CI’s Venture Team Holiday Wish List
In the past year, Connecticut Innovations’ Venture Team had record investment activity, strong returns from its investments, and many portfolio companies on the “nice” list!
For the coming year, CI compiled a wish list of recommendations for its portfolio companies that want to stay on the “nice” list in 2018:
- Build the strongest management team possible. When building out your team, hire slowly and thoughtfully, and do your due diligence to bring in people who expect change and have previous experience managing change. Experienced (serial) entrepreneurs and former members of successful startup teams have a much higher probability of success.
- Hire at least one year in front of positions you are filling, and attempt to hire people who are potentially overqualified for the current role. In startup and high-growth companies, the growth of the company will often accelerate more quickly than that of individuals (and there is precious little time for people to catch up).
- Remember that market timing is essential. This includes both customer readiness to change behavior, as well as supplier/partner network willingness to adopt new tech. Companies must react quickly to external inputs and have partners that will “pivot” with them. As one deal manager said, “The only thing we are sure of when we invest in a company’s business plan is that the plan will be revised multiple times on the way to success.”
- Raise more than 12 months in funding. Successful portfolio companies (and strong returns on investment) are built by management teams focusing on the business, rather than always being in capital-raising mode.
- Avoid being a single-product company. Fundable companies leverage their knowledge, intellectual property and management skill to solve problems and meet customer demand along a broad spectrum.
- Point your company toward big markets, where people will pay a premium for the product. Many companies’ products outperform the competition, but do not drive a premium price. Cool technologies that are ahead of their time may not justify ongoing investment in building a company.
- Finally, stay on the “nice” list. As one CI deal manager said, “If you don’t like the CEO (or management team), no one else will either.” Funding a startup and driving a business to success is very challenging, so don’t make it more difficult because of egos. Be nice—working with you will be more enjoyable for all of us and put you on a path to success.