With continued talk that the venture model is broken—or at least in need of an overhaul—first-time funds are trying to get the ear of prospective limited partners by pitching funds with massive networks of venture partners that are highly engaged
Both firms follow in the footsteps of
These firms say they their venture partners allow them to not only offer more hands-on help to their portfolio companies, but also more expert help. Need advice about the advertising world? Emerge can point you to venture partner Marten Van Pelt, who is also a senior VP at advertising goliath Young & Rubicam.
What about one-on-one advice from someone who is in the trenches every day? Transmedia can point you to Venture Partner Josh James, who co-founded and is CEO of publicly traded analytics company Omniture, while Ariva can hook you up with Venture Partner Kumar Ganapathy, chief operating officer of 2-year-old startup Virident Systems.
Venture partners’ other jobs can be both a positive and a negative, says Clint Chao, co-founder of 8-year-old Formative Ventures in Menlo Park, which itself features three GPs and nine venture partners. “Our venture partners all have their own things that they’re doing,” says Chao, suggesting that it would be virtually impossible for them to spend as much time with portfolio companies as do GPs.
At the same time, says Chao, “We like that [they have other obligations] because they have different vantage points help us as a result of what they are seeing and doing.”
Another positive, say Downing and Schneider, is the ability to pair startups with people with highly relevant experience. Indeed, Emerge is structured so that seven or eight venture partners might swoop into one startup to deliver feedback, make introductions and help map out strategy all at once. “It’s a high-touch, value-add model,” Schneider says.
Emerge’s venture partners may also take board seats. Ditto for Transmedia, where the view is that “GPs can only do so much,” says Downing. “When you have partners on six boards, that’s a joke,” he says. “There’s no way you can add value.”
Downing notes that he, as well as General Partners Chris Redlitz and Craig Cardon, each plan to sit on a maximum of three boards. “After that, we’re going to tap into our venture network. That way, the bandwidth issue doesn’t get absurd.”
For his part, Chao isn’t sure that venture networks are what really interest limited partners. And Indeed, both Emerge and Transmedia seem to be skipping institutional investors. Schneider says that Emerge is relying in part on “lots of overseas money,” while Transmedia is turning in large part to friends, family offices, and traditional media companies.
Chao also believes that entrepreneurs don’t sign on with a firm because of its venture partner network. “As far as I’m concerned, entrepreneurs care about the GP with whom they’re dealing with,” he says. “At the end of the day, the buck stops there.”
Besides, says Chao, VCs with big networks of smart friends is really nothing new. “We’re expected to have networks that we can use to help our entrepreneurs, whether they are venture partners or just friends. That’s the way it’s always been.”