Venture firms, big and small, look to add value beyond just invested capital. One way they do this is through helping their portfolio companies build winning teams. At Growth Collective, we work closely with many top venture firms to help them in this process. Here is why that makes sense for the venture firms and their portfolio companies.
Some Background On Working With Venture Firms
Growth Collective was founded in Silicon Valley when two former Google employees who had worked in the paid search group noticed that a lot of companies were asking platforms for advice about how to find freelance experts. At Google, that was companies looking for independent freelancers that could help them efficiently buy Google search in an ROI+ manner. Our founders recognized this was a pattern at other companies around Silicon Valley as well.
Customers of SaaS companies were asking for help in finding conversion optimization experts. Customers were asking social media platforms for referrals to freelance experts who could help them optimize their social ad spending. DTC e-commerce companies were asking their investment firms for help finding independent marketing talent.
So, Growth Collective was founded in Silicon Valley to help ambitious companies find the best and fully vetted freelance marketing talent to help them grow.
One of our first customers was one of Google’s venture arms. Other venture firms followed. Many of our early customers were supported by some of the more well-known top venture firms, as well as many smaller and more niche firms. That word spread about our platform, and the company went through Techstars. This led to further relationships with early-stage ventures and their investors. We have expanded since this but still count venture firms and venture-backed start-ups as one of our largest customer categories.
Certainly, part of the reason that we work with a number of venture firms and their portfolio companies is because of proximity. The company was founded in Silicon Valley. It went through Techstars. Our initial customers were friends or friends of friends. Our initial freelancers were moonlighting while working with some of the Valley’s top start-ups or had recently left those top companies to become independent.
However, Growth Collective became fully remote during the pandemic, and our team is spread around the country and the world. So, proximity is only part of the reason why we work with venture firms and their portfolio companies.
Venture Firms Aim To Add Value Beyond Just Money
Venture firms, big and small, are trying to attract the best entrepreneurs and deals. While some companies and entrepreneurs find it extremely difficult to get even one VC interested, other companies find that they have a lot of options. This could be because of their backgrounds, initial traction, or a variety of other reasons. So, to earn the best deals, venture firms must earn a reputation for providing their portfolio companies with more than just money. Ultimately, smart entrepreneurs want to go with investors who provide value and increase their chances of success.
There are a number of ways venture firms aim to support their portfolio companies and help them to win. These can include:
- Helping to pull in other investors to invest in a company in a syndicate
- Making connections and introductions for partnerships
- Helping with product and engineering expertise
- Connecting their portfolio companies to each other so that their portfolio companies can help each other
- And the list goes on
First Round Capital, Andreessen Horowitz, and other well-known firms were early movers in providing these services to their portfolio companies. The idea was (and still is) that they could bring capital as well as expertise and connections to improve the chances that their portfolio companies could be successful. This is more commonplace these days, and many of the largest VC firms have teams dedicated to supporting their portfolio companies in the areas of tech, marketing, finance, and human resources.
Finding Talent Is Perhaps The Most Important Of These
Beyond capital, perhaps the biggest contribution that a venture firm can make to their portfolio companies is in helping them build great and winning teams. After all, the biggest determinant of a company’s success comes down to the team. In the VC world, the saying goes…” It’s better to bet on the jockey than the horse.”
Venture firms recognize this. Therefore, many of the largest venture firms have Human Resources and Recruiting organizations that are dedicated to helping their portfolio companies hire great folks. These recruiting organizations work almost entirely for their portfolio companies, and this is a massive contribution from the venture firms to their portfolios.
Why Venture Firms Are Including Hiring Fractional Experts In These Efforts
Like all organizations, venture firms and their portfolio companies recognize that the world of work is changing, so organizations need to consider blended teams where they have a combination of full-time staff and fractional and external experts in different fields. This trend started many years ago with engineering teams but has since expanded to other functions as well. Many venture-backed companies now consider fractional CFOs, fractional CMOs, and other fractional experts. While fractional experts make a lot of sense for a variety of companies, hiring fractionally is especially appealing for venture firms and venture-backed companies for a few reasons:
Early-stage companies have to move quickly
Most early-stage companies have to prove something in 1-3 years or won’t be able to survive. Therefore, it’s a race, and these companies have to move quickly. This means that spending months hiring somebody and getting that person up to speed will diminish the chances that the company will survive and thrive. Early-stage companies don’t just have to hire quickly, but they need to be sure that those they hire can contribute quickly.
