When investors consider Venture Capital portfolios, the old adage that 1 or 2 companies within each vintage will deliver the majority of returns largely stands true. But in a portfolio of 10 companies, should and could more be done by VCs to expand this apparent success rate? It is all too common to see very little interaction and guidance being given to portfolio companies at some of the larger VC's once they’re invested, largely due to the sheer amount of dry powder they have available to allocate in the event of a string of investments not performing as planned. Furthermore, most VC's tend to only allocate resources, additional capital, and time to portfolio companies that seem to be achieving commercial growth. In our view, for the majority of VC funds, this model arguably is not sustainable, and a fund might miss out on a few winners if they had a proper growth framework in place.

So how are Fuel different?

When viewed across the VC spectrum, we believe that our positioning is both unique and unparalleled, for the following reasons:
  1. We are an early stage Seed investor with significant follow on capabilities.
  2. Our team and advisory board are full of successfully exited entrepreneurs with real experience of growing and scaling businesses, both within the UK and Internationally (this will be explored further in a future blog).
  3. We actively roll up our sleeves and get involved with our companies.
Looking into some of the above points further, choosing the right investor at the seed stage is all too important for a startup. We have a unique portfolio company nurturing process, which is integral to assisting our team to maximise the potential of portfolio companies, whether this be in their current iteration or through a new business line. Fuel Ventures, as an early stage investor, sets a critical framework for all portfolio companies to adhere to, to ensure that the founders achieve realistic monthly targets, and this is not simply linked to revenues. Instead, focussing on a few carefully selected metrics, which ultimately if delivered will lead to growth across all facets of the business, allows our Founders to empower their teams to take responsibility for delivery. By empowering their teams, the Founders then have greater accountability across the business and happier employees – a sure fire way to create an excellent culture. Once we believe that the right framework is in place, we then consistently challenge our Founders and their Teams through constant questioning of their own processes and systems to help them understand their business better. Through this constant feedback loop, our portfolio companies continuously evolve and avoid getting comfortable in their own success. Notwithstanding the above, one of the key roles we play in advising our portfolio companies on their journeys, is giving them the backing they need to double down in areas that they have been successful in or believe will deliver sustainable growth. Whether this be through further investment or strategic introductions, the combined network of the Fuel Ventures team has really paid dividends for a number of the current portfolio. However, even with the above and other ways we help our companies (as discussed in our previous post), we appreciate that with the nature of the stage that we invest in companies at, there will still be companies that don’t take off as either the Founders or investors would have originally hoped for.

So what do we do in this situation?

One of the key fundamentals from the above that we look for in all of our relationships with Founders is the ability to have an open and honest discussion when things don’t go right. In those situations, these conversations can often be uncomfortable but also incredibly rewarding. A great example of this would be the relationship that we have with Boris Hodakel, the founder of one of our fasting growing portfolio companies, WeAreFeel (https://wearefeel.com/). Boris originally received investment from Fuel in July 2018, into his existing business Sewport, which is a marketplace connecting brands with clothing and textile manufacturers. In mid-2019, in one of our regular catch up sessions with Boris (a byproduct of being located in the same building with our ‘all under one roof’ approach), we had an open and frank discussion on the future of Sewport as key metrics and growth was not being delivered in various facets of the business. With a health cash balance still within the company, we challenged Boris to explore new business avenues that he could pivot Sewport into. Within months, WeAreFeel was born, a health and wellness subscription business, that is delivering premium product with the highest quality ingredients right through the letterbox. WeAreFeel works directly with expert doctors and nutritionists to set the highest standard and make people healthier, happier and more productive. Since launching the health and wellness subscription business in November 2019, the uptake from consumers has been incredible and this is reflected in the growth of monthly recurring revenue (MRR) from £4,135 to £69,800 in April 2020 By originally challenging Boris into pivoting the business focus, all parties have been astounded by the growth shown over the last 6 months. This is an example where we believe maximum shareholder value (Boris included) has been achieved from our proactive approach. This is a great example of how we believe we can change the understood dynamic of a VC portfolio. We do not buy into the preconceived notion that there will only be 1 or 2 winners in a portfolio. By maximising our time and resources with each company, we have strong conviction in being able to deliver more underlying value for all of our investors. WeAreFeel are currently seeking to raise additional growth capital, to learn more please reach out at Alex@fuel.ventures for more information.
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