What Do VCs Talk About?
Each quarter, the Panache leadership team converges on a Canadian city for a week of strategy and planning meetings. As Canada’s only national early-stage VC, our partners live in four different cities (Vancouver, Calgary, Toronto and Montreal), so it takes extra effort for us to get together. When we do, we make certain that the time is well-spent.
But what do VCs talk about when they get together behind closed doors?
“Question #1: If it’s -10ºC outside, why don’t we have pants…?”
Here are some of the things we talked about last week in our 2023 kickoff meeting:
2022 Review
2022 was a wild year by any account. We spent a full day discussing last year, including:
A high-level review of the performance of each of our funds.
A post-mortem on the fundraise for Panache Fund II.
A brutally honest “highlights & lowlights” review of every aspect of Panache (what we did well and where could we improve).
A deep dive into the macroeconomic changes that took place in 2022 and our hypotheses for 2023.
Portfolio Companies
At each Panache offsite, we review our portfolio and the 100+ companies in it. Last week, our discussion focused on identifying companies impacted by ongoing changes in the macroeconomy and opportunities for us to help. Questions we asked included:
Which companies in our portfolio have had their core business affected by economic changes (e.g. interest rates) and how does that impact their path forward?
Which companies do we expect to face the most challenging fundraises in Q1 and Q2?
Which companies may want or need to explore M&A in the near-term?
What are the common challenges currently faced by our portfolio companies and is there anything we can do to help?
Finance
Venture Capital firms are complicated organizations with lots of moving pieces. But like every other company, we have revenues and expenses and have to make ends meet. Led by our fearless CFO (aka my Toronto Partner, Prashant Matta), we dug into our financial performance for 2022 and discussed, debated and disagreed on our budget for 2023 (seriously guys, I need more money for overpriced Vancouver coffee and Lululemon pants).
Actual photo of Prashant Matta
Investment Strategy
We started investing out of Panache Fund II when startup valuations were near their peak. The investment model we built for the fund (the mathematical model that we use to drive our investment decisions) very much reflected those valuations. Since then, the fundraising landscape has changed significantly and valuations have mostly returned to historical levels.
We discussed the impacts on our investment model and whether or not we wanted to revise our strategy as a result:
Should we invest in more companies?
Should we invest more money in the same number of companies?
Should we change our target ownership percentage?
Should we change the amount of money we hold for follow-on investments?
Are there any industries that we are more/less excited about given the macroeconomic shifts?
Investment Process
As a firm, we’re constantly trying to streamline and improve our investment process. How can we be more responsive to founders? How can we reach conviction on an investment in the shortest amount of time without skipping any diligence steps? Where can we trim the fat?
Last week, our focus was on our investment committee meetings, the weekly meetings in which the entire Panache team comes together to discuss potential investments. In particular, we brainstormed ways to more effectively surface key questions partners and associates have earlier in the diligence process, in order to reduce the number of times we need to go back to founders with follow-up requests and shorten the overall investment process.
Operations
Continuing with the theme of efficiency, operations is a key topic that we discuss at our partner meetings. Last year, we undertook a complete rebuild of our internal CRM and communications systems to better support our work and our ability to review more than 3,000 startups/year across Canada.
Last week, we discussed our infrastructure roadmap and the improvements we want to make in 2023. Areas of focus included our outbound infrastructure (the systems we use to identify potential entrepreneurs across Canada), our data analytics infrastructure and our portfolio support systems.
Marketing and Events
As Canada’s only national early-stage VC, it’s important that we be present in our communities and at startup events across the country. We recently brought on an amazing head of marketing and community and have big plans for 2023. Expect to see us at major events, like Collision and Startupfest, as well as smaller activities across the country.
We also firmly believe that support for our portfolio companies shouldn’t stop at the border. That’s why we made a strategic decision last year to start playing offense on the international stage. Our ambitions for 2023 are even bigger — stay tuned!
Panache hosted 100+ US VCs at an event in San Francisco in September
Partner Dynamics and Mental Health
Just like startups have cofounder dynamics, VCs have partner dynamics. As anyone who works in a distributed team knows, it’s even harder to manage interpersonal relationships when you’re not in the same office. To ensure that we prioritize this, we dedicate a full day every quarter to strengthening our partner relationships, which includes a half-day session led by an executive coach from the US who specializes in VC partner dynamics. We also talk openly about our mental health and that of the broader team and ways that we can prioritize everyone’s well-being while ensuring that we each perform to our peak.