This article was originally posted by Brad Harrison on August 5, 2015. The original can be viewed here.
Yesterday morning I read a blog post from a colleague, Hunter Walk, where he talks about competition in the seed stage. Essentially, he concludes that seed stage investors should focus on seeing great deals and being in the founder’s Top Five. It’s something we firmly believe in here at Scout. And every summer, when the office is full of fresh minds with new team members and interns, we spend our time talking about how we make ourselves more valuable to founders. How can we leverage our relationships and operational experience to help alleviate their pain points so they can focus on building a great company?
And as we continue to grow our portfolio, now 58 strong, I realize more and more, that our focus after we make an investment needs to be on helping our founders execute on their vision. This means a few things:
(1) Capital: If the business is consistently under capitalized then the founder will always be distracted by fundraising. The more you can provide leadership pulling together a round and/or making introductions to investors, the more you’re delivering real value. It also doesn’t hurt to make sure they raise enough money.
(2) Stress Management: Being a founder can be lonely and very stressful. At Scout, this means “being present” for your founders. It’s important to let them know they are not alone and that you understand how difficult some of their decisions will be around product, technology and personnel. The more you can share personal experiences to help them think through some of these difficult decisions, the more valuable you can be.
(3) Operations: Most great founders are not focused on operations, so they need help. If you provide advice, guidance and service providers, you will enable them to focus on building their business. A great founder needs a great team – so help them recruit people on the operations side to give them the confidence to focus on other areas of the business.
Of course, we realize that many founders will fail; some founders will have an exit; some of these founders might even make money on the exit, and a few founders will build unicorns and become investors. But by helping founders execute, we like to think we are helping more and more founders and companies reach their full potential.