The term ‘venture partner’ is frequently highlighted in articles and papers, and its definition is frequently put through search engines. What is a venture partner? How can small companies prosper with a venture partner’s help? This article reveals the crucial mentorship that venture partners provide and the consequential growth that startups can accomplish, alongside emphasizing the importance of VAT registration.
A venture partner provides the experience and knowledge that every startup searches for; however, it is difficult to have at an early stage of a business. Venture partners assist small companies with investments, strategies, and management, sometimes on behalf of a venture capital firm.
Therefore, besides providing capital, VCs can offer mentorship and connections through the venture partner role that supports young companies’ growth and scale. However, the venture partner can also operate independently of a venture capital firm.
The core characteristic of the role of venture partners is that they are less closely knit than partnership members.
Further, unlike entrepreneur partners, venture partners source and manage multiple deals.
Depending on the function of the venture partner and the position of the company, there are different types of venture partners. Of course, the job title may vary depending on the workplace and functions. However, the below-outlined types of venture partners describe both the position and the responsibilities aligned with it.
Funds provided by angel investors can support the company during its difficult early stages or be a one-time investment to get off the ground. An angel investor is a wealthy individual who invests his own money in a startup. Compared to banks or venture capitalists, angel investors tend to take greater risks. Due to their independence in investing, they aren't bound by banks or institutions.
An example of a successful active angel investor is Chris Sacca. He has invested in some of the most successful companies over the past few years. As an early investor in Twitter, Chris Sacca also backed Uber and Instagram.
Unlike pure Venture Capital investments, Corporate Venture Capital (CVC) does not involve third-party investment firms, and the investing corporation does not take ownership of the startup companies it invests in.
Instead, the corporation directly invests its own funds into startup firms, providing them with support and resources such as management and marketing expertise, well-developed strategies, and access to credit. Through the deal, CVCs gain access to new technologies, markets, and business strategies.
Drive by DraftKings is an example of a corporate venture capital company that invests mainly in sports technology solutions and entertainment companies. The firm's portfolio includes companies such as United Airlines, Spin Masters, and Zoom.
Startups at an early stage of development are the primary focus of a business incubator, which helps them expand and increase profits. Business incubators support new companies in developing their product ideas and business models. Further, their help reaches far beyond the financial aspect and covers network opportunities, leadership, and equipment.
StartupYard is a startup incubator that specializes in deep tech. The business incubator covers fields such as robotics, IoT, augmented reality, AI, predictive analysis, and cryptography.
In contrast to incubators, business accelerators focus on startups with already developed business plans, introduced products on the market, and experience in their field. Startup accelerators concentrate on expanding small companies' reach, accelerating growth, and increasing brand influence. They help mainly through mentorship, legal advice, connections with industry leaders, and potential investors.
Startup Wise Guys offers accelerator programs in Europe and Africa, ranging from Sustainability to SaaS to Fintech, region by region. The accelerator has invested in over 290 early-stage startups in the past ten years.
Micro VCs concentrate on a particular industry or phase of a company's growth. They generally take a more involved approach to collaboration with their portfolio companies than larger VC companies. Micro VC firms search for companies in the early stages of their development to keep their expenses low and acquire more ownership. They can identify businesses that lack sufficient funds to survive until a Series A investment round, and by investing, micro VCs essentially obtain a share of the company.
IA Ventures is an example of a venture capital company that focuses on financing startups in the fintech industry during their seed-stage or early-stage phases. They have invested in over 70 companies, and their portfolio comprises over 150 investments.
Online crowdfunding platforms can be used to launch crowdfunding campaigns. These platforms enable startups to raise funds without relying on traditional sources like loans or investments. They enable early-stage businesses to collect small contributions from a large number of people. By receiving this financial support, startups can start or launch new initiatives.
Among startups seeking funding, SeedInvest Technology is the most suitable pick. With over 700,000 investors attracted to its platform, it has aided over 250 startups in securing more than $465 million in financial backing.
In the realm of venture capital funding, the typical structure often involves limited partnerships, entities designed to pass through tax obligations to their partners. This setup means that the responsibility for tax payments rests with both the general partners (GPs) and limited partners (LPs) of the VC fund, rather than the fund entity itself.
Before reaching out to a venture partner, a realistic perception of the role and impact of such a partnership should be acquired. This includes developing a 360-degree viewpoint of the advantages and potential obstacles this alliance may result in. Therefore, to fully cover the topic, in this section, we outline the pros and cons of venture mentorship.
Among the main benefits of partnering with a venture mentor is access to competency, professional experience, and connections within the industry. All of which are rarely reachable when the startup is on its own. Further, the additional expertize can contribute to better decision-making and strategic planning. Moreover, through risk sharing, the financial stability of the venture partner can result in financial security for the startup.
There are potential obstacles that can emerge from a similar partnership as well. The expertise of the venture partner can result in a conflict with the visions and goals of the startup’s founders. Additionally, the venture mentor can demand a share of the profits, easily leading to conflicts of interest. In general, the contribution of the venture partner can be transformed into a demand for ownership and control over the small business.
Since you are familiar with the definition behind the term, the different types of venture partners, and their potential influence on your business, now it’s crucial to understand the right steps toward finding a venture mentor.
Firstly, research the field not just for a venture partner with rich experience but one with expertize and knowledge within your startup's industry. Explore this person’s venture portfolio and whether startups with similar visions at the same stage of growth are included.
Secondly, when introducing the company and its core idea, be exceptional in the choice of words, tone, and structure. The first impression matters and the first pitch is decisive regarding the potentiality of the partnership.
Thirdly, prepare a well-developed business plan ready to go once the venture partner contacts the startup. Not only does a pre-prepared business plan outline stability and security behind the idea, but it also underlines the set progress direction. Therefore, this will contribute to avoiding future conflicts of interest.
Launching a startup includes a great extent of uncertainty and financial instability. And whilst reaching expertize in a particular industry takes years and encounters obstacles, a venture partner can provide the necessary support.
The right hand of early-stage undeveloped companies, venture partners provide rich knowledge, experience, and financial support. Venture mentors differ in their types and characters. However, their goals and visions are the same – to enable startups to reach above their target growth.
Next time the question “What is a venture partner?” reaches you, counter it with the advice and suggestions within this article.
