Blog Post

illustration of an investor leading to more growth

Strategic Investors and Value from Your Cap Table

image of characteristics of venture capital

Investors play a critical role in the venture ecosystem. Deploying capital based on the assessed potential of early-stage companies is elemental to the development of new ideas, products, platforms, and technologies. Even so, many startups expect investors to play a much bigger role than simply providing essential funding.

Here’s a question for you entrepreneurs: when raising capital, how would you describe your ideal investor? Is it strictly the person or firm who can provide an investment fastest or with the most favorable terms?

We would guess that, for at least part of your cap table, you aim to include investors who can be strategic. Those whose networks you can leverage, and whose expertise you can lean on when facing the inevitable challenges of growth. We know that some of the best investors in the market play that role and play it well. But we also see instances where companies are disappointed by the lack of partnership offered by investors who claim to provide value other than just money. In this article we take a closer look at where expectations between investors and entrepreneurs can be mismatched, and where explicit communication and thoughtful strategies in building your cap table can alleviate these pressures.

The Startup Perspective

Why do founders seek investors who can double as strategic advisors? This may seem obvious in some respects, but let’s break down some of the specifics and nuances.

Expertise. Investors typically have unparalleled experience regarding operating an early-stage business. Many Angels and VCs are former entrepreneurs themselves and have stewarded dozens of their investments through the most challenging phases of growth. To first-time founders and founding teams, this expertise can be invaluable. Whether through board participation or informal involvement, it is easy to imagine how a tenured investor can help keep you on the right track.

Network. Investors’ personal and professional networks are another key selling point. Investor networks often include executives at large potential customers, go-to-market partners, and other investors who can bring in additional capital. For entrepreneurs with a limited network and limited time to build it, a well-connected investor can feel like the missing puzzle piece.

Validation. Finally, landing a highly successful and respected investor can be a mark of validation for a new venture. Prospective users may see buy-in from a top investor as a strong endorsement of your product or service. Later-round investors may also look to your initial cap table as a means to better validate your business’s potential.

The Investor Perspective

Many investors recognize the value they bring to early-stage companies beyond funding alone. They see their know-how and networks as differentiators to both win deals and help grow their portfolio companies. However, startups often fail to recognize that any investor has a multitude of demands on their time and attention. Consider this: according to FundersClub, the average VC fund is spread across 30 to 80 startups, and serving as a Directors or Advisors to their portfolio companies comprises only a portion of VC partners’ time. They are constantly focused on sourcing new investments, developing LP relationships and/or raising their next fund, executing exits with existing portfolio companies, and managing the day-to-day activities of their firms. 

It is important to understand an investor’s strategic role in context – investors want to add additional value for entrepreneurs when it helps maximize their return AND when they have the availability to do so. They aim to provide impactful guidance at key inflection points, make a handful of targeted introductions, and offer a stamp of approval that a founder can leverage in the marketplace. This is not a critique of investors’ willingness to help, it’s more of  an observational fact. To spend an outsized amount of time on a single portfolio company would require the abandonment of other equally, if not more, important responsibilities, not to mention the potential ramifications of materially favoring and supporting one portfolio company over another.

Addressing the Disconnect

photo of an investor partnership

When you consider the perspectives above, the potential for disconnect between entrepreneurs and investors is clear. Startups often seek investors that can play a considerable strategic role, and investors have limited capacity to play that role for multiple portfolio companies simultaneously. It’s not a dig at either side, it’s simply the nature of each party’s respective position.

So, founders, when you’re seeking your next VC or private investor, are you going to seek out someone who can bring more than capital to the table? We think you should, but here are a few ideas for how to align your needs and expectations so you can maximize the effectiveness of those on your cap table.

1) Make a plan to build your network of advisors and be thoughtful about where investors fit into that network, keeping in mind how they may be impactful later down the road. As your company progresses, you’ll eventually form a Board of Directors composed primarily of members of the founding team and major investors. Since board members will help set the direction for your company, you want to make sure that you have solid pre-existing relationships with all investors who may eventually be granted a seat. Adding lead investors to a Board of Directors is more-or-less inevitable and typically a board seat will be included in the investment terms you’ll receive. However, if you’re considering carving out a Board seat for an Advisor or minority investor, our recommendation would be to only bring on anyone who has already proven their value.

