Onboarding Excellence: Best Practices for Fund Manager & Portfolio Interactions
As a fund manager, you shoulder crucial responsibilities, including the onboarding and cultivating of companies within your portfolio. This process presents an opportunity to forge relationships, evaluate and enhance the current performance of portfolio companies, pinpoint areas for improvement, and showcase your value. Establishing a transparent process for new investments enables fund managers to monitor progress, enhance your community where companies can benefit, and implement corrective measures when necessary. Remember that this is a people business, and relationships are paramount and often long-term.
How to Win the Deal
When pursuing a deal, prioritize building relationships first and foremost. While you may be writing a check to the company, aim for interactions that are more than just transactional. The process of courting a company should not stop once the money is wired; instead, take advantage of this early time to build a strong foundational partnership. Use your current methods of support to demonstrate your value to a prospective company. Identify your “Superpower,” also known as “Differentiator,” “Value Proposition,” “Unique Offering,” “Competitive Advantage,” and more. In all cases, determine what are the 1-2 key resources you or your firm can offer that make a significant difference, whether that is network, talent, or marketing assistance, etc. Ensure that companies are aware of the access you can provide to them *before* you invest — then follow through with it.
Brand Differentiation - With the proliferation of venture firms, it is crucial to articulate why companies should choose you as an investor. This involves highlighting what sets you apart from other firms and demonstrating your value beyond capital. Are you especially skilled at getting companies to a specific milestone? Do you possess extensive connections within the industries where you invest?
Try to avoid clichéd terms like "founder-friendly," "hands-on," and “value add” when possible, as they have become overly used. Instead, emphasize your strengths and capabilities that resonate with companies. Ask what they need instead of telling them what you do.
Support - Be intentional and deliberately craft your platform. Identify additional support or value-adds you can offer portfolio companies in conjunction with writing them a check. Remember, your goal is to identify the 1-2 primary resource areas where you excel — avoid overcommitting, and focus on doing a few things well rather than many things mediocrely. Be mindful when introducing a third party, ensure that you have a dedicated coverage person already lined up so the company has a warm reception.
Tech Stack tools and discounts, e.g., AWS credits
Lawyers, Banks
Designers, Agencies, Freelancers
Customer Intros
Sales, Marketing, Strategic Partnerships
Recruiting, Talent
Public Relations
Coaching, Advising
Co-Investor Intros
Strong Company Referrals and Reviews - Cultivating strong relationships with companies enhances your credibility with potential founders, which can lead to new deal opportunities and deal wins through positive word of mouth. Build strong relationships here so that companies can speak highly of you in both formal references and informal/back-channeled references.
How to Onboard Portfolio Companies
Onboarding is an opportunity to build trust and rapport between your firm and the portfolio company's team on the outset. Building a relationship with each portfolio company fosters collaboration, transparency, and open communication, which are critical for a successful partnership.
Set Expectations & Align Goals - Even before your investment check has cleared to the portfolio company, ensure that the goals and objectives of your role as an investor align with those of the portfolio company. This alignment is essential for maximizing value creation and achieving mutual success.
Give before You Take
Ensure you are providing value and support to portfolio companies as an before expecting something in return. This can be across strategic guidance, access, insights, training, and more.
Share How Data Collection Will Be Used
Outline when its inclusion will be in limited partner (LP) updates.
Specify the extent of its incorporation for internal usage.
Establish clear guidelines distinguishing public information from confidential data.
Inform the Company of Portfolio Data Collection
Notify the company of the anticipated data collection frequency, e.g., quarterly basis.
Communicate the standard data to be collected, such as revenue, growth, and customer metrics, as well as any specific data agreed upon pre-investment for the company. This helps ensure the company is not caught by surprise by any subsequent requests from you.
Ensure Deadlines Make Sense for Your Portfolio
Take into account seasonality as certain metrics may fluctuate depending on the time of year, for example between peak seasons and off-peak seasons due to consumer behavior or industry trends.
Integrate Systems - Effective onboarding facilitates the integration of the portfolio company into your community. This includes integrating systems, processes, culture, community, and resources.
Centralize Systems and Processes
Confirm your wire has been received by the company.
Collect contact information of all founders, e.g., name, email, and cell.
Add company team members to communication channels, e.g., Slack, Discord.
Ensure each company can see a list of your other portfolio companies.
Add their logo and/or bio to the portfolio company section of your website. Before proceeding, make sure to confirm that the company is prepared to be added and is not operating in stealth.
Perform Intake
Determine whether the company is opting for a stealth approach or aligning its announcement with a larger PR push, and provide assistance accordingly.
Gather company intake questionnaires to document standard information such as organizational charts and collateral, e.g. Typeform, Google Forms. It is advisable to request this information early, given there is heightened excitement immediately after you have funded.
Include company fundraising and growth needs in your database to better assist in their future and remain vigilant for opportunities that align with their needs.
Consider featuring a “Founder Spotlight” by using select content to highlight recent achievements. This could include insights into how the team met or could showcase notable customers.
Welcome Companies To Your Community - Begin with a human connection. Build a sense of belonging and connectivity within your portfolio company community by providing a nurturing environment for growth, knowledge-sharing, and collaboration.
Extend a Warm Welcome
Provide a regular welcome call/email/checklist for newly onboarded portfolio company cohorts.
Tap into the expertise of seasoned founders and those navigating similar stages or sectors. Utilize existing portfolio relationships to facilitate introductions between founders.
