Close

Make the Process Clear, Make It Efficient

Building new companies involves the convergence of many forces: ideas, founders, capital, attracting talent, acquiring customers, delivering value, and fortitude. We have converged our capital to deliver seed and early-stage capital to entrepreneurs, and our Venture Partners, who are on the board or in an advisory role, have a fund behind them.

Why the new name? 

Things change when you put the entrepreneur at the center of the process. Entrepreneurs build the enterprise value. If you put the entrepreneur at the center of what you do as an investor, you begin to see them as your customer. You are there to serve them. They make the return on your investment happen. The greatest way to help your customer is to invest in their venture. Of course, investors can partner with only a small percentage of the companies they meet. The second best way to serve the entrepreneur is make the investment process clear. Make it efficient. Equally important: make the decline process clear. Make it efficient.

Serving the Real Customer

CommonAngels is one of the best-known angel groups in Boston and in the U.S., founded 17 years ago by five successful software pioneers to invest in and support tech start-ups. The model worked well for its time, but in response to the dramatically-changed landscape for seed and early-stage investing, we evolved our model.

We pooled our capital to create a fund. We combined the power of active limited partners who are leaders in the tech community–our Venture Partners–and a fund managed by full-time investment professionals. We are innovating how early-stage capital is invested via a model that combines a VC fund structure with a powerful, deep network. In doing so, we transformed our model and mindset, restructuring to serve the entrepreneur as our customer.

Venture Partner Leverage venn-diagram

As a fund model, we can better leverage our Venture Partners, themselves entrepreneurs who have, or are, building enterprise software, SaaS, mobile, digital media, and internet businesses.

Our Venture Partners offer to our companies relevant industry and operating expertise, connections to new customers, strategic partners, and referrals for new hires.

They fill our board seats and now have a fund behind them. When our Venture Partners invest personally, the fund’s capital augments them on the cap table. The division of labor enables a 3-person venture fund to scale: Converge’s Venture Partners contribute deal flow, diligence, and connections. And the general partner provides experienced, full-time investment professionals who make the investments, build the portfolio, and stage the capital.

Too much of a good thing

We are coming into that part of the cycle when there is too much of a good thing: as seed and early-stage investors become more prevalent, it has actually become harder for the entrepreneur. We changed our model in response to these macro shifts:

  1. The early-stage investing landscape is flooded with crowdfunding platforms, incubators, accelerators, seed programs at VCs, angel groups, and others.
  2. The glamorization of start-ups (i.e. Shark Tank) have made entrepreneurs entertainment – catering towards “hot” industries.
  3. The influx of capital means entrepreneurs demand more from their investors.
  4. A 7-year bull market makes everyone feel like a winner. Not enough new investors have lost money yet. Investing looks easy right now.
  5. Fundraising is a more time-consuming and opaque process now – it is harder to suss-out who is a real check-writer.

By transforming our model into a fund and consolidating our individuals’ capital, we are better serving the entrepreneur.  We can provide the clarity and capital of a fund with a faster, clearer investment process. Make the process clear. Make it efficient.

The Convergence  

Without real organizational changes—behavioral, cultural and procedural changes—we would have fallen short of the transformation we set-out to achieve when we restructured ourselves as a fund. A premature name change without a mindset re-set around “who is the customer” would have missed the mark.

We believe the entrepreneur is the customer. Not the investor. The entrepreneur builds the company, builds the value. We put the entrepreneur at the center of what we do, and we work to earn the privilege to partner with exceptional entrepreneurs. We have changed how we deliver our capital and our connections. Made the process clear. Made it efficient.

 

 

Tweet about this on TwitterShare on LinkedInShare on FacebookEmail this to someone