4 Reflections From Working in a Portfolio Company

Startuo neon sign with a handshake
February 21, 2024
Perspectives
Written by
Judith Schrader
Investment Analyst

At the beginning of 2023, after Scale Capital invested in Mazepay, a startup offering long-tail spend management for enterprises, I went on a 6 months secondment as a sales consultant to help open up the DACH market.

Here are 4 reflections from my time working within a portfolio company.

1. Understanding the Growth Challenges of Startups

Working in venture capital, you often tend to have back-to-back startup pitches, which can lead to losing touch with the actual challenges of growing a startup. Experiencing this from a sales consultant perspective, I could very quickly see the effort and time required to set up meetings, close customers, hire new employees, and grow a company. This process not only depends on the startup itself but also hinges on the cycles of other stakeholders, not least enterprise customers with lengthy sales cycles. A more nuanced understanding of customer needs, market dynamics, and sales strategies furthermore offers a new perspective that can help with future support and guidance that can be provided post-investment.

Gaining hands-on experience is invaluable, especially for those starting young in Venture Capital. It helps with gaining a better understanding of the challenges of creating a company, which benefits investment decisions and working with portfolio companies.

A more nuanced understanding of customer needs, market dynamics, and sales strategies furthermore offers a new perspective that can help with future support and guidance.

2. The Power of Partnerships

During my time at Mazepay, I was particularly impressed by the significance of well-functioning partnerships. Mazepay’s go-to-market model relies on partnerships with banks, wherein they set up meetings with their existing customers. Especially in enterprise sales, where customer access is usually challenging, those partnerships can significantly influence the success of a company. Of course, this also comes with a set of challenges, as you have to rely on others to set up meetings, incorporate new sales approaches, and most of all, build a trusting relationship.

Understanding and developing a robust go-to-market model is key. A successful partnership strategy can provide a strong, long-term competitive advantage.

3. Navigating New Markets

Our work of opening the DACH market involved engaging with key account managers across different regions to gain trust and start setting up joint customer meetings. Even neighboring countries in Europe can vary in business culture, which underscores the necessity to adapt approaches to each market and stay flexible. Picture my colleague’s surprise as he punctually arrives for a meeting in France, only to spend the next 25 minutes waiting for other participants. Only then was he to discover that the first 30 minutes of this meeting were meant for arrival and not for the actual agenda.

When venturing into new markets, even those that appear similar, it’s crucial to test and adapt strategies, as subtle cultural and operational differences can significantly impact market entry and growth.

(…) trust allows for a more open and collaborative relationship, where both parties can contribute to the company’s growth more effectively.

4. The Importance of Trust

Many founders prefer to maintain a degree of independence in their daily operations to retain control and autonomy over their business. A potential conflict of interest when debating a secondment is quite common. Being welcomed by Mazepay’s team brought forward a strong level of trust after the initial investment process. This trust allows for a more open and collaborative relationship, where both parties can contribute to the company’s growth more effectively. My experience reassured me about the importance of a fit between startup and investor, given the long-term nature of the relationship. Our “kissing period” approach at Scale Capital tries to build trust and alignment between both parties before the investment and aims to find the right balance between providing guidance and support while respecting the founders’ desire to manage their daily operations independently.

The alignment of values and long-term goals between a VC and a startup is fundamental. It’s a long-term commitment that requires both parties to collaborate effectively, especially during challenging times.

Mazepay team photo.

Reflecting on my time at Mazepay, it’s clear how invaluable hands-on engagement is for venture capitalists. The stint has highlighted the importance of trust, strategic partnerships, and the nitty-gritty of breaking into new markets. As we at Scale Capital continue to support our portfolio companies, these insights have shaped my commitment to not only invest financially but also to contribute actively to the company’s growth and success.

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About
Judith Schrader
Judith Schrader is an Investment Analyst at Scale Capital, a Danish venture fund investing €1–3M in Nordic and German B2B tech startups at Seed and Series A, and helping them win in the US. Judith is also supporting the acceleration of Scale Capital’s presence in Germany.
Mazepay
Mazepay a Danish fintech platform that simplifies long-tail procurement and B2B payments for customers in 21 countries across 5 continents. Founded in 2018, Mazepay employs a team of 28 people, spanning 11 nationalities. Investors include Outward VC, Hambro Perks, and Scale Capital.