2) Communicate your goals for the investor relationship and where you envision their help playing a critical role. Identify specific companies or individuals in the investor’s network that you aspire to get in front of, or offer guidelines around the types of introductions you hope they can make. Try to focus on where an investor can make the biggest impact while minimizing the demand on their time.

3) Be realistic about the validation that comes from a specific investor relationship. Some investors’ track records may stand out, but no investor has entirely avoided making mistakes – investors are only human after all. Your product or service must be able to stand on its own; backing by a great investor can be a powerful marketing tool but it can never replace a proven product-market fit.

In a way, Bizydev, by nature of what we do, is better positioned to be the hands-on strategic partner that entrepreneurs often seek in an investor. We recognize better than anyone the value of a partner who can immediately understand your business and get you in front of the right opportunities at exactly the right time. We also recognize better than anyone how much time, commitment, thought, and effort it takes to play that role effectively for multiple startups concurrently. Communicate directly with your potential investors about how big of a strategic role they can play and you’ll build much more rewarding relationships in your cap table. And if you find yourself in need of a business development partner who is focused on going the extra mile to bring you industry expertise, a vast network, and a strategic helping hand, you can always drop us a line.


illustration of employees quitting en masse

Fighting the Great Resignation: What Companies are Doing Today to Retain Talent

The Great Resignation. Honestly, this sounds like a pretty scary proposition for employers and business owners. Although no one can deny the effect the pandemic has had on current work practices, this newfound importance placed on work-life balance isn’t going anywhere. Rather than being the scary proposition it could be, many companies are combating this talent exodus by finding ways to bring new value not just to the work of their employees, but to their lives as well. 

Flexibility

Anthony Klotz, the Texas A&M management professor who coined the term “the Great Resignation,” recently spoke with CNBC and shared that “the pandemic brought the future of work into the present of work…we are not going back to the work of 2019.” Business owners who simply think they are going to be able to bring their employees back to the way things were are going to get left behind. According to a recent LinkedIn poll, 63% of respondents claimed work-life balance is their top priority when finding a new job, and the Workhome Project found that people value flexibility as much as they do a 10% raise.

It should come as no surprise then that companies are shifting to hybrid and remote models that provide more benefits than the old in-office adage of “we’re a family here.” The talent pool drastically increases when shifting to a pure remote model, adding opportunities not just for employees who may have been landlocked from their dream jobs, but for employers as well to create a more diverse and skilled employee pool. And flexibility doesn’t just mean where you work, but how and when. Accessibility has become a focus in interviews and workplace structure, and when applied appropriately, results in a workforce who is living to work, not the other way around.

Culture

We are not suggesting the office is going away forever, in fact quite the opposite. The office now needs to serve a different purpose in the life of your employee. In speaking with Marc Spector, FAIA and Principal/Owner of Spectorgroup, a recent Bizydev client, he said “companies need to create a cultural, hospitality-driven experience in the workplace that is more compelling than that of the home office. Cultural capital is the new office currency” and this trend is here for the long-haul. 

In terms of office layout, companies are experimenting with more open concepts, from activity-based workspaces, to coworking spaces, and hotdesks (where no one in the office, even the C-suite has their own personal desk), all with the goal of creating more options for workers regarding getting their work done. Even more extreme, some companies, especially in the tech sector on the east coast, are experiencing what can only be referred to as the “San Francisco-ization” of the office. Offering amenities such as free meals, lounge spaces, recreational activities, and beer taps, the companies that are approaching this new trend from the perspective of getting employees to “want” to, rather than “need” to, be in the office are the ones that are going to win this battle. 

Employee Wellness

The pandemic has been mentally taxing on most, and with this came a shift in focus in the way people are thinking about their wellness. Mental Health became a much bigger focus during the pandemic, and employers who are providing support in these areas now have a big leg up on the competition. In Mercer’s 2021 Health on Demand report, 42% of employees with access to mental health benefits reported that they’re more likely to stay at their current organization than if they didn’t have those resources. They also found that 44% of those without access to mental health benefits did not feel supported by their employers.

