From Pitching with Portfolio Firms to Running BD For a VC Firm
This article is part of our VC Portfolio Relations spotlight series. Each week, a different professional joins us to share their experience partnering with organizations as a venture capital or private equity firm. Learn more in the intro article.
Tai Rattigan is one of the three co-founders who brought Partnership Leaders to fruition just over a year ago. His career has taken him from managing partnerships efforts at SaaS companies to handling business development at a portfolio company in recent years.
Today, Tai joins us to discuss his experience managing partnerships between portfolio firms and tech companies, best practices for successfully building the channel, and more.
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The Value of Portfolio-tech Partnerships
At Optimizely and Amplitude, Tai collaborated with many dedicated business development leaders at top portfolio firms like Battery, A16Z, and Benchmark. “A lot of what I was doing at both companies was participating in VC’s programs. Many VC firms have business development people whose full-time job is to help portfolio companies generate more revenue. At all of the VC firms I worked with, there was a person on their side driving the effort and helping us make the most of it.”
Some portfolio firms regularly host pitch days, where they’ll have large enterprise companies share areas of interest, then have all the portfolio companies of interest come to pitch. “At Optimizely, I would participate in the pitch days, doing demos, and answering the questions. In return, we were shown around to interesting companies at the Andreessen Horowitz network. At GGV Capital, the VC firm I worked at, we took a 1:1 approach. We’d meet the portfolio company, learn about their portfolio, do research, and explore people in our network who would be interested.”
These introductions are especially valuable for small and early-stage startups. “When you’re a small startup, and you don’t have those resources internally. You don’t have that network to set up that program. Meanwhile, your VC firm works with a ton of portfolio companies that don’t have those resources. So to support their portfolio, they’ll build those necessary resources in a centralized firm.”
Understanding the Three Different Partnership Models
In Tai’s experience, there are three ways companies can partner with a VC:
- Your VC firm has a BD program that you invest in.
- You proactively ask for introductions from your VC firm.
- VCs and incubators are a distribution channel for your company.
While managing business development at GGV Capital, Tai got a lot of experience in the VC firms as a channel category. He shared, “At GGV, we worked with AWS and Twilio, who had partner teams specifically for VC. They go to VC firms to set up a discount deal so the VC firm can offer the product at a discounted rate. That approach works well for certain VC firms and not at all for others. It works well when VC firms have a centralized platform team that has a good understanding of the needs of the portfolio. However, what often happens is the people who own the relationships are the people who did the investing. Hence, the conversations are a lot higher level than the tools used at a tactical level.”
Building the Foundation for Strong VC Relationships
Before you consider approaching VC firms, you need to have your foundation established internally. What you prepare for depends on the types of portfolio partnerships you’re targeting. Tai shared two schools of thought here. “First is if your goal is to reach startups. There are incubators, such as Y Combinator and 500 Startups, that can help you create groundswell around your product. It’s a fairly low lift to work with one of those companies and provide a blanket discount. That’s something the marketing team should own; it’s a collaboration with partnerships, but it’s essentially an affiliate program. You wouldn’t have a salesperson build those deals, and it doesn’t make sense for partnerships to manage them unless there’s scale.”
“Second, are your 1:1 partnership efforts. For those, I would suggest getting everything else in place first. If they’re not your investors, it’s a challenging model. If the need for your product isn’t ubiquitous, you need to find a VC portfolio that aligns with your target market. Portfolio firms need a high level of trust. They have a low risk tolerance for relationships. It’s important to understand that these firms have a very low investment frequency and might only do 1-2 deals per day. The chances of one of those companies needing your product at any point in time are low. You may spend tons of time working with a VC firm only for them never to need your product.”
Best Practices for Pursuing VC Relationships
Tai had a few critical pieces of advice from his many years managing these partnerships. “Start with your investors and focus on VCs where they have a platform team. Know that the deal frequency will be low, and their portfolio will not grow that fast. Tread carefully — it can be a real time-drain unless you’re a larger, more experienced company. There’s a finite amount of return for the time invested, and your team needs to prioritize accordingly.”
Outside of traditional portfolio partnerships discussed here, Tai highlighted the value of collaborating with VCs on various activities. “Consider working with VC firms on hiring. They have broad networks, which can be incredibly powerful when growing your team. VC firms also have marketing resources for getting people in TechCrunch or Forbes, which can be challenging to do alone.”
Expand (or Launch) Your VC Portfolio Relations
This quarter, we’re digging into insights from venture capital, private equity, and business development professionals! Individuals with experience on the portfolio and technology sides alike will join us to discuss lessons learned, best practices to implement, and ideas to consider from their time in the industry. Be sure to follow us on LinkedIn so you don’t miss any updates.
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