We've crunched the numbers & we're officially better, faster & cheaper!
Forward Partners’ portfolio companies execute better, faster and cheaper than businesses that raise from more standard investors. At the end of this post I will share just how much better, but first I will put our work in historical context and explain how and why we do what we do.
Venture capital is changing. Over the last decade there has been a growing realisation that venture capital is a services business - entrepreneurs buy our service to help them grow their companies. The counter-intuitive thing is that cash is part of what we are selling and we get paid in equity in the companies that we invest, but the fact that the money flows in the opposite direction to most transactions doesn’t change the fact that founders are our customers.
Most good VCs have got this now. You can see that by the way they blog more and make a show of hustling hard for their companies. What’s more interesting is that a small but growing group of VCs have taken the service we offer to entrepreneurs to the next level. We call this new category of venture “Applied VC”. There are maybe a dozen of us globally now, including Forward Partners, Project A, Andreessen Horowitz and Openview Venture Partners. What distinguishes us is that we believe investors can and should do much more for their portfolio companies than provide cash, advice and introductions. We, of course, do all that, and I would be upset if I thought that our investment team wasn't working as hard (or harder) for our partner companies than investors at other VC funds, but where Applied VCs differ from other VCs is that we have an additional team that helps our partner companies with execution. At Forward Partners we call that team our Product Team. It’s made up of expert developers, designers, growth, talent and comms execs who all work directly with our partner companies. The execution support our product team provide is wide-ranging and has recently included helping our partner companies flesh out their customer research, build and launch MVPs, make key hires, implement a growth culture, upgrade their infrastructure so they could handle the Black Friday shopping spike, to building a new analytics stack.
We offer these services to our partners because we want them to succeed, and therefore it only makes sense if they are more successful with our help than they would be without it.
The founders we back regularly tell us our assistance has been a huge help for them. That because of us they have been reaching their goals faster, cheaper and with stronger foundations than if they had raised what I might unkindly call ‘dumb money’. Additionally, because our team of experts has so much experience working with startups, we were able to help them navigate the choppy waters of startup life and avoid mistakes they didn't even know they were in danger of making.
So in our heads and hearts we know that our help makes a big difference.
But we didn't have the data to prove it.
We’re proud to have made fifty investments over the last five years and recently set ourselves the task of digging into the figures to determine precisely how much better, faster and cheaper companies execute when they have our help.
The process was both exciting and challenging. There is no single metric to work with and comparison data sets are difficult to gather. However, we embraced the complexity, thought hard, worked hard, and produced a solid analysis.
We’re delighted that the picture that’s emerging not only validates the effectiveness of Forward Partners, but is better than we’d hoped.
We can’t wait to share the detail. In the meantime I can give you a headline. Round-to-round valuation increases for our partner companies are 55% higher than comparable companies, and on average they raise those rounds 26% faster.
Stay tuned over the coming month to learn more about how companies use us as a turbocharger to reach their goals. You will hear from our growth, product and development teams about how we have helped companies execute better, faster and cheaper at departmental level. Then the final update will focus on what this means for the most important figure, the value of founder equity.