Now there are many ways employees can further their efforts in these areas. New health and wellness initiatives are being brought to companies every day. From company-wide fitness platforms, to providing mental health days, to the aforementioned workplace flexibility, and to wellness retreats, these are just some ways employers are trying to create a healthier experience for their workers. It is more than just adding perks to the workplace however, it is the true intent by company leaders and their commitment to a healthier life for their employees that will truly make a difference.

What Now?

It is definitely an uncertain time for business owners. With the job pool ever expanding thanks to remote work, a change in mentality when it comes to what actually matters in the workplace, and a workforce that has demonstrated they are willing to move on if their needs are not met, this is a time for leaders who can empathize to take advantage of this opportunity to create the most well-rounded workplace.


Tech Trends: What's in Store for 2022

From an innovation standpoint, the past couple of years were full of dramatic and transformational change and we do not expect 2022 to be any different. We’re particularly excited about the changes happening in PropTech, Health and Wellness, and Retail, as we have been busy engaging new clients in all of these verticals.

PropTech

In PropTech, we expect to see continued emphasis placed on the use of technologies that help customers and businesses visualize and experience their spaces in the digital world (e.g., AR/VR, visualization, advanced 3D rendering). During 2021, we saw the rise of virtual Real Estate as the wider world was introduced to metaverse platforms like Decentraland and The Sandbox, and our opinion is that this was just the start. We believe that advances in AI will allow this evolution to proliferate even faster as development engines and deep-learning algorithms are able to take user-specified metrics and requirements and automatically generate robust designs and finished building environments.

Take our current client Qbiq as an example. The Company utilizes proprietary AI and advanced rendering techniques to design finished office floor plans in minutes, uniquely tailored to a customer’s specific needs. With private investments in PropTech up 28% YoY, this sector is going to continue to explode and Bizydev’s expertise in real estate positions us perfectly to take advantage.

Health & Wellness

On the Health and Wellness front, we know that remaining healthy will remain a top priority for people in 2022 as we cautiously emerge from the COVID19 pandemic. While we could focus on a variety of trends here, we are most excited about the opportunities in the realm of connectedness, on both an interpersonal and technological basis, particularly as we see more and more people transition to remote-work-friendly lifestyles. Ecosystems that enable and support distributed communities by allowing users to stay connected around the globe, interact with specialists and professionals, compete with their friends to achieve goals, and the like, will ultimately lead to better outcomes across an array of disciplines (e.g., fitness, mental health, weight management).

Supporting this will be the continued proliferation of smart, connected devices that enhance the health and wellness experience in the home and provide users useful and impactful data. Whether it be connected fitness (iFIT), smart sleep systems (Eight Sleep), or fitness trackers (Whoop, Oura), we are now able to gain real-time insights concerning all aspects of our daily well-being and performance. It won’t be far off until we see the interconnectedness taken to the next level whereby these devices are all able to communicate and exchange data with one another, effectively comprising a single, holistic platform empowering individuals to live healthy and productive lives with minimal effort.

Retail

For Retail, we anticipate that the convergence between brick-and-mortar and digital channels will accelerate as the broader use of in-store automation and contextual analytics at the edge bring us closer to a unified, and highly-personalized, omnichannel shopping experience. Throughout 2021 and already into 2022, we have seen big-box retailers like Walmart, BestBuy, and Walgreens launch internal retail media networks to capitalize on the burgeoning “store as a medium” opportunity–think targeted ads on digital signage as you pass by or individualized promotions pushed to your phone while shopping all driven by customer datasets comprised of comprehensive in-store and online data–which has been enabled by these new technologies.

Another embodiment of this trend can be seen in the work being done by our client Brik+Clik, who is shaping the future of retail by bringing the convenience of online while allowing consumers to touch, feel, taste and try-on their favorite brands in a real-world environment. The benefit to the shopper is clear, but Brik+Clik is also changing the game for D2C online brands who now have a capital-light, data-driven, white-glove alternative to establishing their own physical retail presence. Instead of Location, Location, Location, for physical retailers, it’s becoming Data, Data, Data.


