We’ve made it through to the final blog post of the ten lessons learned since beginning our venture capital journey in late 2020.
Over three funds, we’ve experienced the benefit of working with many tremendously valuable strategic LPs (Limited Partners) as investors, and building a network of many other incredible mobility-focused investors along our journey.
Like any startup, a Venture Capitalist (VC) has to position themselves to win: to source unique deals, energize growth in their portfolio companies and return above-average returns back to investors.
We believe that one of the best ways to accomplish the above is to build out a group of smart, well-networked strategic investors (LPs) in our funds. By doing so, we can then leverage our strategic investors’ expertise, market access, and resources to enhance our portfolio companies' growth and ultimate success.
How do we leverage our LPs?
Industry Expertise
Strategic investors offer deep knowledge and insights into specific industries. VCs tap into this expertise to help with due diligence prior to investment, and then post-investment to guide startups in navigating challenges, regulatory issues, or technological trends.
Source of Dealflow
Our investors are often our best source of dealflow. As they come across startups, we receive thoughtful referrals when they find companies that fit our investment thesis.
Market Insights & Competitive Intelligence
Strategic investors often have significant data and insights about market trends, competitors, and customer needs. VCs utilize this intelligence as a key input to due diligence when vetting potential investments, and then to help startups refine their strategies.
Customer Access & Partnerships
VCs leverage strategic investors' established networks and customer bases to help their portfolio companies form partnerships, sign contracts, or secure major clients.
Product Validation & Credibility
Smart, knowledgeable strategic investors can provide feedback on product/market fit, and on the competitive landscape. A direct investment of a strategic investor (alongside our fund investment) can act as a stamp of approval, lending credibility to a startup’s product or service. This validation can attract further investments or customers.
Distribution Channels
Strategic investors often have access to unique, well-established distribution networks. VCs collaborate with them to help startups scale by integrating them into these existing channels. This can greatly accelerate a startup’s growth, while simultaneously saving sales and marketing costs.
M&A Support (Exit Strategy)
Strategic investors often face a “build vs. buy” decision when it comes to innovation. Many realize that it’s far easier to buy innovative technology, and thus have healthy appetites for acquiring innovative startups. VCs often facilitate introductions between their portfolio companies and potential acquirers, providing a clear exit path.
Mentorship and Board Participation
VCs may bring strategic investors onto the board or advisory roles within portfolio companies, allowing these investors to provide direct mentorship and guidance to the startup's management team.
Follow-on Funding & Syndication
Strategic investors can often leverage their network to help portfolio companies identify and meet potential investors for subsequent funding rounds.
Implications for Automotive Ventures
Having a strong network of knowledgeable LPs and strategic investors helps us de-risk investments, adds value to our portfolio companies, and provides a higher probability of delivering Alpha (above average returns) for our LPs.
But don’t take our word for it. Let’s hear from some of our LPs:
Liza Borches, the President/CEO Carter Myers Automotive, says, “Participation with Automotive Ventures helps strengthen my current business and hedge against any disruptive forces that might effect my business over the next 10 years.”
AJ Fang, from Assurant Ventures, observes, “We catch up frequently with the Automotive Ventures team to compare deal flow, look for potential commercial partnerships with their companies, and brainstorm on disruptive trends in Auto. We’ve co-invested in one company so far but look forward to more in the future.”
DJ Cha, the Managing Director of Higher Life Ventures, says, “We are thrilled to join Mobility Fund II as an LP and are also eager to directly invest alongside Automotive Ventures in strategic opportunities to Higher Life Ventures and HL Mando.”
Kelly Price, the former CEO of National Automotive Experts/NWAN, notes, “We were an early investor in the first fund, and doubled-down on the DealerFund. Automotive Ventures has access to unique deal flow we wouldn’t see anywhere else.”
Paul Antony, the former founder of CarProof and Executive Chairman at AutoCanada, says, “Steve and team have deliberately built an incredible brand with Automotive Ventures and become the early stage VC focused on global mobility.”
We greatly appreciate working side-by-side with some of the very best LPs in the Automotive and Mobility ecosystem, and leverage their time and talent to uniquely energize growth in our portfolio companies and deliver above-average returns to our investors.
Join us on the journey,
Steve Greenfield
