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Why the role of the VC must evolve in an increasingly competitive market

Why the role of the VC must evolve in an increasingly competitive market

updated role of a VC updated role of a VC
Photo credit:

Think London 

The role of the VC is evolving. Entrepreneurs expect more than just capital from their investors. Here's how Index is keeping pace.

It’s rare to hear that the global financial crisis in 2008 led to opportunity, but Dominic Jacquesson worked the fallout to his advantage.

Jacquesson became more interested in the startup world after realizing that the investment scene was set for a shakeup; he began consulting for young firms which led him to work closely with Index Ventures.

Prior to Index, Jacquesson had experience as a startup COO in New York and London, a founder of a digital publishing consultancy Ink on Dead Trees and has held positions at MOO, Electric World, Biomni and Institutional Investor.

Index Ventures came to me really…an approach from Index is like getting approached by Barcelona if you’re a footballer.”

Index approached Jacquesson to build a portfolio support function to improve the level of service provided to companies post investment.

The updated role of a VC is all about adding more value to their services.

It’s fair to say however that Index was one of the first European investors to deviate from the standard model and improve their service in this way.

The 20 year old firm has invested in 150 companies of various sizes, but Jacquesson is more interested in what happens after the investment has been made.

“When the investment team secures a new company and investment [we] start to help them scale and grow their businesses.”

It’s called the Venture Development team, of which Jacquesson is Director, and the team is key to Index’s investment philosophy.

“VCs are taking a longer view of their investments; there’s a lot of capital out there and entrepreneurs can differentiate between investors. Dangling a cheque simply isn’t enough anymore…”

Jacquesson extrapolates this issue:

“[VCs] now need to provide value which can be added in a tangible way beyond the core format which we’re all used to…we need to get deeper into the operations of the business.”

The updated role of a VC, as Index is trying to create, is a logistically demanding task though.

Index’s 150 investments are spread over 24 countries and 39 cities, and as Jacquesson himself notes, “there is a huge amount of learning in that network…”

Specifically though, the updated role of a VC means utilizing and connecting the different verticals its entrepreneurs have.

“Engineering, product, talent, legal, analytics, design, the list goes on…”

Index has pulled these different communities online to allow their entrepreneurs to access the groups in order to share best practices. They even host one event each week for face-to-face participation and networking.

“These could be a dinner, a workshop event or a masterclass…I see myself as a glorified switchboard operator to make these connections and map out who’s in the Index network.”

Another entry to add to the updated role of a VC lies at the University level.

Index are trialing a startup internship program at several universities, complete with residential accommodation, in order to tap into fresh talent – something that “US startups are ahead of the game on.”

Jacquesson recognizes that this gives an advantage for American entrepreneurs which their counterparts across the pond already struggle to compete with.

It’s up to established investors to help the ecosystem as much as they can, which is why the updated role of a VC is so important.

“Our aim is to act as gatekeepers to a talent source for those startups.”

More on the US – Europe dynamic though.

“There is an unparalleled depth of talent in Silicon Valley and a lot of startups in Europe move there. However there is now a huge amount of homegrown talent that’s evolved in the EU, it’s a tipping point for the startup ecosystem: this is the place to be.”

A lot of the energy drive behind that is marketing Jacquesson thinks

Adverts, both in print, on board and online, are forcing people to rethink their career progression, it’s not a case of bigger employer is better anymore.

“People want their careers to go faster and further.”

Running parallel to that shift in employer focus is another trend that Jacquesson is heavily involved with: data.

“My own background contains data since day 1…. and back in May my team launched Index IO and we’ve now plugged a web app so out executives can log in and have access to our data.”

Index also has it’s very own resident data scientist.

“Data has grown exponentially and it’s taken longer than normal for VCs to respond to that, to make that shift.”

For Jacquesson, a VC has to keep up with those trends and the updated role of a VC must create a culture that is receptive, creative and tangential.

As noted earlier, Index Ventures were one of the first European funders to carve out this service, but Jacquesson readily admits that “portfolio support teams are more common in Silicon Valley.”

Index are also developing specialization within his team too: looking at talent, marketing and branding.

“We’re a marketplace, not a fulfillment centre and we think a startup has the knowledge and expertise so we make it possible to connect them to more.”

However it’s impossible to ignore the figures that suggest between 65% and 90% of startups fail within 3 years of conception.

Jacquesson has a view on what is required to succeed.

“You need the right team who have got the chops to take things far; the right product, something distinctive and truly disruptive; and a market opportunity, is it big enough create a big business to scale over time?”

It’s not just startups that need to have a checklist though; the updated role of a VC is enabling healthy communication between entrepreneurs but investors still have to have an eye for detail.

“Ultimately, great investment is as much art as it is science: investors must be able to spot the great teams, the market gaps and the opportunities to disrupt.”

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