The Importance of Talent Inside a Venture Firm

We call ourselves a venture accelerator and sometimes refer to ourselves as a specialized accelerator. We’re very close to calling ourselves a specialized venture capital firm. Our model is different than others using similar nomenclature, and there are two reasons why:

• We provide and recruit capital to infuse into our portfolio companies throughout their development
• We believe that a capital program of any type benefits from a deep focus on in-house talent, and that it is increasingly the key to earning quality deals

This post is focused on the in-house talent issue.

Our team has expanded and our deal flow is different than it was 12 months ago. We’ve been pulled beyond the early stages of technology investing into growth capital opportunities and private equity plays. We’ll end up seeing close to 200 deals this year. I regret we haven’t been able to grow our talent base quickly enough to participate in more of these deals than we’ll be able to.

And, that’s something I’ve learned. I believe the ‘talent recipe’ is the key to accelerators and incubators today – and will be a key to venture capital firms of tomorrow. Here is an example. One of the things I increasingly hear is that our methodology of talent acquisition and deployment provides a much different advantage than a ‘mentor network.’ Two friends of mine in Austin are part of 3+ mentor networks associated with other incubators / accelerators – on top of their full time jobs. When I ask them, they tell me they spend minimal time at most in these programs working with the companies.

The point of this isn’t to criticize mentor networks. I believe there are quality acceleration programs built using mentor networks. However, given that we want to build the ability to deeply influence our portfolio companies and provide long-term tranformational impact, a mentor network didn’t seem to be the right talent recipe. The questions we asked ourselves were:

• What’s the long-term value of the mentor network itself?
• Is it really a sustainable advantage for early stage businesses and equally importantly, for the accelerator?

We never found good answers to these questions, so we never built one.

Our talent recipe is to build a focused, multi-disciplinary team of experienced, high-end domain experts in design, customer acquisition, technology and market-alignment. This allows us to invest in identifying target outcomes the same way an investment bank or private equity firm would. Then we focus on how to get there in an ongoing series of 90-120 day initiatives. Executing these cross-disciplinary strategies has meant innovating the notion of what it means to build a business. We’ve reconceived our brand creation, product design, MVP definition and customer acquisition processes to arm our team with the ability to create winning outcomes for our customers while transitioning as much of our institutional knowledge as possible.

Building and balancing our talent recipe is very hard. However, our customers and capital partners place tremendous value in our talent recipe and believe it’s the critical thing we offer that other investment programs and firms don’t. The growth of the companies in our portfolio validates this.

I see evidence with Andreessen Horowitz and Google Ventures that some of the largest, most successful VC firms are embracing the idea of infusing their programs with in-house talent. Some of the more notable accelerators continue to innovate here as well, like 500 Startups and this post earlier this week by Christine Tsai.

I believe accelerators, incubators and venture capital firms need to push the envelope and conceive of and operationalize their own talent recipes. I like the fact that we’re ahead of the curve here.