How to differentiate as a VC?

is this something only seen with early stage? or is founder support a strong part of late stage as well?

I'm early stage focused (seed, A). I recall Index did this massive analysis of their historical portfolio performance, and their conclusion was the founders that they communicated with the least did the best. I've seen something similar. Of course, you need to have good references from founders to win & get good referrals, so it's not like you can afford to be completely MIA. But generally focusing your effort on finding & picking great investments seems to pay off way more than trying to go out of your way to help companies you already invested in.

@VC_since13 is right on sourcing and to build off of that, do your own research and come prepared. VC is sales and the best sales people know who they're selling to.

Getting into the conversation is one thing but to win deals you need to convince founders you actually understand their business and industry. There's so much publicly available information and combined with a well developed network you should be 2 degrees away from someone that can give you insight into a company you're pursuing. When you come to a meeting sharing the learnings you've gained from others vs. walking in with a blank slate and off the shelf questions, you're going to immediately stand out to a smart founder.

I was in VC (later stage) and started a company (Series B), so here are two examples from my experiences:

As a VC -- There was a hot international deal that we were pursuing and my co-worker (who's now a GP) went into the meeting with a full list of questions and thoughts about a specific regulation they were having trouble with. While he wasn't an expert, he showed initiative and came with thoughtful questions based on what he'd seen in the US that helped them think through alternative paths to achieve their goals. He was in his 20's and that won us the lead check and earned him a board seat. That company is now a multi-billion $ behemoth that will likely return half the fund.

As a Founder -- When raising our Series A we were pre-empted by a VC that had a very clear understanding of our space and a thesis of how it would play out long-term. They came in with very clear thoughts on the avenues we could pursue to grow and a thought process of how their other portfolio companies could complement our vision. We likely would've taken the term sheet if they weren't so aggressive with timelines and terms. We didn't need the money so we ended up running our own process later and they were priced out by other offers.

Portfolio support is nice to have but honestly the question "How can I be helpful" is a VC meme for a reason because most of the time, they just aren't.

1. Value-Added Services: Beyond money, offer strategic guidance, mentorship, and access to your network to help startups grow.
2. Industry Expertise: Specialize in specific sectors where you have deep knowledge and can provide meaningful insights.
3. Founder Support: Build strong relationships with founders by being approachable, understanding their vision, and offering genuine support.
4. Track Record: Highlight your successful investments and exits to build credibility and attract top startups.
5. Unique Deal Flow: Develop a reputation for identifying promising startups early, giving you access to the best opportunities.

VC is indeed driven by power laws, where a few investments yield most of the returns. Standing out requires more than just capital; it’s about the unique value and support you bring to the table.

Exactly. In terms of adding value, you can either be someone like Elon where simply by you being involved with a thing draws eyes. OR, you can provide support to the company.

It is easier to provide companies support than it is to become a draw yourself. It is easier to help a startup with operating the business so they can focus on the product. Most startups, most early employees, come to the business for the good/product. They tend not to have experience actually operating a business nor the knowledge of how to do so. The easier you can make the actual business operations side, the more the startup can focus on the product. The more the startup can just deal with the product, the more likely they will succeed.

And it is not that difficult to do this. Once you get through 3-4 full investment cycles (ie - from initial screening of the investment through the final liquidation event), you'll see that most startups deal with mostly the same problems. They just present themselves in different ways.  

But, as someone else noted above, it is easy to be value destroying. It is easy to get in the way as a VC. If you aren't going to be a good proactive support tool, just don't do anything. Just identify the good opportunities and get out of the way. There is nothing wrong with that. "Just" joining in on a good startup's growth is providing value to your customers. And this should be remembered. VCs are a business. The customers are the LPs. You are providing a service yourself. If that service is "merely" finding the right companies and getting out of the way, that is you doing your job well

You need to have a value-add. The best DPI is coming from VC's that provide founders with complementary LSD, kombucha, and lions mane morning brew. 35% unicorn rate with this value-add strategy. It's Benchmark's secret.

Someone explain this to me:

1) As an IP, how much of your past experience can really be helpful when advising founders? I.e. the 3-5 year founder to VC certainly has some experience, but surely not enough domain knowledge to truly guide a founder. 
 

2) Wouldn’t an operations team (with long term operational experience, ideally within startups) be much more helpful?