Most startups work months, even years, to secure funding that will be the lifeblood of their business. Securing that precious capital has been the primary goal of every founder in our portfolio at one point or another, and along the way they have become familiar with the beginning of the venture capital path yet may not be familiar with ends and outs of portfolio management. So, what happens AFTER your startup gets funded? What a lot of entrepreneurs don’t know is how the relationship between investment firm and company continues well after the ink on the check is dry.
The interactions between investor and founder following the investment are called “portfolio management” and are focused on protecting the investment, monitoring company progress, spurring growth, and maintaining a close relationship with the company across several areas.
A few of the critical functions of portfolio management are summarized below:
- Collecting and analyzing quarterly updates and financials
- Monitoring progress and performance
- Tracking performance against funding round milestones
- Establishing accurate company valuations for investment accounting purposes
- Reviewing forecasts and financial results
- Connecting founders with accounting resources
- Advising on hiring decisions (when asked)
- Attending meetings of the Board of Directors
- Advising founders on company decisions (when asked)
- Working directly with management teams to develop and execute business strategy
- Keeping an eye on competition- both from a valuation and competitive threat perspective
- Assisting with continued product and market refinement
- Making connections to potential clients and strategic partners
- Advising on the development of and executing on a detailed sales strategy
- Advising on the coordination of a consistent, quality supply chain
- Assisting in additional fundraising
- Investor communications
- Calculating and maintaining capitalization tables
At i2E, we have taken our approach to portfolio management a step further through our Executive in Residence program. For example, we employ a sales expert who is specifically focused on the sales aspects of our portfolio companies. We know that effective selling is critical to the success of any startup; our founders have specific areas of expertise, but most of the time they have limited experience selling products or services or managing a team of salespeople. Plugging in experts to help our companies succeed is yet another element of portfolio management.
Most importantly, portfolio management provides assistance, advice, and partnership to founders during their company building.
i2E manages over 40 active portfolio companies with more than $90 million in investments under management. Our portfolio management efforts spread across numerous sectors including medical devices, therapeutics, software, and battery technology. With such a diverse range of investments, every day brings new challenges and opportunities to our portfolio management team.