Community's Influence: Driving Venture and Business Growth
While in Coolwater's venture manager program, I've met plenty of fund managers who really shine, even when times are tough economically. What makes these folks stand out is how dedicated they are to building communities.
When people feel included, they eagerly help and refer friends, driving momentum.
Repeatedly, I've observed investment clubs providing a lasting experience that empowers managers to consistently raise funds, thanks to the camaraderie and events offered as supplements to the fund's investments. Angels frequently dedicate their time and dollars, offering more than any individual manager could expect to provide.
These angel groups typically require a set investment minimum, commonly around $50k per year into the group's fund or $25k into two deals. However, many members contribute more, especially if they've formed a strong connection with a particular investment or founder.
Yet, for other businesses, the significance of community holds just as much weight.
In my capacity as a mentor for the UCLA Anderson Accelerator, I was paired with MBA student Rondale Davis. Rondale had gained admission to the accelerator and is in the process of developing an impressive platform called GradPad. His platform is focused on enhancing alumni communities, providing students with more accessible job opportunities, and supporting universities through increased donations, all stemming from alumni feeling better served.
It's a narrative that nonprofits frequently fail to grasp. Establishing a vibrant community fosters donations. Despite the associated costs, the benefits significantly surpass those of investing in paid ads or other transactional forms of advertising.
Rondale has been visiting college campuses to advocate for the importance of cultivating alumni networks. His insightful perspectives on the potential for universities with strong alumni departments to attract up to 10x or 25x in donor dollars likely played a significant role in securing his victory at ACT House's pitch competition.
Universities and their alumni departments are better starting to recognize the importance of organizing events and digital communities centered on giving back, alumni connections, and fostering a sense of college community, which ultimately translates into increased donations.
As a result, universities across the nation are investing in this field, though they frequently encounter challenges in identifying appropriate service providers and establishing effective metrics beyond tracking the increase in donor contributions.
There is a clear correlation between the investment in constructing these communities and the subsequent returns expected within five to ten years. Platforms like GradPad aim to collaborate with universities in developing these initiatives.
Beyond academia, community building holds nearly universal relevance and importance.
My friend Erica Wenger from Park Rangers Capital wrote an article about "Elephants, Not Unicorns" that discusses a shift in the tech industry away from celebrating unicorns (startups valued at $1B) towards recognizing "elephants" - companies that prioritize community-building and long-term impact. It outlines two major trends driving this shift: the democratization of company creation and the increasing loneliness epidemic, particularly in the US. Elephants focus on attracting and retaining loyal members, driven by a clear purpose, and they emphasize transparency and storytelling. The article presents case studies and highlights traits that distinguish elephant companies, ultimately arguing that they are better positioned for long-term success and returns.
Forging a sense of community within venture can either empower and uplift others but must be balanced with the increased competition that may result, as commonly witnessed in San Francisco, where numerous venture managers vie for access to the most sought-after deals.
The quicker Los Angeles can empower the emerging startup ecosystems surrounding West LA, UCLA, USC, Pepperdine, and numerous other hubs of talent, while also tapping into the vibrant communities supporting sports and entertainment talent, the sooner Southern California can compete with San Francisco for venture capital investment flowing into deserving founders!
