Get 10x the Returns on Your Venture Capital Investments

As an investor, you place bets on businesses that you believe in. You look at the market and the technology. You determine your level of risk and how your investment can have the greatest impact. You then specify how the business should spend your funds.

But this doesn’t guarantee the business’ success.

So, what should you do to reduce your risk and achieve a great return on investment?

As a strategic adviser and mentor to leaders, I have worked with some of the most successful entrepreneurs and investors in Canada.

They tell me that the #1 key to a winning investment is solid leadership and management. Meanwhile, the worst investments are almost always due to weak leadership and management.

To get 10 times your returns, you must take a proactive role in strengthening the business’ leadership. Picking a winner venture, providing adequate growth funds and serving on the board is simply not enough to achieve insane returns.

The next generation of winning venture capitalists will put leadership development processes in place to ensure that their ventures are On Market, On Strategy and On Purpose. This is the best way to protect your capital, maximize growth and ensure the greatest rate of return with the least amount of risk.

Let’s take a closer look at the 3 key areas of development that your ventures need to focus on to ensure exponential growth:

1. On Strategy

Developing a sound, workable strategy is central to the success of any venture, and yet this is an activity that too many leaders take for granted or consider a “nice to have”.

All too often teams, departments and even entire organizations are just “going through the motions”; clocking in and performing their basic tasks, but lacking that fundamental drive and enthusiasm the organization needs to catapult your investment to the next level.

Work with your leadership teams to implement a process for developing a strategic plan that will guide the entire organization towards the goals. This should include hiring an outside third-party to facilitate a team planning session. Aligning the leadership around a core philosophy, common vision and shared goals is the first step to ensuring your venture maximizes returns.


2. On Market

Staying on market can sound easy in theory, but most organizations don’t do it consistently. This can lead to missing the mark and wasting millions in investor dollars on costly product and service development or advertising campaigns.

Ensure that the leadership teams inside your ventures take steps to learn what their customers really want. Many businesses don’t check in with their customers on an ongoing basis. Most of them don’t bother at all, or worse yet, they believe their own story without any real validation.

Increase your returns by building in a process for continually charting the landscape. Analyze your markets, your competition and your customers to successfully anticipate and adapt to their needs.


3. On Purpose

People want to work for a company they believe in, customers want to buy from a company they believe in. Creating a culture that is reflective of the ventures vision and mission or “purpose” as we call it, is central to its success.

Aligning the leadership team around a shared purpose will help the organization mature quickly. Companies that focus on key areas such as leadership, culture, strategy and execution outperform their competitors. They also have a more than 90% chance of consistently delivering high shareholder value. In fact, their investors’ total returns rose by an amazing 945%*.

This begins first with the leadership team. Aligning the leadership team around a shared philosophy is not a simple thing to do. As it must be at the core of who they are – both as individuals and as an organization. However, many find it difficult to commit to the purpose of an organization if they aren’t first clear on their own personal life purpose. 

Since many leaders aren’t often fond of this type of soul searching, we suggest you employ a third-party facilitator to guide the process. They can help guide you through the process and and craft a purpose for the organization that unites passion and produces results.

How to Prime the Leadership Team for Success

The entrepreneurial leader’s spirit, passion, and vision are key to driving growth.

However, most entrepreneurs are alpha dogs who aren’t used to deferring to others. Just like teenagers are resistant to advice that is good for them, most high-potential entrepreneurs and growth companies share a similar attitude.

If you want to achieve 10 times your return, you must get the leader on board. This may mean taking a more hands-on approach with the organization and providing strategic counsel to its leader. You also must insist that a portion of your investment be allocated towards leadership development activities and initiatives.

For example, you or your designate can regularly meet with the leader to assess the team. What processes must you put into place to help them succeed? If the team is not hitting their targets, you can coach the leader on who needs to be trained or let go. You can also discuss whether everyone on the team is aligned with the organization’s culture, values, and purpose.

If you want to achieve 10x the your returns on your investments, review your ventures with this new lens.

Audit the leadership teams and their activities to ensure there is a process for developing an ongoing Team Strategic Plan. Don’t rest on your current position in the marketplace, stay ahead of the competition by regularly getting feedback through a third-party. Get your leadership teams on purpose by taking the time to connect their personal life goals to that of your organization.

When people are united around a shared vision and they understand how they contribute to the vision, the possibilities are endless!

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