If you want to start or become great at fly fishing, all the reading, videos and study will not net that first rainbow trout. You must go through hours of trudging through mud and creek, untangling fishing line from the bushes, mending cuts from the hook, making cast after cast, there is no substitute.
When investing in early stage companies, a deep perspective of the founder and startups is gained by investors who travelled a similar journey, spending years in the trenches understanding the market problem, assembling the team, productizing the solution to the problem, getting funding, going to market and identifying the exit trajectory. Some say it takes a degree of insanity to go through the startup process and it’s certainly not for everyone as it takes melding your passion with an incredible amount of faith, stamina fortitude and vision.
For Azafran, our LPs and portfolio companies, it starts with our intrinsic DNA as founders and operators - our General Partners have started and operated dozens of companies with 13 exits, participated in 120 M&As, creating $9B of enterprise value between them. Just as important for our formula is operationalizing our Global Network which we have been building for decades alongside all our ventures. Azafran’s Global Network, now reaches all corners of the globe with tens of thousands of experts, CEOs and founders at our reach.
When researching and compiling background data for this issue, our team was surprised to find that only 40% of GPs at top tier VC firms have direct experience as startup founders and less than 20% of the GPs have experience as founders among the rest of firms surveyed. 100% of Azafran’s GPs are founders and 50% of the entire Azafran team are founders.
This dynamic is particularly important in Early Stage investment, as founders and younger companies need hands-on assistance in a number of areas including building out the team, productizing, market development, connecting with partners and supply chain.
The chart at the top of Page Two and associated research comes from the TechCrunch article, Entrepreneurial Experience Separates Top VCs From Other Investors - which concludes with their Recipe for Success: “Investors who have worked as founders and C-level executives have an inside perspective on what it takes to make a company scale and succeed. This expertise is difficult to replicate in any other way…the second factor is the personal network that comes from working inside an entrepreneurial company…founders are likely to prefer to partner with an investor who has been on a similar journey.”
So, what does it take to be great early stage VC investor? The Azafran Formula: 1) Deal flow from our decades of building companies and networks, as well as our research team; 2) Investment judgement from starting and building dozens of startups combined with the value we add to each company from our hands-on approach, and; 3) The Azafran X Factor, where we bring our deep Global Network of experts from every niche to provide value for each company in our portfolio.
The Azafran X Factor: Our Global Network
While the Azafran team is intentionally lean, we are surrounded by tens of thousands of experts in every possible technology and market niche, a network we call into action with each company from the due diligence phase through to growth and exit.
Key to this global network is the Azafran Partner’s decades-long membership and stewardship in Young Professionals Organization (YPO). YPO, highlighted on the following page, is comprised of 28K founders/CEOs in 130 countries whose companies produce $9 Trillion in annual sales, equivalent to the GDP of the 3rd largest global economy.
Through YPO and other elements of our collective networks, we operationalize the Azafran network by recruiting proven and successful entrepreneurs and executives with deep domain experience as well as time, talent and treasury to rapidly help evaluate and grow each investment.
We call this the Azafran Network Effect, where we are able to place expert voices, who intimately know and understand the prospective investment and associated market, into active diligence alongside our deal team and researchers. They provide a critical role by offering an independent view on the prospective investment and may even go on to take an active board/advisory role in that company, assisting via mentorship with strategy, business development, partnerships, and governance.
Finally, founders / entrepreneurs choose Azafran for the intrinsic value-add we bring to each investment, aligning with the key operational and leadership experience we bring to every company’s journey. We are…
- Entrepreneurs that support / understand the entrepreneurial journey and vision;
- Technologists and data scientists embracing technology evolution;
- Financiers who understand and underwrite the financial path;
- Experienced humans that understand the importance of strong culture as a company evolves.