Venturing with compassion – The new VC

We are navigating through turbulent waters in the venture capital landscape.

I have seen first-hand how these tides can change their course almost overnight. Over the last few quarters, a palpable 'funding winter' has taken hold driven by the boom and bust of investor sentiments in global public and private markets. This sudden financial frost led to scenarios that were not anticipated when the going was good.

Layoffs became a norm, and the intricacies of talent management took centre stage. The heavy responsibility of communicating these hurdles to board members, founders and teams, in hopes of rallying them together, has become the yawning chasm that many of us have to bridge.

Yet, drawing from my experience, I can say with confidence that every winter has its spring. While challenging times are temporary, the essence of trust stands eternal. While difficult circumstances may test you to the core, realise that cycles do turn; if you cultivate trust during this adversity, it will stand with you eternally.

Stakeholders' trust, especially in turbulent times, transcends from being just a lifeline to a treasured asset. That trust can have your stakeholders not merely endure tough times with you but champion your cause with unparalleled fervour. As in life, the genuine worth of an investor is not unveiled during prosperity but during adversity.  

The blueprint of venturing with compassion

So how do you nurture this unwavering trust and dedication? The answer lies in ‘venturing with compassion.’ Venture capital does not only mean investing money; it means engendering trust, loyalty and commitment among all stakeholders.

What would be the components of venturing with compassion? There are numerous; let us begin with four elements here:

1) Speak the plain authentic truth: In my journey, especially during tumultuous stretches, I have always held transparency and authenticity paramount. Transparency in tough times entails admitting to uncertain terrains and divulging genuine insights into evolving circumstances. And as vulnerable as that seems, it helps to create a culture of openness and accountability, builds confidence and eventually contributes to recovery and business growth.

Transparency is not an end in itself. Sharing of information and ideas encourages initiative and innovation enriching the organisation as a whole.

2) Stick to the core: That raises the next question. What do we communicate? I would say focus on the core and minimise the number of objectives, initiatives and KPIs. This ensures that goals remain clear, outcomes are discernible, and measurements are uncomplicated.

Sticking to the core provides clarity and direction. A smaller and more focused list of initiatives is easier for a team to focus on and deliver. Having a minimalist set of KPIs is clearer in showing traction and in the early detection of potential issues and problems. As opposed to this, managing with a long list of KPIs may cause confusion and reduce the clarity of goals and outcomes.

3) Care for the human element: Behind each decision, there is a human story. Be it long office hours, a missed family dinner or a missed birthday party – each episode has real consequences. Perhaps this is easiest to empathise with in the case of an extreme event as a RIF (reduction in force) which not only poses financial constraints and urgencies for the individual and their family but may also evoke an unnecessary sense of humiliation and remorse.

Recognising and responding to these emotions provides much-needed support and cultivates loyalty. Ultimately, it is the relationships that outlast all crises.

4) Reciprocate in kind: Once you start extending compassion, you will realise that it is reciprocal. Compassion earns you respect and respect begets respect. When you display understanding and compassion, you automatically exert other stakeholders to mirror the emotion. An empathetic organisation is an institution with a character that goes far beyond business. I would even suggest that an empathetic board achieves greater outcomes.

Good ethics and smart business

Blending compassion into venture strategies is not merely about taking the moral high ground; it is astute business. Venturing with compassion nurtures a lasting culture of trust and togetherness. This climate of openness fosters a safe haven for concerns to be voiced, enabling early detection of problems. Addressing problems in their infancy opens doors to innovative solutions, steers clear of potential crises and ensures continued growth. Integrating compassion is about cementing an organisation's foundation for both, immediate and prospective successes.

The compassionate horizon

Venturing with compassion rhymes with my experiences. At QED Investors, we realise the inevitable industry statistic that a large share of venture-invested companies will face difficult situations and may not take off, and yet, we play the “full 90 minutes” as a truthful advisor to our portfolio through thick and thin.

In my fortunate career spanning about two and half decades, I have led, advised and invested in small and large companies across the USA, the UK, India and Southeast Asia – across these diverse companies and geographies transcending many moments of crisis, I have learnt that compassion and the relationships built on the back of it, outlast the tests of time.

Navigating the venture capital world, particularly during uncertain times, requires more than just business acumen. It demands empathy, understanding, and compassion. These attributes not only help in weathering the storm but also in ensuring that when the skies clear, you have a committed team standing with you, ready for the greater journey ahead.

In fact, why only in venture capital? I would urge every reader, regardless of their role, to champion compassion. Build your strategies, interact with stakeholders, but always prioritise compassion. Professional relationships, akin to personal bonds, flourish on trust and compassion. Whether you are an investor, founder, board member or employee, always advocate for compassion – it is not just good ethics; it is smart business!

‍