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Why VC Firms Are Investing In Platform To Compete

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POST WRITTEN BY
Stephanie Manning
This article is more than 4 years old.

Lerer Hippeau

Two years ago, New York-based investor Heather Hartnett sent me a note about a new trend she had noticed in venture capital. The founding partner of Human Ventures, Hartnett had spotted the rise of “Platform” at venture capital firms — positions that specialize in support and services for startups post-investment — anything from network and events to talent and marketing.

Hartnett explained the new trend in a blog post in September 2017. Since then, Platform’s function within the venture capital industry has exploded. Today, hundreds of professionals identify as working in venture capital platform roles — more than 400 people in one self-reported membership group, the VC Platform Global Community, alone.

It’s clear that Platform is more pervasive than ever in venture capital, and that firms are hiring at an ever-faster clip as ancillary services become table stakes to entrepreneurs considering potential partners and term sheets. But there’s still a great deal of education needed around the Platform function and how it can differentiate up-and-coming firms.

Whether a firm’s Platform consists of a team of one or dozens, General Partners are making a bet that founders will reap the benefits of direct recruiting, PR support, network connections, and more. And they’re allocating management fees to those Platform initiatives — funding new hires, building tools and products, approving event budgets and marketing dollars — all to support the firm and fuel founder success.

Where is VC Platform growing the quickest? Data from the VC Platform Global Community shows three major areas firms are paying attention to as they build out their founder support: Talent, Marketing, and Events.

1. Talent

Founders report that hiring is one of their greatest challenges, so it’s no surprise that it’s a fast-growing functional area within Platform. In fact, 48 members of the VC Platform community list “talent,” “recruiting,” or “people” in their title (i.e. Director of Portfolio Talent or Talent Manager) and 51% of the entire group lists talent and recruiting as a part of their job.

FirstMark Capital’s VP of Platform Dan Kozikowski has built a team of four to help with corporate development and events, but has dedicated one role specifically to talent. “Making the right hire can fundamentally change the trajectory of a company,” he says. “If [a VC] can help companies get access to the top tier of talent, that is an enormous and tangible impact." Through a designated, in-house talent manager, venture firms can add immediate value by helping founders find, hire, and retain employees.

2. Marketing

Content, brand and public relations generally fall under the umbrella of “marketing,” which can support both the firm and its founders. Sixty members of the VC Platform community list “marketing” in their titles (such as Head of Marketing or Marketing Manager), while 57% of the overall community report that content, brand and PR fall under their role. Anecdotally, in the past few months I’ve seen more job openings for marketing roles at venture firms than at any other point since I joined the Platform world in 2015.

For Flybridge General Partner Jeff Bussgang, hiring a full-time marketing leader was an opportunity to differentiate the firm’s early-stage fund. “Founders are short on resources and are early in the process in standing up their marketing organizations,” he says. “Thus, [Flybridge] wanted to provide them with much-needed support to help them with launching their company and thinking through their initial go-to-market plan.”

Marketing roles are usually both portfolio and firm-facing, and investors may choose to bring on someone to level up their own brand — be it through original content, social media, branding efforts, and media strategy — as well as help their founders in those areas.

Lerer Hippeau

3. Events

The vast majority of Platform roles spend time focusing on events intended to forge cross-portfolio connections and partnership opportunities. Seventy-five percent of VC Platform members report events, network and community as a part of their responsibilities.

Designated network and event managers at venture capital firms are becoming increasingly common as investors see knowledge sharing as a way to support new and existing founders, stimulate referrals, create business development opportunities and fuel deal flow.

Work-Bench General Partner Jessica Lin has a hand in programming more than 200 community events in New York centered around enterprise technology each year. To help put on so many events, she’s invested in filling that Platform events role. “We believe in the long (long) game,” Lin says. “If we help the whole ecosystem, then, out of that, great people and great companies will happen.”

The Platform role has come a long way in the last five years. It’s clear that firms are not only investing in Platform support, but also in specific functional areas therein. How VC firms choose to double down on Platform says a lot about what their founders need, how they want to uniquely add value, and for what they want to be known.

My own hiring patterns as Director of Platform at Lerer Hippeau have matched the overall trends mentioned here. In two years, I’ve grown my team from one to three, and I’ve hired in the most pressing areas of need for our founders and our firm, which in our case was talent, content and brand. Like others who join VC Platform teams, the professionals we've hired bring with them specific industry expertise: startup recruiting and journalism, respectively.

As the venture capital world becomes more competitive and VCs look for new ways to support founders and win deals, I anticipate firms will continue to invest in Platform and add headcount in this area. Even so, this growth spurt might not last forever. We are operating in a thriving time in venture capital, as the 10-year bull market continues its run. If we see a contraction in the market, firms may slow hiring for Platform roles and, taking a note from their founders, get creative and scrappy as they think about their value-add services.