I started working on the The Junto Institute in 2011. Later that year, my friend Jeff Carter, a co-founder of Hyde Park Angels in Chicago, became involved in an advisory capacity. He brought an interesting and unique perspective, having deep experience at that point as an angel investor (today, he runs a venture fund).
Jeff believed in the Junto concept from the beginning because, as an angel, he invested primarily in the team and didn't want to see it leave or get pushed out in the future. Like other investors, and as some studies have suggested, Jeff believes that founder-led companies have a higher likelihood of success. As a result, he saw Junto as a way to accelerate the maturity of the founding team so they could effectively manage the business as it grows and scales, increasing the chances of a successful exit.
Fast-forward five years.
I got a call three weeks ago from a venture capitalist considering an investment in one of the JuntoCompanies. The purpose of the call was to discuss the CEO of the company who provided my name as a reference. At the end of the call, the investor expressed mild surprise at what I was able to share: insight into the CEO's decision-making process, capacity for learning, ability to manage conflict, interaction with peers, ability to run meetings, and more. At the end of the call, the investor asked me to meet for breakfast so he could learn more about Junto.
We met two weeks ago and it was clear to me that he "got it". He shared stories of several of his deals and how challenging it was, or has been, for the management team to effectively lead their companies through growth. He talked about young founders whose confidence and stubbornness got in the way of following experienced guidance. He spoke about the importance of character, communication, and culture. And as someone who holds an MBA from a top-five program, he confidently asserted, "This makes sense. It's the entrepreneurs' MBA."
And then, to add to this experience, we held our Open House that evening, which many JuntoMentors and Instructors attended, including Jeff Carter. At the event, as they were introducing themselves, Jeff gave us a plug that was priceless: "I recommend to every company that I invest in to do Junto."
This awareness, acceptance, and endorsement among investors doesn't just exist at the individual level.
Leadership development has increasingly become a focus of the top venture firms across the country which are using the "platform model" to go beyond just capital and provide deep support and assistance to their portfolio companies. While not invented by them, Silicon Valley-based Andreessen Horowitz accelerated the sophistication of the platform model several years ago. As the venture and startup communities took notice, more VC firms jumped on the bandwagon and started offering their own array of similar services.
These investors know that at some point a startup - especially if it has first-time founders - needs to grow up. Its priorities must shift from a focus on product, market, and funding to people, culture, and leadership. They know many founders have a hard time transitioning from being builders and operators to becoming managers and leaders. They know that, for many founders, it's lonely at the top. And they know that startups need outside help through mentors, advisors, and seasoned experts.
So in addition to providing support services such as recruiting, HR, marketing, and financial assistance as part of their platform model, many of these venture firms offer leadership coaching, conduct management training, and hold leadership summits.
I believe the reason they're doing all this is simple: it helps mitigate the extraordinary risk that comes with investing in young, growing companies. And while I believe there are many ways this risk is reduced through the platform model, three in particular stick out to me.
If investors can be more aware of the day-to-day operation of the company - without actually running it - they are more likely to preempt poor decisions by the founders and tough times for the business.
By building a closer relationship with the portfolio company, there is a higher likelihood the startup has greater trust in the investors and increasingly looks to them proactively as an ally.
Because a startup's leadership team spends so much energy making decisions every day, reducing that time through the investors' introductions and tactical meetings/phone calls helps accelerate the company's progress.
We know - as do our graduates and mentors - that Junto's program helps in these areas, and many more. Learning emotional intelligence, working "on" the business, hearing about experiences of people who have "been there, done that", and having access to a powerful network all help mitigate the risk and accelerate the growth of a startup. It may not be the conventional venture platform model but it's certainly a platform, and one that we know works.
It's a platform that directly benefits the founders and leaders of the JuntoCompanies. And for the half of those companies that have received outside funding from angels and VCs, it's a platform that will likely benefit the investors as well.