In 2024, venture capital support goes beyond just financial backing.
According to CB Insights research [1], major reasons for startup failure include lack of market need, heavy competition, and flawed business models (56%). With proper guidance in these areas, startups have a higher chance of achieving product-market fit and becoming profitable businesses.
Modern VCs compete by adding value through mentorship, industry connections, and operational expertise, aiming to improve the startup’s success rates and have a profitable exit strategy. Key areas of VC support include providing additional capital in later rounds, recruiting top talent, offering strategic guidance, and facilitating sales through customer and partner introductions.
The key takeaway is that experienced mentorship and strategic guidance, often provided by VCs, can help startups navigate common pitfalls and increase their chances of success.
In this article, we will elaborate on how venture capital for startups drives growth beyond funding, as well as a list of top VC platforms to partner with.
What is Platform Support in Venture Capital?
Platform support in venture capital refers to the comprehensive set of resources, services, and expertise that VC firms offer to their portfolio companies beyond just financial investment.
Platform teams within venture capital for startups are dedicated groups that work alongside investment professionals to support portfolio companies. Their goal is to accelerate growth, mitigate risks, and increase the overall success rate of investments.
Learn more about Europian startup accelerators in this guide.
Here are the core components:
- Talent acquisition & development
VCs reach out to their extensive networks to help startups build strong teams. For example, Andreessen Horowitz (a16z) has a dedicated talent team that assists portfolio companies in hiring key executives and engineers.
They maintain a database of potential candidates and organize recruiting events. Some VCs, like First Round Capital, even create leadership development programs to nurture talent within their portfolio companies.
- Business development
VC platform teams facilitate connections between startups and potential customers, partners, or acquirers. Sequoia Capital, for instance, hosts annual “Base Camp” events where portfolio companies can meet and potentially collaborate with Fortune 500 executives.
Another example is GV (formerly Google Ventures), which leverages its connection to Google to provide portfolio companies with access to Google’s vast resources and potential partnerships.
- Strategic & operational guidance
Platform teams often include experts in various operational areas who can provide targeted advice. For example:
- Firms like Greylock Partners offer marketing workshops and provide access to growth marketing experts who can help with user acquisition strategies.
- Many VCs, such as Union Square Ventures, have in-house legal counsel to assist with common startup legal issues, such as IP protection and employment contracts.
- Firms like Bessemer Venture Partners provide operational playbooks and benchmarking data to help startups optimize their processes as they scale.
Interested to see which are the best cities to raise capital in? Read our article.
Value Creation Through Platform Support
Some popular companies today were once rising start ups (Airbnb,Slack,Doordash,etc). With the help of funding and VC platform support, these startups managed to become profitable and scale their business faster.
Let’s go through some real life examples to see how VC platforms create value for rising start ups:
1. Nest – Hardware Support from Google VC
Before Google fully acquired Nest, they were one of the key investors in the company through Google Ventures. Google VC invested in Nest almost a decade ago, the startup got $80 million in total funding from various investors, including GV and Kleiner Perkins.
As an investor, Google offered Nest access to its vast ecosystem and technical expertise. This partnership allowed Nest to tap into Google’s knowledge of cloud services and machine learning, which were crucial for developing smart home devices.
Google’s engineers likely guided scaling server infrastructure to handle the growing number of connected devices.
Google’s investment also opened doors for potential integration with Android, giving Nest early insights into mobile platform development. This was vital for creating user-friendly mobile apps to control Nest devices, a key factor in the smart home market.
Furthermore, Google’s global reach provided Nest with valuable market insights for international expansion. As an investor, Google could share data on consumer behavior and preferences in various markets, helping Nest tailor its products for different regions.
Lastly, the relationship with Google as an investor potentially facilitated early discussions about integrating Nest products with Google’s emerging voice assistant technology, laying the groundwork for future compatibility.
Here is what Google startups mentor has to say about the experience:
“As a Google for Startups mentor, I’ve learned that connecting the dots between founders solving real-world problems and Googlers who can support them with knowledge, tools, and resources is invaluable. This kind of mentorship isn’t about making up for something lacking—it’s about helping startups grow in ways they didn’t even realize were possible.” says the Strategic Partner Manager at Google [2]
2. DoorDash – Networking & Support
When Nozad and Hershenson, a newly formed venture capital team, set their sights on investing in DoorDash’s competitive seed round, they knew they needed to bring more to the table than just money. Their approach showcased how VCs can leverage their unique strengths to support startups in ways that extend far beyond financial backing.
Recognizing DoorDash’s need for design expertise, Nozad and Hershenson quickly tapped into their network, connecting the startup with a talented designer from Google. This swift action demonstrated their ability to identify and fill critical gaps in a young company’s capabilities.
Nozad’s extensive network proved to be a goldmine for DoorDash. He had cultivated relationships with successful founders like Drew Houston and Arash Ferdowsi of Dropbox and had previously connected them to Sequoia Capital.
By offering to open these doors for DoorDash, Nozad provided access to invaluable mentorship and potential partnership opportunities that could accelerate the company’s growth.
Meanwhile, Hershenson brought her operational expertise to the table. With three companies under her belt and a finger on the pulse of innovation through her interactions with Stanford graduate students, she offered DoorDash a wealth of practical knowledge.
Her experience could help the young startup navigate the challenges of scaling, avoid common pitfalls, and make informed strategic decisions.
This combination of network access and hands-on operational guidance set Nozad and Hershenson apart in a crowded field of potential investors.
They ended up investing $250,000 into the seed round of DoorDash [3]
3. Airbnb – Customer Acquisition
Andreessen Horowitz’s support for Airbnb, led by Jeff Jordan, went far beyond financial investment. Jordan’s experience with online marketplaces like eBay and OpenTable made him an ideal mentor for Airbnb’s founders.
