Any economist will say the foundational attribute of money is that it is fungible – it doesn’t matter which dollar you have in your hand, because all dollars are interchangeable with each other.
With ever-increasing amounts of investment capital becoming available to fund early stage companies, thanks to the fungibility of capital, entrepreneurs have an opportunity (if not, arguably, a responsibility) to look past a dollar bill in hand to determine what additional resources an investor may bring alongside it in order to influence business outcomes.
This signals a sea change in what has otherwise been a longstanding feature of the relationship between venture capital and entrepreneurs. For decades this relationship was relatively one-sided: as a source of otherwise scarce capital, VCs could pick and choose their investments. With broader availability, VCs sought to differentiate themselves by providing portfolio companies with capital and services (introductions, marketing, communications, etc.).
Today, however, we argue that the next step is not simply extending professional services, but actually providing portfolio companies with sales and revenue: access to the kinds of channels and transactional networks that in turn generate scale that can be the differentiator when it comes to a young company’s success.
Boiled down, it means one key question worth asking for an entrepreneur, given its capacity to have an ongoing transformative impact on a business: beyond investment capital, can an investor actually deliver revenue?
Simply, while investment capital is fungible, other types (intellectual capital, relationship capital, etc.) are not, and yet can be important determinants of growth, and success, for the enterprise precisely because – properly organized – they create revenue. And while an investment round is a one-time event, revenue represents organic, recurring self-funding that is the basis for actual business growth.
A goal we have in common with all of our companies is straightforward: we want them to be successful, faster. At Telstra Ventures, how we meet this goal is a key differentiator: we understand the importance of revenue and the impact it can have on our portfolio companies, so much so that it’s a permanent part of the machinery of our operations.
For each of our companies, we seek to deliver what we call “Revenue Bearing Relationships™” (or, RBRs), representing the cumulative decades of experience of our partners formalized into an extensive, established, and most importantly, relevant network of global enterprises and channels to market. And, the intent of this network is commercial. It is Telstra Ventures’ goal that the introduction of our portfolio companies into this network will, in the near term, generate real market and product intelligence which leads to real revenue events.
To be clear, the benefits of this approach flow both ways: our channel partners (including large enterprises such as Telstra Corporation, Infosys and others) can use these introductions as early windows into the way technologies are evolving that will help them serve their own end customers. They know that Telstra Ventures makes consistently reliable determinations as to whether a technology is enterprise ready or not, and so when they’re seeing solutions from us, they’re getting a clear view on what future innovation holds, today.
Over the long term, the value of these Revenue Bearing Relationships™ tends to shift from accelerating immediate revenue growth to creating the conditions necessary to scale successfully: establishing new markets (and new geographies), joining new sales channels and understanding how to sell into, and subsequently service, large enterprise customers.
The value of these RBRs to our companies is significant: to-date, our company solutions are now deployed at more than 1,300 enterprise customers as a result of these introductions, and have driven over $400 million in revenue to more than half of our portfolio companies.
That’s a remarkable number, so let’s talk about how Telstra Ventures makes it happen:
- We are former operators: our team has worked for and with large enterprise buyers, and their partners, for years. We have decades of experience with large organizations and how their sales processes, technology adoption and implementation cycles work. And, it’s in our DNA: Telstra Ventures, while independent since 2018, shares our name with Australia’s largest telco, and so we have deep connectivity within Telstra, their industry and customers, and regional and global channel partners. That same experience means that we understand how to navigate other large partners (such as Infosys, Microsoft and Google) to deliver success for both the channel partner and our investment.
- Growing your business is part of our due diligence: assessing your product, your go-to-market strategy, and your capacity to meet enterprise needs can be done in a way that minimizes risks both for your business, and for your customers. Our RBRs mean that early stage companies can engage, constructively and cooperatively, with enterprise buyers to prove out both strategies and tactics. In return, our enterprise network partners get a valuable window on emerging technologies that they know Telstra Ventures already holds in high confidence. And, for our part, we can help companies – in some cases, even prior to investing in them – adjust how they go to market in ways that translate into higher growth.
- We’re both boots on the ground, and a second set of hands: small companies with big ideas face natural barriers in terms of resources. It is no trivial decision to expand into new markets in Asia, Australia or Europe, and personnel is often a limiting factor. We can – and do – act as remote COOs and CMOs for our companies as they explore new markets.
- We’re human, we’re social, and value connection: while our RBR approach to delivering revenues and activating growth for our companies is always conducted with a view to commercial outcomes, we’re curious, love learning from our companies and our customers, and we like to have fun. So: we have gin tastings. We host dinners and small events, including industry roundtables. And we’re always willing to organize a cup of coffee.
Taken together, the methodical development and application of Revenue Bearing Relationships™ has created extraordinary value for our portfolio companies, our investors, and certainly, to the enterprise customers who we have moved closer to game-changing technologies, earlier than ever.
And so, while the dollars we have to invest in emerging enterprise technology companies may be fungible, we’re confident that the advantages offered by our RBRs are unique and special. Ultimately, we make our investments in the people behind these great new ideas, and because of this human connection, we feel a shared responsibility for success. Being able to nurture a new idea or new product by delivering it into new markets and channels is exciting to us, and the best way we can imagine to help our companies grow.