Venture Capital is a business of picking and doubling down on winners. We all recognize this when it comes to capital allocation - we diligently track metrics, focus on our top performers, and make calculated decisions about follow-on funding.

However, when it comes to allocating our platform resources across portfolio companies, funds very often abandon this same discipline, falling into the trap of providing equitable support, programming, and resources to all portfolio companies regardless of potential or performance.

But here's the uncomfortable truth: While equitable support may feel right and align with the desire to help every founder succeed, it may significantly dilute your platform's impact on those winners and, thus, fund returns.

In this newsletter I'd like to introduce a new concept that I call "platform discipline." Just as you maintain reserve planning spreadsheets for your fund's capital allocation, I'll outline a framework that brings the same rigor and disciplined methodology to platform resource deployment.

In this piece, we dive deeper into building platform discipline through:

1. Developing a portfolio categorization system

2. Measuring and monitoring platform resource allocation

3. Designing tiered platform support models

When investment and platform teams share this common framework, everyone operates with the same north star of maximizing fund returns through focused, strategic support.

Let’s dig in!

Developing a Portfolio Categorization Framework

When it comes to building a portfolio categorization framework, there are two critical dimensions that should guide your thinking:

1. Ownership: How much capital have you invested in this company and how much do you actually own?

2. Performance: Is this company executing exceptionally well with strong future potential?

These two factors determine whether a company can meaningfully impact your fund returns – which is the only metric that truly matters. Unless a company has the potential to return a meaningful amount of your fund, it simply cannot be a priority for your limited platform resources.

Is this cold-blooded? Perhaps. But venture capital is a returns-driven business and the moment we pretend otherwise, we're doing a disservice to our LPs and diluting the impact we could have on our genuine winners.

This exercise should be an investment team-led exercise. The investment team, with its board-level visibility, must drive these distinctions while creating a shared vocabulary with the platform team. The purpose of this exercise is alignment, understanding that while the platform team serves all portfolio companies, they need an efficient way to triage and prioritize without consulting every board member for each decision.

Many funds already have structures in place for portfolio categorization. Some use letter grades (A, B, C, D), others use stoplight colors (green, yellow, red). If you have something that works, stick with it. If not, I’ll share with you what I like to call my “Portfolio Wildlife Framework”. 

This framework goes a level deeper than a simple quality score, categorizing portfolio companies into four categories – Gazelles and Fireflies (our high-performing companies) and Sloths and Pandas (our underperforming companies).

High Performers

These are companies that consistently beat expectations quarter after quarter. They're hitting milestones ahead of schedule, attracting top talent, and securing (or on track to secure) follow-on investments at impressive valuations. Their performance metrics make you smile during LP meetings. 

Yet, within this group, your ownership percentage creates a critical distinction:

Gazelles (High Ownership + High Performance)

🦌 Swift, agile, and poised for remarkable growth.

These are your fund returners: companies executing flawlessly where you own enough to matter significantly.

With Gazelles, you should deploy your highest-value support and resources without hesitation, including those activities that don’t necessarily scale. They need help closing their top VP of Sales Candidate?  Hop on a flight tomorrow and help them get it done. They're looking for advice on their enterprise sales strategy?  Call up that V-VIP exec in your network that you only have one ask of per decade.

Something to keep in mind when it comes to Gazelles: these are often the companies that will ask for the least support and attention precisely because they're self-sufficient. Their exceptionality means they rarely reach out for help, and their growth trajectory means they’re busy building a rocket ship of a company, so you must be intentional about and proactive with your support. 

Fireflies (Low Ownership + High Performance)

🪲 Bright and full of potential but flickering and out of reach. 

The second category of overperformers are those companies performing brilliantly, but where your ownership is too small to meaningfully impact fund returns. Even a 20x outcome barely moves your return needle.

These might be companies from earlier funds where you've been significantly diluted or smaller checks written outside of your firm’s core investment thesis. Whatever the case, the simple math doesn't justify extensive platform resources. Resist the gravitational pull of their success. Their impressive performance makes them tempting recipients for your attention, but this is precisely where platform discipline matters most.

Direct your Fireflies to standardized resources and group programming while being transparent about your allocation model. Remember, these companies typically have other investors on their cap table with meaningful ownership stakes who should be providing high-touch support.

