February 25, 2015

Investing the Lean Way: How We Fund the Deals That Matter Most

Given the hundreds of startups that investors are exposed to, deciding which entrepreneurs’ thriving ideas to fund is no simple feat. Investing at Verizon Ventures goes beyond a one-sided transaction – not only do we look for a potentially compelling commercial relationship between startups and the platforms of Verizon, but we find our interest piqued by frontier technologies that are paving a new path beyond our core business. By taking a portfolio-first approach to investing in next-generation companies, we are able to apply lean startup principles that align us with the emerging companies we believe we can help navigate towards success. Verizon Ventures has been successfully funding companies for more than a decade, but over the last year, we have strengthened our venture development team to make stronger connections for our portfolio companies. This spurred us to take a more public-facing approach to communications in order to be more visible in the investing and entrepreneur communities. We started with a deep look at who our audience is, how they perceive us, and how those perceptions can help drive our decisions going forward.

In order to deliver smart capital to promising startups, we need to believe the company will be successful in solving an existing challenge and seizing a real market opportunity. A detailed business plan will help us understand how much funding is needed in the short term and provide us with a view of where the business might grow. Of course unsolicited proposals go nowhere and if companies can’t spend the time to figure out the appropriate contact within an organization, then that’s usually a sign they don’t understand how to sell to the industry and how the solution will fit. Our team takes a strategic approach to funding opportunities, so a credible introduction to us (or to any potential investor for that matter) is a must. We typically make several investments per year between $250K - $5M and you can generally expect to find us somewhere from an A to C round of funding.

For entrepreneurs, the decision whether to go with a strategic investor, a traditional VC or an angel investor requires some introspection and an understanding of what the company needs. Every class of investor will undoubtedly bring something different to the table, aside from capital. A valuable difference that Verizon Ventures brings is delivering portfolio companies a combination of financial resources, plus access to the array of Verizon resources and important insights from our commercialization roadmap.

Although Verizon Ventures attracts deals from a robust pipeline that includes other Verizon business leaders, we continuously embark on industry networking, corporate and venture development, and marketing initiatives to engage the right innovators, founders, entrepreneurs and co-investors. We choose to work smarter by partnering with other Verizon business units and our portfolio companies to leverage knowledge and amplify our expertise to the people we most want to work with. From commerce and advertising, connected devices and hardware, data and analytics, infrastructure and networking, and media and entertainment, the Verizon Ventures team is always seeking to establish collaborative relationships with companies that share the goal of transforming their capabilities to truly innovate and substantively impact society.

Tags: investing , portfolio , Mark Smith , Startup , Entrepreneur , Deals , Business