Venture Capital Boards – Driving Change Across the Built Environment: An interview with Adam Schuit

Welcome to the third instalment of our venture capital boards (VC) interview series, where we speak to investment leaders from across the world of VC funds that back businesses across the global built environment technology space.

Venture capital funds take a more active role in their investments by providing guidance and often holding a board seat. VC funds, therefore, play a hands-on role in the management and operations of the companies in their portfolio. The objective of this series is to better understand the makeup of the VC board or advisory panel, and the role it plays in both the growth of the VC fund itself and the fund’s portfolio companies. We’ll also be exploring the importance of diverse representation across a board and how larger corporations can take guidance from VC funds when exploring their own internal structure.

About Adam

Adam is a Principal at A/O, where he focuses on the entire PropTech ecosystem including innovative business models and new technologies spanning the commercial, residential, and construction verticals and is passionate about accelerating global decarbonisation. Before joining A/O, Adam was a Manager in EY’s Transaction Real Estate Advisory Group in New York City. He has worked with a wide range of institutional clients including real estate developers, investors, operators, lenders, start-ups, and governments related to transaction, operation, and growth strategy initiatives.

Thanks for speaking with us, Adam. Could you start by telling us what the key requirements of a VC board or advisory panel is?

VC Boards or advisory panels are something we look at when considering investing in start-ups. One of our portfolio companies has developed a unique approach to this, giving equity to advisors and converting them into customers. It’s a great way to get buy-in and partnership from senior leaders across the industry, as well as access to enterprises and major corporations.

A lot of advisors are from major corporates, so having their industry insight is vital for start-up growth. Advisors are there to guide and advise, utilising their industry experience to shape the direction of movement.

For A/O, we’re building our own advisory board of industry leaders. We have a limited number of advisors as this helps to have deeper, more meaningful relationships. We find this means there’s more alignment and buy-in with what we’re doing.

Independent advisors are helpful too from the perspective of due diligence, introductions, industry networks, and access to the right ecosystems.

So, what should the make-up of a board/panel look like in terms of experience, background, and diversity?

Diversity in background and thought is so key. When we were thinking about our own fund, this was so important for us. It’s important to look at a wider mix than just individuals within the industry, so we looked at profiles within academia, local government and experienced founders from different sectors. It’s all about rounding out the skillset around the table and finding the gaps that need filling. The Built Environment is still a relatively new category within venture, so there’s less people who have really strong experience in the space.

As VCs raise more with each round, does the role of senior leadership change? Do profiles need replacing at certain stages?

Venture Capital funds are just like a start-up growing up, so there’s plenty of change with each new fund! In the last two years we’ve brought in a COO/CFO – a role we didn’t have when the fund initially launched. We’ve rounded out the team with data science analysts, researchers, and we’re now looking at more operational and portfolio management-based hires in the coming months. We’re definitely looking to become more institutionalised as we grow, improving the way we report and document investments, developing our own internal processes. That’s something that senior leadership and the wider team have played a role in, helping to really develop our structure as we’ve scaled.

Our new fund will be a regulated fund so that brings certain requirements that some of our peers might not have. It’s meant we’ve needed more rigorous operational processes and strategies, so that’s something we’ve had to collectively develop and prepare for.

As A/O has scaled, has your approach to supporting start-ups changed at all?

Our approach is still very similar to when we first started out. I’d say there’s likely more internal structure and formal processes. We’ve always been quite process driven, conducting quarterly reviews of our portfolio companies, annual reviews of our focus and priorities for the year ahead. We also work to understand which companies might be looking for funding further down the line, or who might need support in terms of talent and recruitment. It’s something we’ve always done as a fund and will continue to do as we look to double Assets Under Management (AUM) and the number of companies within the portfolio.

Does a VC’s approach to funding change as they grow? Does a bigger fund mean more flexibility in deal making?

As a fund expands and brand recognition increases, so too does the number of deals you can deliver. This is a relatively organic process, as your reputation and networks grow over time. It’s also something that adapts and pivots based on the state of the market. General market conditions are always a key contributor to changes in deal flow.

Time in the market is so important, too. As you go through more funding rounds and investments, you start to see patterns or indicators that can help to steer your decision making. This often improves your ability to evaluate deals faster and be more confident in the direction you take. I think every fund gets better at this with time. You start to understand where things went well, what could’ve been improved, and how to progress. For me, assessing people will always be the key criteria for deal underwriting. Market conditions and technology will always change, but if you’re invested in the wrong people or team then you’ll never weather the storm.

What can larger corporates learn from VCs as they scale and grow their own investment funds? Vice versa, what can VCs learn from corporates?

I’ve spent quite a lot of time building networks across the CVC landscape and looking at how they’re structured. There’s such a huge spectrum of CVCs and approaches to funding, from outright funds and investment teams to incubators and scale-up programmes. Generally, however, they all tend to be more focused on strategic alignment with the parent company instead of aiming for VC-like returns. Of course, ROI is important but typically it’s more about developing technology, innovations or processes that can compliment or support the parent company on a strategic level. That can be a challenge for CVC teams as well as start-ups; if an opportunity doesn’t meet the strategic goals of the parent company, then it’s highly unlikely that a deal will happen.

On the other hand, you have VCs who are much more independent and have a wider mix of investors into their funds. This means that VCs can explore a greater range of opportunities across different sectors, and perhaps be a little riskier with deals.

I’m a big supporter of CVCs and what they do. Having the backing of a global business can be invaluable for start-up growth. Their level of market connections, access and guidance can greatly help propel a start-up.

If you would like to discuss any of the topics raised in this piece or if you need support with your leadership resourcing strategy, please get in touch with George Dobbins: george.dobbins@beaumontbailey.com