Venture capital is often referred to as an apprenticeship business because so much important learning comes from day-to-day experiences. Yet, as an article published by the Business Development Bank of Canada (BDC) explains, you can shortcut the learning process by learning from experts: “Your learning curve can be shorter—and your results better—if you learn from pros who’ve already mastered key … ... read more
Draper Associates: Navigating a Vast Network of Relationships with Affinity
Draper Associates is one of the most prominent venture capital firms in Silicon Valley. It is, as the firm likes to joke, a large fund with a relatively a small team. The San Mateo-based investment firm is led by the legendary venture capitalist Tim Draper and receives tens of thousands of inbound requests each year. With more than three decades of experience in the industry, Tim is a major driver behind the torrent of inbound requests for the $190M early stage fund. Tim was ranked 7th on the Forbes’ Midas List and has invested in industry-defining companies such as Tesla, Skype, Hotmail. He has more recently funded companies such as Cruise Automation, Docusign, Carta, Robinhood and Coinbase, and is eagerly sought out by seed stage companies.
Traversing Thousands of Relationships
Tracking the deluge of investment opportunities Draper Associates receives is an enormous undertaking. In addition to thousands of yearly cold inbound requests, Draper Associates is privy to many other sources of deal flow. The firm frequently receives requests and interest from partner funds, including other members of the Draper Venture Network, a network that connects 22 funds across 5 continents, with $1.8B in collective assets under management.
“The volume and scale at which we operate are quite intense. We closely examine thousands of deals each year. Managing the scale by categorizing and figuring out which relationships need to be prioritized, managed and targeted is very important,” said Siri Srinivas, investment analyst at Draper Associates.
In order to effectively manage and track its network of relationships, the Draper Associates team turned to Affinity. Prior to adopting Affinity, the firm tested several different CRM platforms, including SalesforceIQ. None of these platforms added noteworthy value in terms of helping the firm manage and forge strong relationships with prospective and current portfolio companies. “SFIQ felt like a sophisticated spreadsheet, a dynamic set of tables. It didn’t add much value...Affinity feels like it is built for VC firms. The integrations, user experience and tools all make sense for any busy investment team,” said Srinivas.
In contrast, Affinity’s simple interface and emphasis on relationships immediately resonated with the team. The team now leverages Affinity to manage its many different types of relationships and easily determine the context behind each of these relationships, including how many conversations it has had with a company, and whether a company is currently being sourced, vetted, or is an active investment.
Forging Strong Relationships with Affinity
Keeping abreast of its many investments empowers Draper Associates to better assist its portfolio companies. With Affinity, Draper team members are able to determine how best to support its portfolio companies. By understanding the nature of each of its relationships, team members are able to provide the right type of support, whether facilitating introductions to other investors, assisting with recruiting efforts, or offering strategic direction.
“My Affinity dashboard is my source of truth. I go there when I need to understand, manage or analyze my deal flow and the nearly two dozen active conversations I have on any given week."
Srinivas goes on to say, "Affinity helps me categorize and sort through my relationships in a structured, prioritized way and understand when action is required by me. It helps me to ensure we’re not dropping the ball and following up on action items with every conversation.”
In addition to using Affinity lists to sort and contextualize its relationships, the Draper Associates team also leverages Affinity’s Alliances feature. Several members of the team, for example, have formed an alliance with partner Tim Draper and each other. As a result of forming the alliance, team members now have access to thousands of new untapped relationships. “Instead of knocking on Tim’s door, I have ready access to all of Tim’s and the team’s networks”, explains Srinivas.
For Srinivas, Affinity’s report feature is especially valuable. Responsible for reviewing, sourcing, and vetting all inbound requests as well as outbound sourcing efforts, Srinivas creates Affinity reports on a weekly basis in order to measure the velocity and output of her efforts. She actively tracks, for example, how many leads she vets and how many prospective portfolio companies she meets with each week.
Due to the sheer volume of relationships, it’s easy for valuable relationships to fall between the cracks. For Draper Associates, having one source of truth and a centralized platform where they can easily track, monitor, and follow up with relationships is a force multiplier.