BCC

Think Twice Before the BCC

Bizydev’s founding was rooted in the idea that business development as a service was an underdeveloped and underappreciated resource in the early stage startup market. Whether companies get their growth and acceleration advice internally or externally (from a source of capital, advisor, marketing/PR firm, etc.), we’ve also come to see that business development can often be overlooked or half-assed. It takes an enormous amount of strategy and effort to expand your reach and market position quickly and correctly.

We work with our clients to service every one of their business development needs and in that effort, one of our most important responsibilities is making new connections for them. We help our clients by providing them with introductions to new customers, strategic partners, capital sources, and others, in a constant quest to build out the pipeline.

As we’ve seen quite often, though, once we make these introductions by email, our clients have been tempted to either remove us from the conversation or “BCC” us. That’s honestly the last thing we want or would expect.

We’re all about B2B relationships and fostering connectivity, but we’re committed to the total success of our clients and want to see these collaborations come to life and flourish at the same time. If you move us from “CC” to “BCC”, you’re limiting the full impact we can bring to the table.

We want to stay engaged with our clients and provide guidance around the customers and partners we bring to the table because we approach business development as more than just an introduction. Biz dev isn’t just about initial meetings, it’s about goals and objectives. We want you to CC us so that we can monitor and steer your business towards those goals. We can’t do that from the sideline. Bizydev wants its clients to consult us on any issue or question pertaining to growth so that they feel like we are truly just an extension of their company and not an outsourced accelerant. 

So, going forward, don’t worry about cluttering our inboxes. Include us and consult us throughout the process because that’s what we’re here for.


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Emotional Intelligence and Business Development

Judging from my short stint as an associate at a business development firm, this industry is not for the introverted or antisocial. It requires, most principally, the ability to communicate and connect with people across different sectors and over different platforms. If you’re unwilling to do so, you probably won’t make it very far. The business development industry is fundamentally an industry of connections. Thus, successful examples of business development most often come from people willing to engage with others. 

But, there are millions of extroverts around the world, so what separates the best communicators from the average? The answer: emotional intelligence. Naturally, everyone would like to think that they’re as emotionally intelligent as they can be and that they possess all the skills necessary to be a great communicator. In many cases, unfortunately, their self-images are overstated. True emotional intelligence is not only the ability to read, understand, and react to other people’s emotions, but it’s the ability to analyze your own emotions and reign them in or properly convey them.

It seems obvious where these skills would play into business development. In an industry where establishing relationships and networking is paramount to your success, a high level of emotional intelligence is almost a shortcut to the finish line. So shouldn’t a skill that can minimize miscommunication issues, endear you to a necessary business connection, and help you analyze your own goals be developed as much as, if not more than any other skill? I think so.

If you choose to believe that emotional intelligence is a quality that is necessary to successful business relationships, then you might also be wondering how you can improve it. I have found that the best way to develop your emotional intelligence is practice. Make more deliberate efforts to reach out to potential connections, have more coffee chats, attend more conferences. And, while you do so, be mindful of your own behavior. Take note of how you phrase things, make an effort to show that you’re listening, even making eye contact will help you better understand your counterpart. The misconception that emotional intelligence is simply the ability to read others is where most people fall short. Self-awareness is key to productive relationships, and it needs to be a quality more present in the business world. 

Emotional intelligence is an important part of Bizydev’s approach to their service. We maintain that sincere, mutually beneficial partnerships are key to business growth in any industry. By ensuring that our relationships and the relationships that we help establish between other firms are conducted with a high degree of emotional intelligence, we are setting ourselves and our associates on a path to success.


Virtual Reality

From Virtual to Reality

As the world makes the shift away from Zoom meetings and back to in-person activities, the adjustments that we’ve made to our business strategies over the last year and a half will likely be tossed to the wind by most people. Why shouldn’t they be? After all, living room couch to corporate board room isn’t a natural switch. I would posit, however, that we should not overlook the lessons that working and living online for such a long time has taught us.