Host founder camps, founder offsites, or founder events to allow for more serendipitous engagement.
Encourage inter-company intros and interactions.
Communicate with your portfolio companies in ways that work for them — this may be texting or signal messaging frequently rather than more formal comms channels in the early welcome days.
Encourage Continued Learning
Provide forums for your portfolio companies that cover specialized topics.
Bring in guest speakers, across experts, advisors, and peers.
Offer standard document templates to save companies time and effort in re-creating those that are commonly used, e.g., LOIs (letters of intent), company handbooks, etc.
Grant access to your curriculum, articles, videos, and other educational tools.
Collect Feedback
Collect anonymous Net Promoter Score (NPS) score feedback on a consistent cadence if possible. This practice helps to keep you sharp as a fund manager on ways to improve.
Send out one-off feedback requests following significant projects with a company if needed.
How to Sit on a Board
Being a member of the Board of Directors can be an important part of your role as a fund manager not only for providing regular oversight for your investments but also in establishing a level of formality around the running and execution of the company's business and, more pointedly, your relationship with the company’s CEO. If you do not have an official Board seat due to your business model or other factors, you can still build rapport with the company by being a confidant for key issues, assisting with Board meeting preparation, or taking an observer role on the Board. You can help push the Founders to have effective Board meetings by asking them to speak about their company’s trajectory on a quarterly, annual, and multi-year horizon. This information is also critical in your own evaluation of the portfolio company.
Hosting Effective Board Meetings
Conduct strategy discussions, not mere presentations. The Board of Directors' responsibility includes approving an annual budget, strategy, and financial reports with portfolio companies. Do not use this time ineffectively as show-and-tell.
Stress the importance of establishing a consistent reporting framework for companies, ensuring they report on the same metrics, in the same manner, and within the same timeframe during each Board of Directors meeting to facilitate continuity and enable the identification of progress or potential concerns.
Maintain records of attendees, meeting minutes, and pertinent documents, as meticulous record-keeping may prove beneficial in the future.
Refrain from excessively involving yourself in insignificant matters such as equity approvals.
Review materials *before* the meeting, e.g., beforehand, examine the team's revenue, financials, burn rate, projections, business plan, growth trajectory, customer base, user metrics, partnerships, business development agreements, recruitment efforts, and marketing strategies. Portfolio companies should send their deck in advance to enable a focused discussion on substance during the meeting, rather than reiterating facts that are already known.
Keep regular check-ins between or before Board meetings, encouraging your companies to use methods such as investor updates via email or recurring calls or meetings. This approach aids in assisting your companies, strategizing for upcoming events, and providing guidance through milestones.
Informal Meetings
Create an informal “two-way street” of dialogue with the portfolio companies so you are included in the difficult decisions. Founders in particular are often tasked with making major strategy changes to the business, such as downsizing or hiring. Offer to be your portfolio companies’ first phone call to help them weather both positive and negative events. This means you must work on the relationship early and often to build rapport, as becoming a trusted confidant does not happen automatically.
Help portfolio companies prepare for Board meetings by scheduling 1:1 time together prior to the official session. This practice time allows them to pre-socialize issues and receive buy-in beforehand, gaining consensus for smoother decision-making during the actual meeting. Such preparation is particularly crucial for new founders and when discussing controversial topics.
Best Practices of Fund Manager and Portfolio Company Conduct
Transparency and Honesty - Fund managers and companies should maintain open and honest communication throughout their interactions. This builds trust and fosters a healthy working relationship.
Professionalism - Both parties should respect each other's time, expertise, and opinions. Show up to meetings on time and be prepared.
Early Communication - It is crucial to communicate early and often. Share in advance when deadlines or milestones will not be met. Avoid turning simple bad news into surprises.
Clear Expectations - Establish clear expectations regarding data collection, goals, timelines, and milestones. Ensure that the interests of both parties are in sync, particularly regarding the long-term vision and goals of the company. This helps avoid misunderstandings and ensures alignment on objectives.
Feedback and Advising - Fund managers should act as supportive partners, offering guidance and resources to help companies navigate challenges and capitalize on opportunities. Actively listen to the concerns and ideas of portfolio companies, and seek feedback along the way. Establish a regular feedback cadence to evaluate the effectiveness of the partnership and address any issues that may arise promptly Constructive feedback should be given and received with common courtesy in mind. Likewise, portfolio companies should be receptive to feedback and advice from fund managers.
Ethical Conduct - Both fund managers and portfolio companies should adhere to high ethical standards in their interactions, avoiding conflicts of interest and maintaining integrity.
Long-Term Relationship Building - Aim to build a long-term relationship based. Even if the initial investment does not succeed, maintaining a positive relationship can lead to future opportunities.
As a fund manager, your role encompasses vital duties such as onboarding and nurturing companies within your portfolio. By establishing a transparent process for new investments, you can streamline the addition of each new company, expand the reach of your community to improve deal wins, and build long-term company relationships, ultimately fostering success within your portfolio.
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Sincere appreciation to our contributor Katie Andresen of Better Ventures, written along with Shea Tate-Di Donna and Kaego Ogbechie Rust, authors of The Venture Fund Blueprint.
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Disclaimer: The providers, companies, examples, products, and services shared represent only a subset of available options and are based solely on internal fund manager conversations. These options are intended to be a general framework, not an exhaustive catalog, and should not be viewed as legal or tax advice, endorsements, recommendations, approvals, or rankings. We encourage you to do additional research into each category to find the resources that best fit your specific needs.
