Hiring to Build a Successful Fund

I'm currently hard at work on a project involving the transition of a personal holding company into a venture development company backed by an evergreen fund structure.  

The initial challenges involved currently accounting for the investments made to date, ensuring that governance and legal structures were adequate, and setting standards for reporting to shareholders.  

Moving from a "carry at cost" basis to equity accounting for subsidiaries and fair market value for non-subsidiaries created the ability to index the growth of our investments.  It also allowed us to start tracking our investment returns across multiple rounds and key milestones.  

But now that that work is done, the focus has changed to: what kind of resources do we need to create more successful investments?

The answer is: the right people.  Because literally everything else a successful fund requires - access to capital, the ability to execute on great opportunities, executives to run the businesses, code, brands - can be solved by making hiring a first priority.

Luckily, there are some excellent guides for this journey.  Malcolm Gladwell identified three types of people that successful organizations need to hire: mavens (domain experts), connectors (people-people or networkers), and sales people (storytellers and communicators who love to sell.) 

The job of a maven inside our structure is to tap their deep knowledge and unlock value, by isolating an area in which an efficiency can be gained, or coming up with a brand new product or service.  This role can be executed by a partner, by coming up with a new idea and seeking an executive to better it (our usual model), or by backing an entrepreneur's vision. 

Mavens - financial and legal mavens - are also required to instill the correct financial structures and plans, and ensure that valuations and the returns are correctly calculated, governance is in place, and legal frameworks are sufficient to reduce risks.  

Mavens with business experience are an increasing site at venture firms and typically play roles within an "advisor" framework.  

In a fund, it's the job of the investee CEO to be the salesperson in chief for each individual investment - but there is another sales role that is equally important: the person raising capital must be able to sell the vision of the fund, and the investment track record.  This skill is as essential to the fund as the rock star CEO. 

Which leaves us with Gladwell's final category: the connector.  In my view, the more positive connections a fund has both within its target ecospheres and with the outside world, the more likely it will hear about great new ideas, connect with fresh capital, and find the people it needs to operate.  

Can these roles be executed by one person?  Sure they can - the best-known people in the business are known to be mavens, salespeople, and brilliant connectors.  

Can a fund benefit from hiring people who are not connectors, mavens, or salespeople?  In my view, no.  Most funds produce only as much income as their management fees allow.  When on a fixed income, you cannot afford to hire anyone but the best - which means by definition, every hire must be a strong maven, a connector, or an outstanding sales person - or a combination of all three.

John Sharp

John is a serial entrepreneur and investor, and the co-founding Partner of Hatcher+, a data-driven, globally-focused venture investment platform based in Singapore. In addition to leading capital raising and deal syndication, he is the visionary and architect behind the Hatcher Stack, the company's proprietary research and technology platform. Over the past five years, John has led numerous venture investments in early-stage companies, including ASYX, DocDoc, Dropsuite, Heardable, Invit, Inzen Studio, SocialCops, ThoughtRiver, and Telr - and syndicated over US$100Mn of additional debt and equity co-investment. IPOs and trade sales in which he was acted for the majority shareholder include Dropsuite (ASX:DSE) and Inzen Studio (ASX:ICI). His M&A work includes the merger of payment leader Telr with Dubai-based Innovate Payments, and the merger of Singapore-based companies DocDoc, and DoctorPage. Prior to co-founding Hatcher, John founded cybersecurity technology leader Authentium (acquired by CYREN in 2010), and acted as a director for global payments aggregator Mozido, and an advisor to Africa-based Gateway Communications, satellite technology developer MDS America, Kuwait-based Internet marketplace Sheeel.com, and Orion Partners, a $2B private equity fund manager based in Hong Kong.

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