In the first place, being able to jump from meeting to meeting without leaving your chair has probably taught us some valuable time management skills. It may have taught you that you can squeeze more into a day than you had previously thought possible. Or, maybe it taught you that you need the commute time in between activities to clear your head, gather your thoughts, and prepare for the next meeting. 

Personally, working online has taught me that I need to do a better job of structuring my time. I learned the hard way that online scheduling tools don’t include regular lunch breaks, but also that thirty minutes is all you really need to both connect with someone and brainstorm with them about business. Each of these lessons guided my work habits to a more productive place, and will be valuable as I return to in-person activities. But, not everyone has to come away with some profound wisdom about their time management skills, just analyze the parts of your day that you enjoy and see what you can do to continue them when you’re back in the office.

And, as we return to some semblance of normalcy, we’ll also have to consider how the relationships we’ve formed and maintained over the course of the pandemic will change. If you got a new job, hired new coworkers, or made any sort of connection lately, their perceptions of you are likely informed by the virtual images that you have presented to them. That means your clothes, your cluttered desk, and your kitchen cabinets that have been in the background of your Zooms could be most of what your coworkers think of you. It will be up to you to change or preserve their perceptions by the way you carry yourself when you meet them in person.

Even still, socially distanced relationships have had their benefits. For instance, because we have regular and normalized access to technology that helps us communicate, meeting someone in-person for the first time doesn’t have to be as awkward as it used to be. Whereas we’ve always had the option to Facetime or call before meeting someone in person, it is now less unusual to establish a visual report with someone by having a quick Zoom call before you meet them in person. Clearly, business networking saw what online dating was doing right. People decided that the most efficient way to meet new people wasn’t shaking their hand at a networking event, but clicking on their profile. 

Furthermore, it might be difficult to resume conducting our business in person, but using the lessons we’ve learned over the past year and a half will certainly help. For instance, if you felt comfortable networking and meeting new people in the comfort of your own home, think about what made you feel comfortable and see if it can translate elsewhere. Or, since the distance has forced many of us to prioritize work in our relationships, try to find areas of common interest with people you already know and make your connections more personal. Resharpening our social skills might be a difficult process, but it’s not one we need to rush. 

Because technology has been so crucial to conducting business, we should appreciate the impact that it had on our successes. This pandemic has opened new channels of communication and has shown us that we don’t need to meet in person to get things done. Sometimes a quick Zoom call or slack message is the more efficient way to communicate. And that’s okay. We shouldn’t feel obligated to return to the office or to in-person activities just because we see others doing it. If technology has made your business easier to conduct, embrace it. There is no question that it offers an enormous amount of flexibility to business owners, employees, and customers alike. 

Every business-person should assess whether working in person or online makes the most sense for them. If you prefer the convenience of sitting in your living room and taking notes on your computer during a meeting, so be it. Just be aware that your coworkers, business partners, or competitors might not do the same thing, and understand the advantages and disadvantages of working remotely. 

A clean-break from the isolated reality of the pandemic might be preferable for some. But for others who don’t want to leave this era having learned nothing from their experiences, it would be helpful to reflect on all the things that working virtually has taught us. The pandemic allowed me to capitalize on my communication skills, my extensive network, and my comfort with technology which all helped my business expand, but it also revealed gaps in Bizydev’s strategy that needed to be filled. I would recommend that everyone be equally self-conscious in their analyses of their pandemic experience.


Bizydev

Introduction to the Bizydev Blog

Welcome to the first-ever post in what is sure to be the most prolific and prolonged blog series in business development history. We’re very excited here at Bizydev to accompany you on your business development journey to a place of sustained growth and financial prosperity. Flash photography is permitted, but please keep your hands and feet inside the vehicle at all times.

In all seriousness, we’ve created this blog because we believe that our experiences and expertise deserve to be shared with the business community as a whole. It’s a soapbox for us to express all the ideas we’re generating and conversations we’re having internally that might be useful to the broader world. By putting out thought-provoking, informational, and interesting content, we aspire to help anyone who’s interested in entrepreneurship or business development get more familiar with the industry. But, beyond that, we just want to create pieces that are compelling and conceptually accessible to anyone. We hope that you get something out of our content, but if not, we thank you for taking the time to engage with us. Happy trails!