(Find Sander on LinkedIn)
Early stage venture capitalist enjoys helping portfolio companies maximize their potential. Prior to Volta partner at a Corporate VC and a long career at corporates. Started out in IT rolling out a mammoth CRM throughout Europe (parts of the system are still running after 20 years). Lived all through Europe and Singapore, now settled with family in Netherlands.
I look for companies who we can help scale to access large markets. Just like a startup needs to focus we focus on SaaS and internet companies and we want to be physically close to our portfolio companies (BeNeLux region or close).
With so many different portfolio companies in different stages of growth and success, how do you balance how much effort and persistence to put into each one?
This is a tough nut to crack, unfortunately companies with issues require most attention and these are not always the ones who deserve the most attention if you look at it from a performance point of view. As an investor I commit to my investments and each one can count on my best effort to help them when needed, this is how we can make a difference. Fact is, as an early stage hand on investor, time becomes an issue with 6 board seats or more, we look to hire venture partners, people with a lot of relevant experience and have them join boards of more mature companies on our portfolio to free up the time.
Persistence, from a funding perspective, is a much more calculated, we don’t throw bad money after good money, each follow on investment needs to be evaluated as if it’s the first investment. This means our rejection to provide follow on capital can lead to a failure of the company. For the fund this is a calculated risk, for the entrepreneur this is always a difficult pill to swallow.
How do you balance your time between (1) sourcing quality prospect ventures (2) doing due diligence for prospective investments and (3) helping current entrepreneurs? Which of these are you comfortable outsourcing to principals/analysts and which do you absolutely have to do yourself?
Generally speaking in our firm its about 33% for each but varies with the state of portfolio and current deals.
Sourcing has many different aspects, we differentiate between direct deal flow, indirect deal flow and research. Research is firmly with the analysts. Initial direct deal flow as well but to generate the deal flow we need to do marketing. The VC marketing is publishing content, speaking, sponsoring and attending conferences websites etc. this sits largely with the partner.
For Due Diligence the partner makes the decisions and is heavily involved in any findings but we use our team and a team of externals to do the actual heavy lifting.
Helping entrepreneurs falls to the partners, when we find a specific area where help is required we use our network to provide additional support, this could be our LP’s or external consultants.
Many GPs are good investors but don’t master one of the core skills – adding value as a board member. What do you think are some tricks to a productive relationship with founders? What should the culture be for the board and CEO for a quality relationship?
A VC should focus on a specific area, we focus on bringing companies from initial MVP (minimal viable product) to scaling in the SaaS software space, it doesn’t matter that much in what vertical you do this many challenges are the same.
A VC is a generalist and acts as an early warning signal for the CEOs. We see what steps are needed and can help focus the business and ensure it doesn’t make mistakes the VC has seen elsewhere. I think there is one trick, show your added value and be brutally honest. A well-functioning board has productive discussions around strategic subjects, is well prepared (also by board members, don’t spend your time reviewing numbers in the meetings, prepare and provide time to ask questions not go over and update for an hour) and is a safe environment where mistakes are analyzed.
Nowadays, mental health is more present than ever, with things like burnout, stress, depression, among others. What do you think of external intervenients like executive coaches, both for a founder and for a VC partner? Do they usually add value?
Its undeniable running a fast growing startup requires an Olympic athlete mentality, you need to deal with setbacks and get up and keep on trying. There are a few things we can do from the offset, one is to make sure renumeration is at a reasonable level, we expect them to perform 7 days a week, renumeration must be reasonable, not so high it’s out of sync with revenue and cost but also not so low they don’t have the peace and quiet the home situation is covered.
Second is we see there are many different areas of expertise they need to master, ensuring they get the help they need early on is essential, we can provide it or outsource it, we can get a temp CFO or whatever skill is required and will alleviate the CEO to allow him to focus on his or her strengths.
How do you solve important conflicts with CEOs, such as lack of alignment on exits, strategy, or just the CEO being in denial about things like performance? Does the resolution begin with a private conversation or with involving other board members in a decision?
Coachability and compatibility are key qualities we look for in our founders, this means they are willing to listen to outside counsel and consider the advice, but there will always be different opinions and possible conflicts. Second a board should have a good balance, between skills and between roles, founders, executives and investors, this balance will already minimize conflicts. Also the governance should be well organized, it has to be clear who decides, if the CEO is not willing to execute he or she should leave. In practice you (or the board member with the best relation) engage with the CEO (or non-CEO founders) and reason to find a mutually acceptable option.
When raising money from LPs, what is the thing you emphasize the most when “selling” the fund? Past returns? Team expertise (domain and/or entrepreneurial expertise)? Unique angle?
This is just like a startup raising capital. It’s a combination but historical returns are number one, second is our focused go to market, what market do we address, how many deals are there and how long until they mature, are there an exit opportunities and how much competition in combination with the team, why are we the team to pull it off.