How do I get my C-suite to prioritize venture investing?
Special edition alert!
Today's newsletter, fresh from the oven, comes with insider knowledge from last week's Global Corporate Venturing and Innovation Summit 2024 in Monterey. Get your C-suite ready for venture investing with tidbits from our Managing Partner, Chris Cusack and C-suite expert, Beverly Rider — straight from their Behind the Curtain workshop.
And you can again count on Forbes 's Rich Karlgaard to choose this week's essential media for boosting your venture growth.
The time to start is now. Enjoy.
By Elke Boogert, Mach49 Managing Editor
Missed GCVI? Here's our highlights
▶️ The very fast folks from Global Corporate Venturing have already ensured you can (re)watch James Macon 's main stage chat with Charles Hume , the MD of Southwire Company Technology Ventures.
▶️ Managing Partner Venture Investing Patrick FitzGerald gathered a great group of participants from CVCs all across the world for a Roundtable. In his words:
"With over 15 countries and 4 continents represented, we discussed trends globally across a myriad of industries. While the challenges were different in each region, paths to success were common and fun to unpack."
▶️ C-suite veteran Beverly Rider joined Managing Partner Chris Cusack on the main stage to relay how you can discuss your venture investing practice with your Board. Their advice is summarized into this ⤵️ action-packed article.
How do I get my C-suite to care about – and prioritize! – venture investing?
You’re looking to set up your first company’s first corporate venture capital fund. Or maybe your fund is only a few short months old (or, maybe you’re just trying to get the C-suite to pay more attention to your well-established fund!). The question is: how do you make the most of your time with the C-suite?
1. Consider their goals over yours.
The C-suite’s concerns should become yours. What do they have to do for your shareholders? What will the year look like for the CEO? How do you make the CCO look good? What are the partnerships they're hoping for? What are the company’s strategic objectives? Next – how can a venture investing initiative help facilitate all of those things? Think about retention, goals, aspirations, and how a fund fits in there. Go into meetings with this perspective.
2. Teach your Board
The education of the C-suite is just as important as the reporting to the C-suite. You should not assume Board members understand fully what you’re telling them – even if they’ve been around venture capital for years. Take the time and be patient and don’t assume they know anything, just because they should. Start with giving them the VC vocabulary that you’ll be using, bring in experts to explain how to look at your portfolio and (potential) results.
For any Board, but especially in more traditional or heavy industrial companies, you have to bring them with you slowly. Baby steps. You have to show your Board how to get from a to b with innovation. Here, the storytelling is critical. Quick tip: get your Board sponsor to ask a question, so other people can also raise their hands.
3. Start early to build trust
Unfortunately, most people don’t want to go to the Board with problems, which is why the C-suite is used to having to dig for problems. Be transparent about milestones and metrics. Be clear about which problems you’ve run into and which potential solutions you’ve identified. Ask for help. If you do this quarter by quarter, you build trust, meaning Board members will be much more likely to offer help and to remove roadblocks for you.
4. Find a mentor that knows everything about the organization
To run a successful corporate venture capital fund, you need an insider. Find a mentor so they can teach you what works inside of the organization. Most people love to mentor and love to share the knowledge that they've gained, so if you can find somebody close to the Board that will help you get heard, it’s a huge asset. (Please note: we don’t mean a sponsor. A mentor will personally coach you and be invested in your success. Your sponsor wants what's best for your organization.)
5. “Show off your cows” – grab their attention with portfolio stories
Board members are used to receiving packages of information, frequently several hundred pages. They scan them – if they read them at all – because they don’t want to get into the fine print. Quick tip: If you have a venture or investment you want them to understand, pull a video together. Even a short video will get the Board’s attention, making them more likely to listen and ask questions. Ten times out of ten, the Board will watch the videos first – if only because they're more easily digestible than the spreadsheets.
6. Get ready for the “why now?” question
Really look at what's happening inside your organization and why venture investing is the right path at this moment. Just as importantly – what are your biggest competitors doing? If they’ve just announced they’re starting a CVC, that could be the straw that breaks the camel's back.
7. Don't be adversarial. Ever.
You can't have all the answers (it's truly okay to say you don't know and you’ll get back to the Board with the answer). One of the biggest problems that the C-suite sees over and over again is people making up numbers, percentages or revenues. You should be a partner to your executives, not an opponent. No matter how successful you've been or what you've done in the past, the most important thing you can do is earn their trust with honesty and transparency.
8. Act like a VC, immediately
From day 1, you need to operate your CVC with traditional venture capital rigor. Because if you invest in, for example, the 7th best company in the category, you don't get 70% of the value of investing in the market leader. You get effectively nil. Your goal has to be driving growth through a financial VC lens, taking best practices from venture capital to invest in the best company in a category. This will give you the best odds of gaining strategic benefits from your investments.