The Golden Firefly

There is one outlier within this category, the rare "Golden Firefly". This is a high-performing company where there's a realistic path to increasing your ownership in future rounds. 

These merit strategic attention specifically focused on positioning for ownership expansion. In fact, these special Fireflies should often be treated similarly to Gazelles, with the same level of high-touch support and proactive engagement. Though your current ownership might be small, their potential to become fund returners exists if you can successfully increase your stake. Your platform team should work closely with the investment team to identify these opportunities and align resources accordingly.

Underperformers

Just as crucial as identifying your stars is recognizing companies that aren't meeting expectations. These companies consistently miss targets, struggle with execution, or face serious market headwinds.

A critical note here: while we use the term "underperformers" internally for resource allocation, remember that to founders, these companies represent their life's work and passion. Sensitivity in how you communicate and engage is essential. Your categorization should inform your resource decisions, not your respect or communications with founders.

Categorizing a company as an underperformer isn't a one-time judgment. Performance ebbs and flows, markets shift, and breakthroughs happen. It is important to reassess your companies every quarter to watch for these changes and adjust categorization as things change. Today's underperformer might be next quarter's Gazelle with the right pivot or strategy shift. Rigorous, ongoing reassessment prevents you from writing off companies prematurely.

That said, similar to your overperformers, ownership stake creates a clear divide in your underperforming companies and how you should approach them:

Pandas: (High Ownership + Low Performance)

🐼 Cuddly and beloved, but slow-moving and facing an uncertain future.

Perhaps the most challenging category is companies where you've deployed significant capital but performance isn't meeting expectations. Your substantial ownership means you can't simply write them off.

The goal here is balanced support, meaningful enough to help if a turnaround is possible, but measured enough to protect your limited resources.

With Pandas, your platform approach should be pragmatic and focused. It should always start with an honest assessment of whether your platform support can meaningfully improve outcomes, then implement only targeted interventions with clear ROI potential.

All resource allocation should be highly selective and results-oriented. The sunk-cost fallacy is particularly dangerous here. Avoid pouring endless hours into companies where fundamental issues can't be addressed through your platform support. However, when dealing with these companies, always keep in mind that the founders are 100% all in here, and you need to treat them with respect and care even if you're not able to go the extra mile for them.

Sloths: (Low Ownership + Low Performance)

🦥 Hanging on, sleepy, but barely moving forward.

Companies with minimal ownership stakes that consistently underperform. The harsh reality is that they will never meaningfully impact your fund returns, regardless of platform support.

The strategy here is simple: limit your platform investment. Point them to standard resources and respond when needed, but don't get pulled into their problems. Your attention belongs elsewhere. Similar to Fireflies, most Sloths have other investors with meaningful stakes who should be their primary support sources.

I recently worked with a fund that had a sobering realization: For five consecutive years, they'd invited every portfolio company CEO to their annual founder summit – including the CEO of a company where they had made a $100,000 passive investment years earlier for "optionality." When they calculated the cumulative costs of this CEO's travel, accommodations, and event expenses over those years, they discovered they had spent nearly as much on summit participation as their actual investment in the company.

This is the perfect illustration of platform resource misallocation – resources that could have been directed toward genuine potential fund returners were instead diluted across the entire portfolio in pursuit of "fairness" rather than returns.

Measuring and Monitoring Resource Allocation

Categorizing company performance and potential is the first step, but to maintain platform discipline in a tangible and systematic way, you need to measure the time spent and resources allocated to each company in each category. 

Top-performing platform teams maintain awareness of their time and resource allocation. While some firms track detailed engagement data like team hours, event attendance, and introductions made, what's most important is establishing some level of visibility into how your resources flow across the portfolio. 

Personally, I'm not one to advocate for burdensome measurement systems. However, the only way to ensure you're truly adhering to your category framework is to understand in some level of depth how your platform team allocates its time and resources.

Time is our most valuable and limited resource. The key is to track your team's support activities in the simplest way possible while regularly monitoring how this support is distributed across your four company categories.

I recommend relying on data you're already collecting through systems like Affinity or other existing tracking tools and doing the bare minimum to get a low-effort, yet accurate holistic, approach to quantifying your team’s resource allocation.

Here is an example “portfolio engagement scoring” system that is relatively easy to pull together. What’s important here is to identify the value (and intangible cost) of each engagement. 