Start-ups are resource-starved
Even the most well-funded start-ups are starved for money and resources when compared with the large, entrenched players they are competing with. Therefore, these companies have to be incredibly efficient with their money, time, and resources. Again, if they aren’t, their company will be short-lived.
Venture-backed companies are trying to prove a thesis - and that requires testing
A start-up starts with a thesis that they are trying to prove. This involves them starting with a thesis about how the world is changing and how their company can respond to that change and earn customers at scale and in a profitable manner. By definition, a thesis can be proven or disproven, and doing so requires rapid and varied testing. Therefore, venture-backed companies must run many tests, and so often, they don’t know who they should hire full-time until they find things that work.
Start-ups MUST stay nimble and flexible
Because start-ups are required to test… and because many of those tests may fail, Start-ups are required to stay nimble and flexible. Whereas a large company might already know what channels will work for sales and marketing, upstart companies have to learn that. And therefore, hiring certain individuals or investing in very specific channels for the long haul can be expensive and create a lot of hassles. Nobody wants to hire people to only have to let them go a few months later.
Giving equity is expensive
Many start-ups provide equity to their full-time teams. This is a great way for team members to be united. But, while equity seems cheap for companies that are cash-starved, it can actually be extremely expensive. Therefore, it should be reserved for those that a company knows will make a contribution for an extended period of time.
“Try before you buy” works well for both the company and the talent
Start-ups should work with team members for a period of time before committing to work with them for the long haul. This is true for a variety of reasons - the individual may not fit the culture, priorities may shift rapidly, or that individual may not have the skill set or background needed. But the same is true for a talented person. Talented people have choices, so being able to try on a company before they commit for the long haul also makes sense.
How Venture Firms are Helping Their Companies Leverage Fractional Talent for Growth Marketing
While some venture firms are tapping into fractional growth marketers, many aren’t. This is because many are still stuck with the idea that hiring a freelancer might provide a lower-quality contribution. Or, they know that it can be a massive hassle to find, vet, hire, and manage talent across some of the large freelance platforms. But, those who do see the value in fractional talent have made recruiting freelancers/fractional experts a big part of their work when helping their portfolio build winning teams.
Sometimes, these venture firms have a large network of people who can step into their companies on a fractional basis. These individuals may have worked at other portfolio companies and/or had past wins. Some of these folks work on a part-time basis within portfolio companies, while others may put on workshops or webinars.
Other times, venture firms may work with their companies to scour large freelance platforms to find independent talent. While this can work well, it can also prove to be very challenging. The freelancers on these platforms may not have experience working with start-ups at the velocity needed. They may not be fully vetted by people who know how to vet freelancers in a specific skill set (hence why TopTal and similar companies have done so well in helping companies with tech/engineering talent). A lot of the freelance talent on these platforms are now companies that are sub-contracting, and that can cause issues.
At Growth Collective, we aim to be an alternative to the above - we bring a network of experts who are from some of the best companies and have great experience while being more hands-on in recommending matches and overseeing engagements to ensure success.
Why Venture Firms Are Increasingly Encouraging Their Companies To Hire Fractional Marketers
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While venture firms have long helped their portfolio companies hire fractional engineers, it is a fairly new trend for venture firms to encourage their companies to hire marketers in this way. This is because venture firms and their portfolio companies are recognizing how marketing has changed and how fractional is the best response to these changes if a company is young and resource-constrained.
There are more marketing channels than ever
The number of marketing channels available to companies has exploded in recent years. From paid search to paid social. From affiliate marketing to influencer marketing. From e-mail marketing to organic social. There are now a huge number of possible channels. But, add to that the fact that within these channels are also endless different platforms and tools.
