This VC's firm backed Fitbit and Ring. He says one of the keys to its success is focusing on founders' emotional intelligence, not their IQ
- Startup entrepreneurs often need more than just funding and business advice - they need emotional support, said True Ventures partners Puneet Agarwal.
- True Ventures, which invests in seed-stage companies, has focused on offering that support to its founders.
- It's developed a platform that seeks to connect founders with each other, with the firm's partners, and with outside sources of emotional help.
- True Ventures has been successful with its approach; it was named firm of the year by the National Venture Capital Association last year.
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The venture capital community spends a lot of time focusing ideas and numbers and trends.
Puneet Agarwal thinks it ought to focus a lot more on emotions - specifically, those of startup founders.
Entrepreneurs almost always face challenges as they are trying to get their businesses of the ground. At the same time, they're often wrestling with physical health or interpersonal issues. Any and all of those things can be emotionally taxing.
Venture capital firms need to be able to offer founders more than just monetary support for their companies or business advice, Agarwal, a partner with True Ventures, told Business Insider in an interview earlier this month. They need to be able to off entrepreneurs emotional support as well. They need to have emotional intelligence, or EQ, as well as IQ.
"I think it's really what will define the next generation of great firms," Agarwal said. "There's a lot of smart people wandering around," he continued, "with a lot of different experiences who can tell you about what's the best way to scale a company, to grow a company. We do all of that too. But I think EQ is kind of in short supply."
True Ventures, which was founded in 2005, has concentrated on offering that kind of emotional support since its early days, Agarwal said. The focus seems to be working. It's had several high-profile successes, including investments in Fitbit, which went public, and Ring, which was acquired by Amazon. Last year, the National Venture Capital Association names True Ventures its venture firm of the year, in part due to its strong returns.
True Ventures developed a platform for offering emotional support
The firm decided to focus on offering founders emotional support, because it found that they are often craving it, Agarwal said. They may be unsure about how to go about fundraising. They may be having conflicts with cofounders or team members. They may be struggling with personal problems. To help them contend with such issues so they can nurture their companies, venture capitalists need to be able to play more than just the investor role.
"Those are all human issues ... they're not transactional business issues," he said.
True Ventures developed something it calls its Founder Platform to offer a formal vehicle for delivering founders emotional support. The platform includes a simple mailing list that allows entrepreneurs to keep in touch and ask questions of each other. The firm also sponsors camps just for founders where they can talk through the issues they're facing. And it offers mediators for founders to talk to if they want to discuss personal issues in private.
True Ventures invests most of its time and considerable resources into the platform, and has devoted a whole team of people to it, Agarwal said.
"We realized that it almost is the crown jewel of True Ventures," he said. "That's where everyone connected can help each other."
The firm wants to offer founders a safe space
Other firms offer training sessions for founders or bring in outside experts who can offer advice or provide inspiration. True Ventures focuses on giving its founders a space and forum to air their grievances and to deal with the emotional issues they're confronting, Agarwal said.
At the founder camps the firm runs, he said, "it's super-raw and open. People are generally just talking very openly about what's going wrong."
But the firm, which focuses on seed-stage investing, offers its founders support through more than just its platform. Its partners try to be easily accessible to their startups' leaders and to offer them a safe environment where they feel they can talk about the problems and frustrations they're experiencing, Agarwal said. The firm wants founders to feel like they can call its partners about any issue, big or small, or ask any question, no matter how dumb it may seem to them, he said.
The most important thing the firm offers "is actually transparency," he said, in "creating a safe environment where the founder can say anything and not be afraid to say that," Agarwal said.
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