Among our core beliefs at Foundry Group is the idea that we bring more value to our business as a team than as individuals. We believe that as a group we have more impact on our portfolio companies, are better at making investment decisions and are more thoughtful about the themes in which we invest.
This is somewhat of a departure from the typical venture capital model, in which venture partners are often islands unto themselves – free to pursue their version of venture capital in whatever way they see fit and to whom their fellow partners function less as a sounding board and more as an arbitration panel through which they must pass deals before they can be officially approved. While we recognize that our business will still be built on individual reputations and that it’s simply not practical (or wise) to have every partner involved in every aspect of the businesses in which we have investments, we believe that our team philosophy will ultimately drive better returns for the companies in our portfolio and subsequently for our investors. For us – who each bring different expertise and backgrounds to Foundry – this is a core operating philosophy and one that we believe characterizes the next evolution of the venture capital business.
As a practical matter, this philosophy results in different behavior than one finds in a typical venture firm. For starters, we don’t have a concept of “my” deal, and as a result we are quick to share new opportunities across the firm. The person who is the initial contact on an investment isn’t necessarily the one who ultimately takes the lead on working with that company. Typically, we very quickly get several partners involved in potential investments – both to share opinions and feedback, but also so investments don’t become sponsored in a way that makes any one person feel that he needs to lobby for “his” deal. When we get serious about a potential investment, we strive to get the company in front of all five Foundry partners early in our evaluation process. This surfaces potential issues early in the investment process. We often then have the partner with the greatest concerns take the lead on exploring those areas further. This is in sharp contrast to the typical venture model where a single partner typically works on a project through the point when they decide they’re serious about an investment, then brings in a partner or two for a quick second look and finally brings the company in for an up or down vote by the full partnership. (In many venture firms, it’s not unusual for this full partnership meeting to be the first time any of the other partners has had an opportunity to review the investment.) We believe that by involving the full group earlier in the decision making process we make better informed investment decisions in which each of the five of us has had meaningful input.
Our team approach doesn’t end once we’ve made an investment. While it’s not practical for all five of us to share responsibility for every deal (and we do have individual board responsibilities), we typically have several partners involved with each of our investments. For us, this starts with fluid information sharing at the firm (the topic of a future blog post) so that each of us knows in some detail the key priorities for our portfolio. In some cases several partners attend board meetings (one as the board member, another as a board observer). It also means that we are thoughtful about which partner takes a given board seat and that our thinking on that may change in through the life of an investment. In fact, we’ve already had one example where we made a change in our board representation based on where that company was in its lifecycle and the relevance of our individual partners’ skill sets. While this won’t be a frequent occurrence it underscores our belief that we best serve our investors and our companies by thinking of our investments as “Foundry” investments, rather than as individual partner investments.
We recognize that our philosophy towards managing our firm may be different from others, however we strongly believe that our team approach yields better investment decisions and broader, more meaningful impact on our portfolio of investments.