Providing value-adding portfolio support along with capital has been one of the hot topics in the financier community for a while now, as founders are looking for funds that stretch their strategic support beyond capital to drive the scaling journey. Further to our recent blog on portfolio support as a differentiator, we speak with our CEO, Lauren Stewart, who shares insights from the investor community.
Q. Please, tell us a little bit more about yourself and Invigorate. Why did you decide to launch the value creation platform?
A. Speaking with founders of high-growth businesses, it was apparent that not only was the scaling journey one that is filled with difficult challenges to navigate but it was one that they often felt like they were alone in navigating. Management teams of high growth businesses spend over 2000+hrs every year trying to find, vet and engage with quality external support to move their business forward whether that be advisors, consultants, service or product providers.
It felt apparent that there was a real need for a central place where businesses could go for great quality expertise and support in moving their business from A to B quicker. In my previous corporate job, I also worked on a policy piece with the BBB and Treasury looking at the scaleup ecosystem and how we could get better at scaling businesses in the UK. It was then when speaking with investors that they too would benefit from one central place, ambitious businesses could go to for scaleup support.
So I founded Invigorate to help both the founder and investor community. We accelerate the success of ambitious businesses for investors by providing end-to-end value creation at all stages of the scaling process.
Q. What are the 3 main challenges investors face around offering strategic portfolio support?
A. In 2020, a record number of funds raised capital from LPs, leading to a more competitive funding market. Founders expect investors to deliver strategic value beyond capital. There are also more emerging alternative capital sources, individual operators turned investors and hyper-specialised new funds that have put increased pressure on more traditional funds. Given the increasingly complex and fast-paced landscape, providing holistic portfolio support throughout the scaling process has become more critical than ever for investors.
Funds are not alone. Although many funds use various single-solution tools from content to events, founder wellbeing and finding talents, they struggle to scale their strategic support, namely around three main areas:
- Catering to and tracking real-time business needs that only gets harder as they scale and their portfolios get more diverse
- Reducing the staggering 2,000+ hours spent per business and in their own investment teams per annum on vetting, managing & engaging with external support
- Measuring the ROI of external supports against tangible business outcomes and objectives
As we engage with funds of different sizes daily, three common questions around portfolio support come up time and time again, including:
- How to accelerate the value of the portfolio businesses drive returns for LPs
- How to improve funds’ operational efficiency to reduce effort and costs
- How to differentiate and drive strategic value to boost your deal flow and brand
Q. Can you explain the portfolio support challenges and how to measure ROI more in detail?
A. There’s no denying that high-growth financiers including VCs, Growth Equity Investors and Debt Providers are under tremendous pressure to adopt new approaches, strategies and ways of working to remain competitive as the fast-paced market keeps evolving.
- While many funds have an extensive black book of experts, it’s extremely difficult to cater to the depth and breadth of industries and functional areas scaleups require. Clearly articulating the top strategic objectives for a growth roadmap, measuring progress against this as well as understanding external support’s impact on achieving these objectives. All these need to be aligned to deliver superior returns to LPs.
- Having to juggle between many different responsibilities and using disjointed infrastructure means that financiers spend considerable time and effort on trying to understand their portfolio and client’s challenges whilst vetting and managing external specialists that could be suitable to help. There is also a limited way to monitor performance in real-time or benchmark this against other portfolios.
- Although funds are increasingly investing in portfolio support, the lack of market intelligence can make it more challenging to understand what others are doing and how VCs can leverage community insights and best practices.
Q. So, what are the 3 top tips you would like to share with investors to help them to accelerate portfolio support?
A. Having engaged with the high growth financier community, the most helpful pieces of advice that we help investors think through are –
- Aligning your portfolio support to cater for businesses at all stages of the scaling journey will ensure that you have a better understanding of what is needed both in the early stages and later on in their growth journey. This allows you to realise the projected growth and best prepare for scale. This approach also helps you establish the key strategic business objectives the businesses should be focusing on, where their resource gaps are and helps develop a holistic, measurable growth plan across your portfolio.
- Assessing your current tech stack and whether it tangibly helps you streamline portfolio support and drives operational efficiency. Does this enable real-time performance monitoring and help you better deliver superior portfolio support through aggregated market insights?
- By investing in diverse, scalable strategic support, not only will you make better investment decisions but also aid portfolio value creation as well. These in turn allow you to drive a superior brand in the market and encourage stronger deal flow.
Providing end-to-end portfolio support is time-consuming and hard. But, once you have a well-established strategy and understand how you can execute it scalably and effectively in collaboration with the founders and the right external partners that can deliver value, you are onto a winning formula.
However, many funds can’t do this all on their own. So, having the right external support underpinning your strategy is essential as it helps them drive your businesses success and stronger returns to LPs.
Q. What are the future plans for Invigorate, and how will the platform adapt in the fast-paced market?
A. We exist to accelerate the success of ambitious businesses and work closely with both management teams and their investors to realise increased company value. We’ve been working hard on co-developing a portfolio support platform for investors that sits alongside our value creation platform for high-growth businesses.
If you want to talk to Lauren about any portfolio support-driven issues and her insights from the investor community, please get in touch.