Data and analytics allow for real testing
Online marketing enables a level of analytics and measurement that was never before available. This means that testing can truly answer whether a channel will work or not. In other words, you can run a test and get an actual result.
If you don’t use expert marketers, you’ll have false negatives
If you use generalists over experts, you’ll get false negatives. This is very dangerous and can be the difference between a company making it or not. Let’s say that somebody who doesn’t know what he/she is doing buys Facebook ads for a DTC company. That person might not be able to drive positive ROAS because he is too experienced, doesn’t understand the industry, or both. The conclusion then would be that paid social media isn’t an avenue for growth when the actual answer may be that the channel is a good one, but it’s just the wrong person executing the channel.
Cost-Efficiencies
Just like venture firms have encouraged their portfolio companies to look for cost-efficiencies in other areas of their businesses, they are doing that in marketing as well. And, within this spirit, hiring fractional marketers can drive strong cost efficiencies.
Some Tips For Venture Firms Looking To Support Their Portfolio Companies With Fractional Experts
Growth Collective was founded in 2019, and we have worked with a lot of venture firms and their portfolio companies. In that time, we have learned some valuable lessons on what it takes for venture firms to support their portfolio companies well in hiring fractional experts. Here are some highlights:
Consider fractional for each role
When talking with a portfolio company about a role, be sure to ask if that company is open to hiring on a fractional on-going basis or if they would rather hire fractionally with the idea of eventually hiring that person full-time.
Be clear about the outcome the expert should drive
Too often, we get venture firms or portfolio companies to reach out, saying they need a paid search person. We ask what is important in that person and what the outcome needs to be. Often, that answer is, “We just need somebody to help drive traffic.” And that answer is why Google is one of the wealthiest companies in the world. Paid search can be amazing, but it’s important to be specific about the outcome needed.
Identify as many “wants” as possible
The great thing about working with freelance experts is that there may be a large number of options. This means that a company can be quite specific about what they want - industry, years of experience, tools, etc. We find that we can usually drive very specific fits because of our large expert pool and the fact that we use algorithms and humans for matching.
Commit to a certain number of months
Just “outsourcing” tasks or projects can result in poor performance. You can go on Fiverr and hire people who can rank for 5 keywords well, but that’s not a long-term strategy. Instead, you should be looking to truly give the person the ability to test. While there are exceptions, we have found that a company should commit to 3-6 months, as that is usually how long a solid test takes.
Understand how important it is to have “local” talent
At Growth Collective, our goal is to find our clients the best talent. This means that we often look at all experts within our network, regardless of location. For example, if a client is looking for a paid social person in Fintech with 5 years experience and a solid understanding of Crypto, the best available expert may be in Brazil. So, it’s key to think about how important it is to have that person locally, close by, within the same country, within a similar timezone, etc.
Companies should treat the experts as part of the team
Venture firms that encourage their portfolio companies to treat their fractional experts as part of the team will see the best success.
Find a platform that you can partner with
You don’t need endless fractional experts; you need the best ones. Venture firms are finding that working with smaller platforms where they can truly partner with them in providing the best experts to their portfolio companies is a better approach than being a number one of the massive freelance platforms.
Smaller Venture Firms Aren’t Left Out
While most of the above references larger venture firms, smaller venture firms shouldn’t be left out of helping their portfolio companies build winning teams. That’s a big reason why Growth Collective was shaped in the way that it was.
We blend platform tech with people to help companies not have to sift through endless freelancer profiles. Instead, we use algorithms and techs to match roles and companies to the right experts.
Small venture firms are some of our favorite client partners because we can work closely with them to support their portfolio companies. In fact, one of the great benefits we provide these small firms is that they can compete in terms of value added to their portfolio companies. By working with us, they can bring great talent to their portfolio companies.
Last Word
We love working with venture firms to help their portfolio companies build winning teams. As entrepreneurs who have built multiple venture-backed companies, we believe in and want to support the start-up ecosystem. If you want to learn how we can work together, just drop us a line.
Onward and upward.
