Do Startups Need Hands-on Support? - A Reflection After Receiving Three Years of Support from Global Brain

Written by Keita Sawaki and edited by the Universe editorial team.

Hello, this is Sawaki from OKAN.

We offer services that aim to enrich workers’ lifestyles, as represented by “Office Okan,” a service that delivers healthy prepared meals to offices, and “Hataraku Karte,” a survey tool that contributes to improving organizations’ employee retention.

In this article, I would like to share with you “how to work with hands-on support members from venture capital firms” from my perspective as an entrepreneur.

While hands-on support that strongly commits to business growth is something to be grateful for, it can at times be difficult, because we have to open up our weaknesses and challenges with the venture capital firm who is our shareholder.

I imagine many entrepreneurs have headaches trying to determine to what extent they should share their business status and how much support they can ask for.

On the other hand, others may think that overcoming hardships is what makes one a true startup and that such a thing as a venture capital firm’s support is not needed.

Do startups need hands-on support from venture capital firms?

To be honest, the answer is probably that it depends on the situation. But for us, it was good to have.

You might think I’m flattering, but I truly feel that Global Brain (GB)’s hands-on support was indispensable for OKAN’s growth.

For three years, OKAN received support from GB’s Value Up Team (VUT), a team dedicated to supporting portfolio companies.

Here, I would like to reflect on the support we received from GB to share what kind of startups can successfuly leverage support from venture capital firms and how to work with one once you accept their support.

Advice is one thing, execution is another

Hands-on support can mean numerous things. The support offered by VUT was very different from the hands-on support we would normally get from other venture capital firms.

Startups often find themselves putting off medium and long-term measures, or forgetting to have objective perspectives, because they are working their tails off every day.

We get a lot of advice from shareholders and outside stakeholders, and this is actually where the dilemma lies.

“Executing” the advice is the most difficult.

Yes, we understand the advice we get, but we have neither the time nor the resources to execute the advice - that’s what a startup is. We’re at a loss because we cannot do what we are told to do, even if we want to.

However, VUT was completely different.

A shocking encounter - “We’ll be there so leave it up to us.”

What surprised me when I had my first meeting with VUT was that they were the ones who first shared the hypotheses and discussion points about our business.

Usually when we work with outside advisors, mostly it is us who share our challenges and ask for advice.

But VUT didn’t wait for us to share the discussion points. They presented their hypotheses first. The way they came to us with a strong sense of ownership left a big impression on me.

Another surprise was that instead of saying “we’ve organized the points, so for the rest, good luck,” they worked with our team saying, “If we’re on the same page, we will be there on-site so please leave it up to us.”

Once the project actually started, the VUT members came to our office several days a week and worked together as if they were one of our employees.

This was the kind of communication we had at all times, and GB’s members cooperated very well with our working level members.

As I mentioned above, in many cases, startups find it difficult to take action even if the advice they received is accurate.

One thing you might want to keep in mind when accepting hands-on support would be whether the venture capital firm you are talking to can continue to support you until the execution phase, and if yes, whether you want to / can leave it up to them.

“Let’s do it later” makes the wound bigger

There are some things I learned through the support. Let me go back to when remote working was recommended all over Japan due to the spread of COVID-19 infection.

Since we offer a service that delivers prepared meals to offices, the decline in the number of people working in the office largely impacts our business. I had a sense of urgency from an early time, thinking things like “we need to pivot our strategy” or “we need to test new hypotheses.”

However, I had my hands full dealing with the unprecedented COVID-19 pandemic and was facing a lack of capabilities and resources– as a result, I had been putting off analysis and hypothesis testing.

Here, VUT’s data analysis capabilities came into use.

By analyzing the past two years of customer deals, they identified which industries we can show our strength in amid the pandemic and reviewed our sales/marketing strategies. As a result, we were able to improve our lead-to-appointment and appointment-to-sales ratios, recovering to the level needed to achieve our target.

While revising our strategies, we started nurturing a documentation culture, which is something OKAN did not have back then. Together with VUT, we succeeded in completely changing the way we hold management meetings.

The culture and internal structure we built is still passed on. VUT not only supported the success of our business, but also gave a big impact on the culture of our company.

I recommend you to consult venture capital teams for support if their support teams can offer you capabilities you lack or complement your weaknesses. Conversely, if your capabilities overlap, the support might not work out.

What to keep in mind if you’re working with VUT

What I learned through my three years of doing business with VUT is that in order to fully maximize VUT, our stance as startups is also important.

Here I would like to share the three “points to keep in mind when startups work with VUT.”

One is information disclosure.

As is often said as knowhow for organization building, employees find it easier to take on new challenges when they have more access to their own company’s information.

This is because it enables employees to have a high level of understanding regarding their current status and assets, and to come up with good initiatives.

VUT has the mindset of working together with the startup team on site and moving the business forward with the same level of passion.

When working with VUT, I recommend you to share even the smallest issues and happenings that you normally wouldn’t tell. Giving them the same amount of information as you would to internal members should make cooperation much easier.

Second is delegation of authority.

VUT is different from consultants or advisors in that they commit to execution. Therefore, if you start saying “please don’t do this or that” after entering the implementation phase, that isn’t helpful for either side nor will it lead to good results.

I feel startups will be able to make the most out of VUT if they delegate authorities saying, “This is the scope and direction of what we want to do, and we will leave it up to you.”

This may not be the best way to phrase it, but it might be better to consider VUT as “a member of your team who will actually do the work for you from an objective point of view.”

That said, entrepreneurs who want to solve problems by themselves or who do not want others to change things without permission might not work well with VUT.

Third is whether VUT’s capabilities fit with the scope of the problem you want to solve.

Although we luckily had the chance to work with a VUT member who had knowledge and experience of businesses with supply chains and B2B sales, if this problem-capability fit is lacking, things won’t work out.

When you are in the requirements definition phase and you feel that what you want to do cannot be achieved with the VUT’s capabilities, I think it is okay to let it go.

Also, timing is key when consulting VUT. Personally, I think the best timing is “after you have achieved PMF and have experienced marketing and sales activities.”

Again, VUT is a team that supports on site.

They build hypotheses together with the team and work toward achieving the target.

This was very good for our members because they experienced the process of hypothesis testing and are now able to act with ownership.

After PMF comes the phase to expand your team for expanding your business. Here, you need to build an organization that can replicate successful experiences, so that targets can always be achieved regardless of who does the work.

Because VUT ran the PDCA cycle together with our team and brought reproducibility to the company, I would say we welcomed VUT at the perfect timing.

Passing on knowhow for future entrepreneurs

I wrote this article for two reasons.

One is simply from a feeling of gratitude.

Thanks to VUT’s proactive support, OKAN was able to achieve good results in a critical situation.

I am truly grateful for this, and wanted to express my appreciation to the VUT members and all other GB members including Yurimoto-san.

Another is because I wanted to help future entrepreneurs.

I think there is a limit to what startups can do on their own. There are so many things that can only be done after they receive support from outside the company.

Future entrepreneurs will find themselves facing a challenge they cannot overcome without outside support.

When that happens, I am thinking it might be meaningful that I have compiled my knowledge of how to work with VUT based on my experience.

OKAN was able to come this far thanks to the knowhow and information passed on by our predecessors.

I want to hand over the baton to future entrepreneurs. This is why I wrote this article.

I would like to end my article with the hope that this helps to-be entrepreneurs who will build the future.