June 19, 2014

The Perfect Game of Golf with a Venture Capitalist


The relationship between a company and VC is a symbiotic one. A VC is like the mentor who takes a young and developing golfer and equips him with the necessary skills to succeed. Think of Tiger Woods and his father, or Jack Nicklaus and his mentor, the great Jack Grout.

Inspired by the 18 holes of a golf course, here are the 18 benefits of accepting a venture capital investment.

#1 Financing – Golf is an expensive endeavor and so is running a business. At some point, the mentor may need to buy high quality equipment for his pupil. Similarly, venture capital provides the financing solutions necessary for an entrepreneur to turn their idea into an actual product or service. This financing can be used for marketing, hiring high quality employees, or paying for whatever needs a company has.

#2 Domain expertise – The mentor knows how to navigate a specific golf course. Likewise, most VCs have expertise in multiple industries. Venture capitalists tend to invest in companies they can lend their experience to. For example, many firms look for disruptive companies within a few specific fields, such as financial services technology, cloud computing, education software, etc. in case on NIN Ventures.

#3 Network – Once an entrepreneur accepts a venture capital investment, he can tap into the VC’s larger network. This leads to connections with sales channels, consultants, legal professionals, accountants, and even other companies and VCs.

#4 Talent Recruitment – Talent tends to go where the money is. A VC-backed company will benefit from increased access to high caliber employees. The top golf teachers are able to use their reputation and connections to recruit other instructors or trainers who know how to foster skills in the golfer.

#5 Public Relations - Funding makes news in itself. In 2010, GroupMe, a mobile group-messaging app, raised $10 million in venture capital after their TechCrunch Disrupt presentation. In 2011, Skype acquired the startup for around $80 million.

#6 Marketing – The mentor who wants to show off their prodigy’s skills knows the right tournaments to join and how to build a following. When a company’s ideas are flowing but resources are limited, accepting venture capital gives an entrepreneur access to the VCs portfolio, which can help build marketing and sales channels.

#7 Experience – An entrepreneur might have a great idea, but VCs have experience from multiple deals that can help the company while making critical decisions. 

#8 Exit Strategy – The mentor eventually wants to retire, but in order to do so he must lead his pupil to success. Likewise, a VC is result-oriented, and will help an entrepreneur in planning a successful exit via sale or public offering.

#9 Goodwill/Credibility – Having Tiger Woods as your mentor would establish credibility before you even play. A venture capital investment is a sign that a company’s product is worthwhile. This adds credibility and brand value to an entrepreneur’s idea or product.

#10 Gaining a Friend with Mutual Interests – Both the mentor and the golfer want to win tournaments. Both the venture capitalist and the entrepreneur want success for the company, and this mutual interest helps the entrepreneur earn a friend in the process.

#11 Scalability –VCs provide capital, experience, and means, which are necessary for a company to scale and grow a faster rate.

#12 Motivation – Every golfer gets in a slump and every company has its own set of challenges. The VC supports the entrepreneur in challenging times and motivates him to continue on his journey to success.

#13 Follow On Financing –VCs can provide follow on financing, which is used to grow a company by hiring quality talent, marketing, or further developing products.

#14 Guidance – The golfer cannot see his own swing, so many flaws can go unnoticed. VCs act as a trusted guide to an entrepreneur who can help to spot and solve problems before the company has to learn about them the hard way.

#15 Long Term Strategy – It’s easy to lose sight of long-term strategies in the day-to-day operations of a company. VCs help companies stay on track to reach long-term success by achieving milestones and goals. This is like Jack Grout keeping a calendar of the days leading up to the PGA Tour.

#16 Focus – With many distractions, it’s easy for an entrepreneur to lose focus on their core business. VCs help entrepreneurs focus on the products that will grow the company. All great golfers are reminded of maintaining and perfecting the fundamentals: grips, aim, swing.

#17 Strategic Acquisition (due to deal flow partnerships) – VCs are in the market for deal flow, and can suggest a strategic acquisition that help the company maintain a lead in its marketplace.  

           #18 Greater odds of Success – Just like how in golf, a perfect shot is derived from the right technique, clubs, weather, and a little bit of luck, a venture capital investment gives greater odds of success to a company. Some venture-backed companies with successful exits include YouTube, Whatsapp, and Nest, to name a few.