Anyone who has ever been in a founder’s shoes will know that you don’t know what you don’t know when starting out. This includes how much to pay for a marketing agency, how to write an application for a grant or the support that’s out there for start-ups. As our MD David Foreman recently put it, nobody teaches a founder how to lead a business; they’re expected to know everything.
And this is where so many VC-founder relationships break down. If a VC agrees to invest capital in a business but provides no additional resources, tools or introductions, can that VC blame said investee business if it experiences problems with cash runway because it overpaid for its offices or a solicitor?
Since day one of Praetura Ventures, we’ve been championing our more than money approach to our portfolio companies because we believe investing capital in an early-stage business without additional support, guidance or advice just doesn’t work. That’s why (along with our masterclasses, mentorship from our Operational Partners and access to our internal resources), we have put considerable time and resource into building our Portfolio Toolkit, which is there for all founders.
VCs are naturally very connected. We speak to property negotiators, accountants, solicitors, brokers, recruiters and specialists within the business landscape, and these relationships form the basis of this resource. Another benefit of our toolkit is founders can access exclusive rates from PwC, which provides support to our portfolio in areas such as R&D tax credits and share incentive schemes – the latter of which is becoming a crucial way for start-ups to retain staff. Other examples of toolkit support include saving our founders money on their office lease, owing to the relationship we have with an experienced property negotiator.
Naturally, the benefit of having this resource in place is that we can connect our founders with experts we trust. But outside of this, another consideration for our portfolio founders is that substantial cost savings can be used to maximise cash runway, which can therefore fund other parts of a founder’s business. In fact, the Portfolio Toolkit has led to potential business cost savings of circa £3 million for our portfolio, with our team recently saving one portfolio company £180k in just four months.
The importance of preserving cash shouldn’t be underestimated – regardless of how much a business has raised. As per data from CB Insights, the second-largest reason startups fail (29% of cases) is running out of funding. And while you may think the most likely reasons for this are poor planning or a bad strategy, very few people consider that paying for professional services, tech or even rent can have just as big an impact on cash burn and reducing cash runway. These monetary pressures can have a significant knock-on effect, not just on a company’s valuation but the wellbeing of founders, who already have the pressure of growing and scaling a business – often for the first time.
It’s for these reasons that we’ve put so much work into developing our Praetura Ventures Portfolio Toolkit and why we’re continually expanding our wider VC network. By giving more than money to founders, we also continue to maximise value for our investors, and that is the true power of our Portfolio Toolkit.
- Running out of funding is the second-largest reason startups fail
- Our Portfolio Toolkit amounts to potential cost savings of circa £3 million
- £180k – The amount we have already saved for one of our portfolio companies in just 4 months