Cooperative Venturing Program

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The Cooperative Venturing Program is a privately funded support system run by VentureCapital.org (VCO), which is designed to help early-stage ventures raise capital during the period before revenue generation.
What are the main aims and objectives?

The goal of the Cooperative Venturing Program is to help entrepreneurs secure capital and other resources necessary to successfully grow their businesses.  

Many new ventures require investment capital before they are able to break even. Entrepreneurs, and especially first-time entrepreneurs, often have insufficient knowledge of early-stage investment process and therefore are not well equipped to successfully present their ventures to investors. They also often lack access to appropriate networks that could help them find potential investors and fully develop their venture (e.g. partners, suppliers). This may lead to potentially profitable ideas failing due to the inability to attract and manage resources. The Cooperative Venturing Program aims to bridge this gap by helping entrepreneurs connect with business angels, who provide much needed capital and often go above and beyond in providing other types of support when necessary.  

In addition, the program aims to help firms that have significant potential but only moderate near-term growth overcome this challenge by generating interest amongst business angels hunting for “unicorns”, otherwise referred to as super-high growth startups. 

How does the program work?

The Cooperative Venturing Program primarily uses diverse teams of mentors to help entrepreneurs secure capital and expand their networks. Two key elements of the Cooperative Venturing model are collaborative mentoring and live/virtual investor pitch forums. 

Collaborative Mentoring 

When a venture is accepted into the Cooperative Venturing Program, VCO assigns a team of four to eight mentors who help the founder(s) prepare an investment pitch to present at the next VCO Deal Forum (described below). 

The mentors are drawn from VCO’s diverse network to coach and support entrepreneurs with raising capital. VCO mentors have a wide variety of skillsets and experiences (alumni, entrepreneurs, investors, accountants, attorneys, marketing professionals, etc.) and mentor teams often include an angel investor, industry expert, professional expert (e.g. Intellectual Property attorney), and a pitching expert. 

During the program, the founder(s) and mentor team meet virtually for an hour twice a week five or six times to prepare an investment pitch. Discussions usually touch on various aspects of the business and often lead the founder(s) to adjust their business model. In addition, mentors often introduce the founder(s) to people in their professional networks. 

Each mentor team also includes one (or more) “investor liaisons.” Typically, a college intern from a disadvantaged background, liaisons support the mentor team and contribute substantively to the process by collating feedback for the founder(s). 

Live + Virtual Forums for Companies to Pitch to Potential Investors  

Four times a year, VCO hosts a Deal Forum where founders present their business to a diverse panel of investors with expertise in the founders' business sector. The Forums also attract entrepreneurs and other ecosystem stakeholders (e.g. professional service providers), which helps VCO founders to build their networks in the broader community and build relationships with potential strategic partners. 

Deal Forum participants are eligible to participate in VCO’s two large annual events: the Investor Choice Conference (ICC) – where 30-40 ventures present to investors and experts – and the Women Entrepreneurs Realizing Opportunities for Capital (WeROC) conference, which showcases women entrepreneurs to panels of women-focused investors and lenders. Overall, more than 60% of Deal Forum alumni receive an investment funding, and more than 70% of ICC Alumni do. 

What is the overall cost?

  • VCO's annual operating budget ranges from US $250,000 to US $375,000 (approx. EUR 211,000 to EUR 316,000).  

  • VCO also receives significant in-kind contributions from its partners and allies.  

  • VCO does not invest in ventures and does not receive commissions on investments made. 

How was it implemented?

The program is led by Utah-based VentureCapital.Org (VCO), a registered 501(c)(3) non-profit organization that operates a regional venture accelerator. The program was founded in 1983, expanded in 1986, and became a multi-state operation in 2015. 

The program could be replicated on either a national or a regional level. However, in many countries smaller than the USA it is likely that a regional ecosystem will not have a sufficient level of business angels for it to function.  

What impact has been measured?

The Cooperative Venturing Program tracks the investment activity of former their participants through surveys they conduct, using reports from third-party sources – such as Crunchbase – that provide information on private and public companies about founders and investments. Likewise, they use Pitchbook to produce data on capital markets and business transactions. 

Although VCO has not measured the direct impact (evidence level 4) their program has had on the performances of their participants, they are reportedly considering further evaluation such as randomized control trial evaluation and an evaluation on the impact of participation on entrepreneurs’ mindsets.  

Currently they can demonstrate:  

  • Amount of raised capital: Since 1986, VCO participants have raised more than US $20 billion (approx. EUR 17 million), half in equity. Each year, 60-80% of participants raise capital during their first year. 

  • Long-term survival rate: More than 80% of the participant firms created before 2008 were still operating in 2018. 

  • Job creation: In 2017, an estimated 1,150 jobs were created by ICC participants, and, since 1986, more than 45,000 jobs were created by participant companies. 

What lessons can be learned?

Challenge 1: Building a culture of start-up investment 

Firstly, ecosystems without a strong culture of start-up investment will be tougher terrain in which to replicate this project. With that said, VCO also faced this challenge with a lack of knowledge about angel investing among entrepreneurs and also among some investors.  

To address this, VCO organized educational programs for the entrepreneurial community. In addition, VCO was active in the National Association for Seed & Venture Funding (NASVF), which, although it is now dormant, is recognized as having supported the growth of angel investor groups and educating prospective investors. 

Challenge 2: Quality of mentorship 

The success of the program relies upon quality mentorship that is both appealing to founders and that can draw upon effective networks of investors. To deal with this challenge VCO uses cooperative mentoring, which helps it maintain a strong and diverse pool of mentors. The methodology creates team dynamics, which helps it weed out sub-par mentors. It also creates new networking opportunities for mentors while sharing the responsibilities. In addition, VCO mitigates fluctuations in its pool of mentors by maintaining a core group with longer engagement and monitoring mentor satisfaction and striving to make their experience is beneficial. This approach has also been shown to be successful in other programs such as the Y Combinator and Techstars accelerators.  

Challenge 3: Network building 

VCO also emphasises the neutral role it plays in the ecosystem to facilitate linkages. While building trust with local ecosystem stakeholders requires investment, connections with other networks were leveraged to build capacity. It was also important to proactively encourage the participation of other business support providers to foster cooperation and channel competition. At every level of the program, they place an emphasis on creating networks both for the mentors and entrepreneurs themselves. Identifying actors who are committed to community building has become an essential part of their methodology.  

VCO also highlights the role of using performance metrics to evaluate progress. Through the collection of data and effective monitoring they were able to adapt their methodology, reinforce their position within the ecosystem and develop closer links with high-level investors.  

CURATED BY

Cristina Fernandez

Director for Knowledge + Programming
Global Entrepreneurship Network
United States