Crossing the investment spectrum. A VC firm's ability to cross the investment spectrum is a huge advantage for limited partners. That same cross-spectrum footprint is also an advantage for an early stage investor. Early stage companies go through predictable phases. First, it is about the Product. Then it is about the early Customers. Then it is about the Partners. Then it is about the Investment Community. All along the team is changing, expanding, and improving. The successful early stage companies have two fates – they either get acquired at nice prices or they go public. Either way, these companies benefit enormously from having 'friends' that run in those circles, professionals whose primary job day-in and day-out is to have CxO conversations with technology and media companies at all stages.
In addition, venture firms improve the probability of success by creating synergies between the various companies they have invested in; for example one company that has a great software product, but does not have adequate distribution technology may be paired with another company or its management in the venture portfolio that has better distribution technology.
All VCs claim they have relationships as a core asset. It is important to note that the relationships which confer strategic value are those that generate deals and then to help the companies in which VCs have invested. It is difficult to have a broad set of relationships with later stage private and public company executives and help my early stage companies and source new deals. Broad and deep usually don't mix. There are only so many hours in the day, no matter how good you are, so focus on the relationships that confer strategic value. Relationships take time.