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9. Prepare for the qualitative vs quantitative discussion
Numbers are easy, but a lot of the benefits from a corporate venture capital fund fall into the qualitative bucket, especially before actual returns come in. To get this discussion off on the right foot, get everyone into a room (or do a series of 1-1 interviews) and define your North Star. What actual impact are you trying to drive over the next decade? How can we draw a map from that point, to today? What milestones will you hit along the way? Which metrics will change over time?
In this North Star map, you can include expectations of trends and ecosystem insights that you gain, that you would never have access to or knowledge of without your CVC. You can discuss the role your CVC can play in what comes next, how your company should continue to innovate and how your CVC can help other parts of the business grow.
10. Organize an Innovation Day
To create excitement, gain buy-in and potentially get some cross-contamination going, organize a day where you bring in every company you’re looking at, right as you're building your portfolio. This longlist of ventures that you’re considering to invest in, will definitely attract C-suite attention. They’ll get to help choose, collectively. It also future-proofs: if there are changes to the Board, everybody else has already bought into the portfolio.
11. Make the most of those 30 minutes
You’re playing the long game, but you can’t tell the same story every quarter. Make sure you are clear about the milestones you’re hitting along the way to show short term success and don’t forget to bring in your partners or portfolio companies. Entrepreneurs have so much energy, it’s contagious. Let your partners tell the story.
12. Don’t oversell yourself
When the C-suite hears crazy growth metrics and stories, they know it’s too good to be true. Although board members would love every investment to become a unicorn, overselling erodes trust. And their trust is the most important thing you can gain. Set – and meet – milestones for the investment becoming a $10 million company and then a $50 million company before racing to a billion. When the board trusts you, they don’t so much fall in love, as they don’t sit on your back. You need extra funding? They’ll give it to you. You have a roadblock? They’ll remove it. If the trust is gone, board members may put extra hurdles in place to make it harder for you.
13. Ensure longevity, even as C-suite members leave.
Be prepared for the inevitable: your board will see change, and your sponsor or champion will eventually leave the company. If you have a good sponsor, they’ll make sure to find a backup sponsor before their exit. But don’t wait until this happens to start from scratch. Continue to tell your story across the organization so that the next generation of leaders have already bought into your venture investing activities. Look beyond the Board and the C-suite.
In conclusion, building trust is the most important thing you can do with your C-suite. Trust will buy you a lot of equity, which at some point you’ll need. When that big mistake happens, or when there's a sale or when you need to go get another $10 million, or $100 million. If you’ve worked hard to gain the Board’s trust, and a sponsor is on your side and wants to fight for you, you can look forward to success long-term.
This article was compiled based on Chris Cusack’s and Beverly Rider ⚡️’s workshop at GCVI Monterey in March 2024.
Beverly Rider has spent most of her career as a change agent within large corporations, including as Chief Commercial Officer at Hitachi and GE as well as as Head of IoT & Emerging Markets for Ericsson . She's participated in over $20B in M&A in her career, managed up to 1500 employees and ran organizations with $4B+ in revenues. Beverly studied at the University of Washington, Western Washington University and Seattle University School of Law where she earned degrees in Finance, Marketing, and a JD cum laude.
Opportunities Disguised as Big Hairy Problems
Our weekly list of must-read media, curated by Forbes futurist and Forbes Asia columnist Rich Karlgaard, on technology, talent, capital allocation, growth strategy and management, and opportunities, disguised as big hairy problems.
In Silicon Valley, Venture Capital Meets a Generational Shift / By Erin Griffith / The New York Times / March 13
Reason to read: Silicon Valley venture capital just got harder. Recent fund returns are historically poor. New funds struggle to raise money. Question to ask: The industrial world needs plenty of capital for reinvention and rebuilds, which require more patient capital than VC-firms provide. Will corporate growth capital fill the gap?
Consultants are Paid To Fix Businesses. Why Can’t They Fix Their Own? / By Lindsay Ellis and Chip Cutter / The Wall Street Journal / March 16
Reason to read: High-end consulting has always been a cyclical business. But today CEOs and boards are demanding more from their consultants than just good ideas. Question to ask: Are your consultants equipped to roll up their sleeves and help you find new products, markets and growth?
Why Internal Ventures Are Different From External Startups / By Henry Chesbrough / SteveBlank.com / March 26
Reason to read: To make internal ventures succeed, you must fight a two-front war. The author explains how to do that. Question to ask: Do you have strong support from the CEO and board for your internal ventures?
Thank you also to our partners and friends at GCVI, Industry Ventures, Cooley LLP and City National Bank.