Finding a ‘purpose’ for a venture capital company

By November 19, 2013Forward Partners

Steve Denning is one of my favourite writers on the future of capitalism and management. As part of an article about the New Centre of Gravity of Management yesterday he reiterated what is fast becoming a cliche amongst the entrepreneurs I talk to, namely, that all the best business are ‘purpose’ or ‘mission’ driven. Making money (for shareholders) is the result of having a mission to help customers, not a goal in itself. He gave four examples:

  • In the private sector the mission of a company is create a customer
  • In health it’s to help patients
  • In education it’s to teach students
  • In government it’s to help citizens

Similarly, our purpose here at Forward Partners is to help entrepreneurs. Our belief is that the better we are at helping entrepreneurs the more we will be able to get into the best deals. We talk more about partnering than helping, but the idea is the same.

In line with our purpose we look at everything we do and ask ‘how does that help the entrepreneur?’. We have restructured our due diligence process to be quick and transparent and are introducing a workshop which is designed to benefit the company as well as help us evaluate the opportunity. We are also restructuring the way our operational team partners companies after we’ve invested to be more transparent and deliver more value. More on that to come in the near future.

  • Leonard Welter

    Nic, Great post and thanks for the link to Steve’s article. Turning the mission statement into a question to evaluate decisions can only help validate/strengthen the mission statement. Look forward to reading more about this.

  • Vinoth Jayakumar

    Thanks for sharing Nic. Steve Denning is a great commentator on issues like this. Making money is and always should be a by-product.

  • Claire Braithwaite

    I couldn’t agree more. Putting purpose at the centre of a company, rather than prioritising monetary returns for owners, optimises the outcomes for all stakeholders including employees, customers and communities. In turn this creates stronger and more sustainable organisations which should maximise long term returns on investment. If investors move to an impact investing model this would support businesses in maintaining purpose at their heart.

  • http://blog.kwiqly.com/ James Ferguson @kWIQly

    Nick – How do you square

    >> “… our purpose here at Forward Partners is to help Entrepreneurs.”

    with (from your website)

    >>”Forward Investment Partners invests for pure financial return…”

    – It looks like a very mixed message to me !

    – I am not calling this as BS because I may be misreading or missing a positioning distinction, but maybe you would like to
    clarify ?

  • http://www.theequitykicker.com brisbourne

    Hi James – the website needs clarifying, thank you. The point we are trying to get across on the website is that our investment strategy isn’t driven by the wider concerns of Forward at all – we are purely financially driven in our analysis. As a strategy this is consistent with helping entrepreneurs because helping entrepreneurs is the best way to get into great companies and get the best results from the ones we have invested in. The point I was getting at in the blog post is that making great returns is a by product of having a mission of helping entrepreneurs.

  • http://blog.kwiqly.com/ James Ferguson @kWIQly

    Ok Nick – Thanks for the clarification.

    So returns is a logical by-product of helping entrepreneurs, but if you ask your fund “is our mission helping entrepreneurs or generating returns?” which would they say? – We both know the answer.

    So a more elegant and open solutions is…

    “Our mission is making returns which we drive forward by helping entrepreneurs (which is more than fine – it is most laudable) – to me that is rational, consistent positioning and importantly it is believable.

    As positioning is fundamental it must be plausible.

    @wmougayar and @awaldstein have commented very well on the subject at http://startupmanagement.org/2013/09/11/the-only-5-types-of-messaging-you-need/

  • http://www.theequitykicker.com brisbourne

    Hi James – first off, thanks for the debate and for the link. Both very useful.

    And – I think you’re right. For the time being at least our raison d’etre has to be delivering returns to our investors. We believe that the best way to do that is to deliver outstanding help to entrepreneurs, but as you say the construction should be our mission is to achieve (a) by doing (b).