Is value creation by Venture Capitalists a reality or myth?….
Whatever it is… there is no denying the fact that Venture Capitalists and Private Equity players have facilitated creation of industries …. accelerated emergence of new age business and led to creation of new breed of entrepreneurs… Here are some of the roles and responsibilities which a VC typically plays across functional areas of a organization in the hopes of a ‘HOME RUN’ blockbuster exit….
| Broad functions | Roles and Functions of Venture Capitalist in Portfolio Companies | |
| Formal roles | Informal roles | |
| Board of director | Member | |
| Sounding board | ||
| Observer rights | ||
| Strategic functions | Formulating business strategy | Strategy sessions |
| Managing crises and problems | Business advisor | |
| Boundary spanning | Selecting vendors and equipments | Developing professional support group |
| Source of professional contacts | ||
| Source of Industry contacts | ||
| Finance related | Obtaining alternative sources of financing | |
| Interfacing with investor group | ||
| HR related | Management Recruiter (Interviewing and selecting) | Searching for candidates of management team |
| Negotiating employment terms with candidates | Motivating personnel | |
| Replacing management personnel | ||
| Marketing related | Formulating marketing plans | Soliciting customers or distributors |
| Testing or evaluating marketing plans | ||
| Operations related | Developing actual product or service | |
| Developing production or service technique | ||
| Supervisory | Monitoring financial performance | Phone calls |
| Monitoring operating performance | Non board meetings | |
| Seeking periodical reports | ||
| Interpersonal | Friend / Confidant | |
| Mentor / Coach | ||
More on the VC here….