Jordan’s most significant contribution was advocating for a property damage protection policy, inspired by eBay’s buyer protection. This initiative built trust and encouraged more homeowners to join the platform, driving Airbnb’s growth.
Additionally, Jordan provided valuable guidance on:
- International expansion strategies
- Improving site functionality
- Innovative product design in travel tech
While the exact impact is hard to measure, Jordan’s continued involvement with Airbnb and similar companies highlights the value of his expertise. This partnership demonstrates how VCs can provide crucial non-financial support, offering industry insights and strategic advice that can significantly influence a startup’s success.
Andreessen Horowitz’s VC ended up investing 60 million in Airbnb. [4]
Scaling with Platform Teams – From 0 to Success
Companies go through various value creation stages as they grow from early-stage startups to mature enterprises.The support startups need depends on the stage they are at. Here are some common support types that vary from early to later stages:
Early Stages
Platform teams in VC firms evolve their support as startups grow. Investors closely monitor the value creation stages of their portfolio companies to assess growth potential. In the early stages, they focus on foundational needs like recruiting key hires, establishing financial systems, and refining product-market fit.
Startups often need help building their core team. Venture capital for startups platform teams might:
- Connect founders with experienced CTOs or lead engineers. For example, a fintech startup might be introduced to a senior developer with previous experience at companies like Square or Stripe.
- Help craft compelling job descriptions and employer branding to attract top talent.
- Provide access to specialized recruiters or headhunters for hard-to-fill roles.
- Offer guidance on competitive compensation packages, including equity structures.
Early-stage startups need robust financial foundations. VC platform teams might:
- Introduce founders to experienced CFOs who can set up proper bookkeeping and accounting systems.
- Provide templates for financial models and projections.
- Offer guidance on selecting appropriate accounting software (e.g., QuickBooks, Xero) and implementing it effectively.
- Connect startups with banking partners who specialize in working with early-stage companies.
VC platforms can help refine your product-market fit:
- Facilitate customer discovery sessions, connecting startups with potential users or clients from their network.
- Provide frameworks for conducting effective user interviews and analyzing feedback.
- Offer A/B testing tools and methodologies to optimize product features.
- Connect founders with mentors who have successfully achieved product-market fit in similar industries.
For example, a B2B SaaS startup that has just raised a seed round. The VC’s platform team might:
- Help recruit a seasoned VP of Sales by tapping into their network and assisting with the interview process.
- Introduce the founders to a fractional CFO who sets up their financial reporting and helps create an 18-month cash flow projection.
- Organize a series of feedback sessions with potential enterprise customers from the VC’s portfolio, helping the startup refine its value proposition and feature set.
Later Stages
As companies scale, support shifts to areas like leadership development, international expansion strategies, and building robust operational processes. For market leaders, platform teams often facilitate high-level networking, M&A guidance, and public relations strategies.
For scaling companies, they might offer leadership coaching programs to help founders transition into CEO roles, or bring in experienced executives as mentors. They may provide playbooks for international expansion, connecting startups with local experts in target markets.
For operational scaling, platform teams might introduce systems like OKRs or help implement enterprise resource planning software.
For market leaders, venture capital for startups support becomes more strategic. Platform teams might facilitate introductions to potential acquirers or merger partners, provide guidance on IPO readiness, or connect companies with top-tier investment banks.
They may also help with crisis management strategies or facilitate relationships with influential industry analysts and media outlets to enhance the company’s market position and public image. Effective venture capital portfolio management requires balancing high-risk, high-reward investments with more stable options.
Choosing the Right VC Partner
Here is a quick overview of what to look for in a VC partner, and the main dangers of VC funding partners:
| What to evaluate | Red flags to watch out for |
| Depth and relevance of expertise in your industry | Generic, one-size-fits-all support programs |
| Track record of successful support with other portfolio companies | Overemphasis on vanity metrics rather than tangible value |
| Size and quality of their network | Limited engagement or availability of platform team members |
| Specific resources and programs offered (e.g., talent acquisition, go-to-market strategies) | Lack of relevant industry expertise or connections |
| Availability and engagement level of platform team members | Poor feedback from other portfolio companies |
| Customization of support to your company’s specific needs | Inability to provide specific examples of how they’ve helped other startups |
Conclusion
Do VCs add value beyond funding?
Yes, this support often extends beyond the initial investment period, providing value throughout a company’s lifecycle and potentially even post-exit.
As the VC landscape becomes more competitive, platform support is increasingly becoming a key differentiator. Startups are recognizing that the right venture capital for startups partner can offer value far beyond capital.
For VCs, robust platform teams are becoming essential for attracting top deals and ensuring the success of their portfolio companies. As this trend continues, we can expect to see further innovation and expansion in VC platform offerings, making the choice of a VC partner more important than ever for startup success.
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Top 1,000 VC Platform Professionals
Every year we are updating our list of full-time venture capital professionals who are part of platform or portfolio operations teams. We understand there are plenty of other high-caliber individuals within syndicates, accelerators, and incubators, but this list is only focused on VC firms with at least one fund.
If you want to nominate someone who does great work with startups and businesses within an investment firm, please drop us a line.
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References
- https://www.cbinsights.com/research/report/startup-failure-reasons-top/[1]
- https://blog.google/outreach-initiatives/entrepreneurs/how-mentoring-startups-helped-me-grow-as-a-googler/[2]
- https://www.forbes.com/sites/alexkonrad/2020/12/11/their-venture-fund-was-a-sign-of-a-bubble-then-they-turned-19-million-in-doordash-into-440-million/[3]
- https://geofinanceca.wordpress.com/2023/09/23/riding-the-wave-exploring-the-strategies-of-top-vc-firms/[4]
