How value creation initiative impacts the business and growth for venture capitalists.

1. Value Creation as a Service

2. 2
What is Value Creation
more than dollars made
Value Creation
≠
Business development in sales & marketing
Value Creation
=
Building value for stakeholders
by delivering the right products or services to customers through
product, customer and business development

3. 3
Conventionally value creation activities such as business development are facilitated by VC to
help their portfolio companies to gain traction and generate revenue, in turn delivering a higher
return on investment for them.
However value creation doesn’t only benefit the “downstream”, it could also benefit the
“upstream” in a make or break situation. Let’s consider the following analogy:
Every year, sporting apparel companies such as Nike, Adidas and Under Armour are offering sponsorship
packages to players in the NBA league to wear their brand of sneakers in upcoming season. Not all players
are treated equal - the top tier players who highly regarded as the next “Michael Jordan” will receive
tailored packages from interested companies. The main difference between the packages is compensation
and bonus; but what truly differentiate from one to another is the value added benefits (both intrinsic and
extrinsic) – owning signature shoes, launching co-branded product line and gaining popularity in
overseas market.
We can draw similarity between the story above and VC making investment offers to high-
potential startups a.k.a. unicorns. Unicorns are alike top tier players, they have the liberty to
choose investors that they want to have a strategic relationship with. Hence it is important for a
VC to demonstrate their track record and ability in helping the company to thrive during deal
making.
What’s in it for Me (Investors)
set the stage with basketball’s analogy

4. 4
Value Creation Strategy
alignment/resource matrix
StrategicAlignmentwithBusiness
Goals
HighLow
Allocated Resources for Value Creation
Support value
creation
activities on ad
hoc basis
Design and
implement value
creation program
Plan individual
project of value
creation
activities
DedicatedUnassigned
Facilitate value
creation
activities on
best effort basis

5. 5
1) Identify business drivers and objectives
Strategic Alignment
how value creation ties with business goals
Growing top and bottom line
Increased visibility and presence
in Asia
Differentiated competitive
positioning
Decreased time to market
Indigenous customer needs &
expectations
New and changing regulations
PortfolioCompanies
Reduced investment risk
Decreased time to exit
Improved relationship with business
partners
Value added
Created jobs
VC
Macro
Economy
2) Define business outcomes addressable by value
creation
Growth in market share
Customer and market
needs met
Customer-related outcomes
Financial-related outcomes
Revenue growth &
profitability
Economy-related outcomes
Growth in expected VA
and jobs
Respectable yearly
return on investment
3) Determine KVIs and Value Metrics
Relative Market
Share
by
geography
by product
by quarter
Total Revenue
Growth
by country
by year
by account
Investment
Scorecard
by region
by industry

6. 6
Allocated Resources
structure and work allocation
Phase 2 Phase 3
Portfolio
Companies
Initiative
HC
ET
ICT
Value
Creation
Program
Phase 1
The recommended structure below is targeted towards the choice of dedicated resources, given that VC allocate dedicated headcount for value creation function. In an
unassigned setting, value creation work could come under investment professionals’ responsibilities.
One staff to look after one sector or more
depends on the number of companies. The staff
acts as an account manager in managing
relationship with particular companies.
All value creation activitiesare organized, documented and
repeatable as initiative. New staff is hired as / Existing staff
grows into a portfolio manager to bridge the gap between
strategy and execution.
Managing value creation initiative as a program allows the function to
scale as portfolio companies expand (in both variety and volume). This
phase requires PMO (Program Management Office) to be established in
order to create and maintain a successful program.

7. 7
Value Creation Program
the big picture view
A research conducted among 587 C-Suite and senior executives by the Economist Intelligence Unit
(2013) reveals that organizations can improve their competitiveness by successfully executing
initiatives to deliver strategic result.
ProgramVision “To be the premier investor in building the future economy”
Program Mission “To value add our portfolio companies by enabling their growth globally”
Program
Objectivesand
Goals
We accomplish our mission by leveraging our extensive network, resources
and experience to help them to:
1. Build long-term perspective beyond typical investment cycles
2. Develop new business opportunities in
Programs
(Example)
1. Developing “green
lane” in clearing
regulatory
requirements with
relevant
government
agencies.
2. Facilitating access to
government grants,
enterprise activities
and procurement
opportunities.
3. Analyzing local
market and
customer segment
needs.
Value Creation Program Charter (strategic alignment level) for VC
For Reference
The invitation-only
BizSpark One program offers
personalized consulting and
mentorship with a single point of
contact at Microsoft.

8. 8
Customer Development is a four-step framework developed by serial
entrepreneur, Steve Blank to help startups in discovering and validating the
right market, building the right product features that solve customers’ needs,
testing the correct model and tactics for acquiring and converting customers,
and deploying the right organization and resources to scale the business.
The rationale behind choosing Steve Blank’s model is to avoid from
reinventing another BD process that doesn’t necessary add value to portfolio
companies. Instead we should leverage on a proven model (which is being
adopted by most internet startups) to steer our value creation process in
creating value-added activities for portfolio companies.
On the right diagram, boxes in red depict activities that VC could value-add for
portfolio companies.
Leveraging Steve Blank’s Customer Development
Model
Value Creation Model
business & customer development process and activities

9. 9
• The father of open innovation, Henry Chesbrough pointed out that in order to sustain profitability and
achieve new growth, organizations must think of their business as a service business.
• Value Creation as a Service (VCaaS) is about delivering business/customer development-related
activities that evolve and add continual value to portfolio companies for VC.
• It is recommended that VC to gradually create an end-to-end Value Creation program. Program
management discipline can integrate and align six critical dimensions (strategy, people, process,
technology, structure and measurement) needed to make Value Creation initiative a success.
Summary
recommendation and what’s next