Carlson Thought Leadership in Finance & Technology

Venture Capital: Accelerating Growth and Financial Performance of Portfolio Companies

July 22, 2014 / by Ethan Carlson

Shikhar Gosh, a senior lecturer at Harvard University, reported in late 2012 that up to 75% of venture-backed companies never return cash to their investors. While most venture capital firms accept significant risks in return for the potential of even more significant payouts, there are ways to effectively mitigate those risks. Carlson Management Consulting offers an innovative and cost-effective Accelerated Growth package that delivers the prospect of a much greater success rate. It also enables VC firms to offer additional value to their portfolio companies.

CMC Accelerated Growth services works with VCs and their portfolio companies to improve the financial and operational performance through four (4) areas of focus:

  • Finance Practices
  • Enabling Technologies
  • Human Capital Optimization
  • Thought Leadership

For most early stage companies, especially in software and technology, executive teams are often comprised of domain and technology leaders, not financial planning and analysis experts. CMC leverages deep finance and management consulting experience with fast-moving companies to fill that crucial gap.

CMC provides an instance of Adaptive Insights, the leading Cloud corporate performance management solution for each enrolled company in the portfolio.   As part of the implementation, CMC works with portfolio companies to incorporate finance "best practices" including driver-based budgeting, rolling forecasts, cash flow modeling, and what if scenario analysis. Dashboards provide decision makers with a snapshot of the most important key performance indicators. In addition, CMC works in an advisory role to ensure that the budget and other financial plans are correctly aligned with strategy and that human capital investments are staged to realize growth targets. CMC monitors KPIs and business drivers to identify early-on future challenges and provide recommendations, allowing firms to take the appropriate steps to achieve positive outcomes. Monthly milestone calls ensure close collaboration and provide a sounding board for both issues and opportunities.

For the venture capital firm, CMC also provides an instance of Adaptive Insights with financial data, reports, and dashboards for the individual companies as well as a consolidated view of the portfolio. Benchmarking and ratio analysis allows the firm to gauge the performance of companies against the portfolio as well as peer organizations within their market. By having non-intrusive insight into their portfolio companies, and regular consultations with CMC experts, VCs are able to dramatically improve success rates.

CMC Accelerated Growth services are offered on a subscription basis and are tailored to each firm's culture and relationship with its portfolio companies. Please contact CMC today to learn more about our unique and innovative service. It could be the best investment you have made this year!

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