Growth Strategy VC firm

Question

I am wondering how would you structure this following case:
Your client is a small Venture Capital (VC) firm which invests primarily on start-ups tech and engineering firms with particular focus on B2B business.The firm currently holds 5 mid-sized start-ups (~$1-2M valuation) and is actively managing their operations. The scale of each of the business is global (from Asia to Europe to US). The client asks you to provide a growth strategy for our VC, not in the form of improving operation of existing portfolio.

Thank you very much guys and your inputs are most appreciated.

Answer 1

Q: The client asks you to provide a growth strategy for our VC, not in the form of improving the operation of existing portfolio.

There are two main activities for VC or any investment body:

Get fund from investor (gov, pension fund, insurance company etc)
Invest in business

To grow the business means at least we should focus on these two things.

----------------------------------------

But how I'd like to approach comprehensively by looking at external factor and internal factor:

External: (To assess the posibility/ knowing how hard growing the VC given the industry growth)

How is the market performance?
- Size?
- Growth?
How is Competitor performance?
- Value prop?
- Share?
- Growth?
Regulation?
- New regulation affecting investment activity?

Internal:

Is it possible to acquire another VC?
Increase funding
- Current source
  - Can we increase the fund amount?
- New Source
  - Actively searching for new fund from a new investing body
Increase investing
- Current portfolio
  - Can we increase the investment?
- New portfolio
  - Actively seeking a new company to invest

Simply, we can start from here.

Answer 2

Growing a VC firm is different from growing a company. VC firms grow by:

1. maximising upside of invested capital
2. minimizing downside risk

For #1:

- Invest in high-margin, low CAPEX businesses that have high scalability and sustainable growth. Essentially these are software focused, product focused, and firms with large TAMs. This is similar to optimizing "product mix" at a product firm.
- Invest in high growth geos and high growth ideas -- e.g. china/india vs brazil and more cloud computing, less telecom.
- Invest later vs super early - you do limit upside this way but you decrease chances of failure.

For #2:

- Invest later vs super early. Lowers risk.
- Hedge - don't invest everything into one area, e.g. AI or blockchain
- Avoid unknowns you cannot control - less regulated industries, less geo-political risk, etc.

Answer 3

Hi, Welcome, you’ve come to exactly the right place! In our Case Library, you’ll find more than 220 practice cases cr... (read entire answer)

Hi, Welcome, you’ve come to exactly the right place! In our Case Library, you’ll find more than 220 practice cases created by our experienced coaches, trusted partner firms, and... (read entire answer)