M13’s Propulsion Platform & Our Multi-Pronged Approach
M13’s Propulsion Platform vertically-integrated industry executives help our portfolio companies both mitigate risk and accelerate early-stage growth. Our mission is to enable founders to make better day-to-day decisions and give them access to unfair advantages. We sit side-by-side with our founders to help them problem-solve and take advantage of opportunities, rather than just share a rolodex of contacts. More importantly, our team has been there before, shepherding startups through prior crises to successful outcomes and exits. The collective experience of M13’s partners and our focus on execution are invaluable to company leaders now more than ever.
Our core principles are to be anticipatory and executional with our portfolio companies. We’ve implemented an operating system that allows us to achieve those goals in a scalable way. That system starts during the diligence process when we identify gaps in the business that may prohibit them from reaching their next milestone. After closing, we hold an in-depth on-boarding and strategy session with each core company to plot out key initiatives necessary for the company to achieve their aligned milestones (e.g., product launch, fundraise). From there, we lead specific, on-going work streams to enable our founding teams to achieve those milestones. This takes the form of in-depth strategy sessions with our Propulsion partners, our series of webinars, peer-to-peer conversations with fellow founders and sharing in-depth articles and corresponding frameworks via our digital platform.
Our Propulsion Platform has served an even more critical function in supporting our founding teams during the COVID-19 crisis. We perform extensive analysis alongside our portfolio companies to create action plans to support them to navigate these challenging times. We’ve made tremendous progress through 2019 to refine this strategy and are proud to continue to receive strong positive feedback from our founders. Additionally, our Propulsion Platform is a significant reason that founders seek to partner with M13 and the value-add that other sponsors see when partnering with M13.
M13’s purposefully designed model and outsized resources enable a hands-on approach, and from the start we have helped put our portfolio companies on the offensive. Since the COVID-19 crisis, we have multiplied our efforts to support our founders and teams navigate uncertain waters and seize unique opportunities.
Developing and executing action plans to embolden our founding teams in difficult environments
As COVID-19 gained momentum, we first assessed the strength of the overall portfolio and then evaluated the macro impacts and dimensions that matter right now for each company. We outlined our tailored analysis for and work with our portfolio companies given the changing environment around COVID-19 in a white paper in March 2020. We summarize that process here.
We began with our expectations for supply, demand, and capital impacts and created a list of the most fundamental components to understand in our companies’ health and positioning. The dimensions that matter most for our portfolio companies right now are: 1) financial strength/cash position; 2) flexibility in business model and cost structure; 3) the timing of key milestones (e.g., funding, product launches) against that of an anticipated recovery; 4) the company’s position relative to changing consumer behavior; and 5) the extent the company relies on and is exposed to risk in the physical supply chain.
For each portfolio company, our investment and Propulsion partners conducted a deep SWOT (i.e. strengths, weaknesses, opportunities, threats) analysis. We asked our companies to use the same analytical framework to self-assess their businesses to ensure awareness of real-time changes. Our four-pronged approach is described in Table 1 below.
We provided our companies a roadmap of key focus areas including team focus, scenario planning, revenues, operations and risks and opportunities, as described in Table 2 below.
In addition, because liquidity and runway are critical in any downturn, we are working with each portfolio company to create cash scenarios that factor in aspects of their businesses that can directly affect and macro factors outside of their control (see Table 3 below). The median runway for our portfolio companies is 19 months.
We continue working directly with our portfolio companies to compare what we and they have identified. Together, we are creating specific action plans with them to confront the threats and to be more tenacious about the opportunities. We are intentional about making better investment decisions by building, prioritizing, and deploying knowledge across portfolio companies. Ultimately that knowledge sharing enables and improves deal flow and helps portfolio companies get up the J-curve faster by anticipating challenges and opportunities, accelerating growth, achieving greater capital efficiency, and facilitating superior outcomes.
If you are a founder who would like to partner with us, please submit here.