and ultimately make a difference to your portfolio performance and founders, in the venture capital industry.

For only together can we accelerate impact!

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Leesa Soulodre is the General Partner of R3i Capital and the founder of the R3i Group. If you found this useful, like, share with another emerging manager or LP, and follow me on?LinkedIn?so that together we can accelerate impact.

R3i is on a mission to deploy one billion dollars over the next decade into deeptech climate impact and the transition to value-based care.?R3i Capital?LP has announced the launch of its Sustainable Development Future Fund. The 506(c) Delaware-based fund will provide financing to 60 startups worldwide whose deep technology innovations improve the resilience and effectiveness of smart cities’ interconnected systems: energy, water, transportation, the built environment, health, food and agriculture, and safety and security, meeting the requirements of our SDGs.

The fund targets 6 Sustainable Development Goals:

1. GOAL 3 — Good Health and Wellbeing: Ensure healthy lives and promote well-being for all at all ages
2. GOAL 5 — Achieve gender equality and empower all women and girls
3. GOAL 6 — Ensure availability and sustainable management of water and sanitation for all
4. GOAL 7. Ensure access to affordable, reliable, sustainable and modern energy for all
5. GOAL 11: Make cities and human settlements inclusive, safe, resilient and sustainable
6. GOAL 13. Take urgent action to combat climate change and its impacts

Only together, can we accelerate impact and build a more inclusive economy.

What’s in our name?

R3i stands for returns, resilience and reliability — three characteristics that are often used to describe or evaluate investments, businesses, or other assets.

Together, these three characteristics can be important factors to consider when evaluating the potential risks and rewards of an investment or asset.

3 i’s — “Intelligence, Innovation, Insight” are the three characteristics that are often used to describe a venture firm’s edge. R3i synthesises these into its collective and inclusive “impact”.

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