We all know that a one-hour meeting with a founder is far more resource-intensive than an email exchange; making a carefully curated introduction is more effort (and requires more relationship capital) than an invite to a firm-wide event. Determine a point system for the different engagements that you feed into your scoring system (don’t worry, it doesn’t need to be perfect). Based on this input you can do some basic math to allocate and track “engagement points” across each category of your portfolio.

A process like this gives you visibility into how your resources are actually being deployed across your portfolio. It also provides you with an easy way to track and report your platform team’s time allocation with your investment team to ensure that you’re aligned. If you discover your team is spending disproportionate time or resources on companies with low potential and limited ownership (your Sloths) then it's time to recalibrate.

Designing Tiered Platform Support Models

The exact method of implementing this tiered support structure will vary from fund to fund. What matters is approaching it with sensitivity and an organized approach.

Some funds develop tiered support models that create clarity for both the platform team and portfolio companies, resembling how SaaS companies structure their “essentials” (Sloths) “basic” (Firefly), “standard” (Panda), and “premium” (Gazelles) offerings. Another interesting approach I’ve seen funds take is adopting a “token system” where, for example, they give each portfolio company 50 or 100 “tokens” when they wire their investment (scaled based on ownership), and each token can be redeemed for an hour of platform advisory support. This approach lets you selectively award extra tokens to your Gazelles, while weening your Pandas off their limited supply of tokens over time.

Whatever approach you choose for your fund, it's essential to maintain thoughtful flexibility, transparency, and understanding of the ebbs and flows of a portfolio company's growth and potential. No company has a straight road to the top, and those navigating challenging periods can make remarkable turnarounds, often due to the support you are providing as a platform team. Remember that today's persistent Panda might become tomorrow's graceful Gazelle; the key is discerning potential beneath temporary performance issues and allocating resources accordingly.

Once you have your categorization framework and monitoring system in place, the next step is aligning your platform offerings accordingly. 

Gazelle Support

When it comes to supporting your Gazelles, your likely fund returners, the approach should be proactive and resource-intensive. Provide high-touch, often unscalable help: facilitating strategic introductions, directly assisting with recruiting key hires (even sourcing candidates and conducting interviews), featuring them prominently in your PR efforts, amplifying their wins across your channels, and prioritizing them at firm events. These companies deserve whatever support they need to accelerate their already impressive trajectory.

Remember that Gazelles are typically moving so quickly they don't always articulate their needs. It's vital to check in monthly (or more frequently) and proactively offer tailored support aligned with their current challenges and opportunities.

Panda Support

For your Pandas, prioritize scalable support systems balanced with targeted interventions. This includes access to your portfolio-wide initiatives and resources. If there's a reasonable belief that your help could meaningfully impact their trajectory - considering your significant investment - it's worthwhile to focus on troubleshooting and potential pivots despite being more resource-intensive. This might include key introductions, hiring assistance, or strategic guidance that could substantially change the company's outcome. This often is the case when Pandas are pursuing a strategic exit, a time when providing them extra support can be worthwhile.

Implement quarterly check-ins to assess your Pandas and continuously evaluate if specific interventions could have a significant impact, potentially transforming a Panda into a Gazelle.

Firefly Support

When we talk about our Fireflies, despite the draw to help these bright buds, keep support ad-hoc and aligned with your fund's overall activities and capacity. Don't overextend your resources. Provide occasional introductions and talent referrals when requested. If their wins align with your firm's brand positioning, amplify them, and always include them in portfolio-wide programs that don't require additional resource allocation.

Note: This more passive approach does not apply to your “Golden Fireflies”, which should receive treatment comparable to Gazelles.

Sloth Support

For your Sloths, effort should be minimal and purely reactive. With virtually no potential for meaningful fund returns, remain predominantly hands-off. Limit proactive time spent on support while still responding when asked.

A Loving Message to Platform Newbies

Applying a mindset of platform discipline is especially critical for those new to platform roles. Eager to make an impact but lacking venture experience, platform newcomers often find themselves in a constant state of responding to the loudest voices (typically from your Sloths and Pandas). Without clear guidance, you can burn valuable time on low-impact activities rather than focusing on where their efforts will truly move the needle.

If you’re a still finding their footing in new platform roles and this article hits too close to home, don’t worry, you’re not alone. But take this article to heart as it very well may be the difference between success or failure in your role.

Conclusion

At its core, platform discipline acknowledges a fundamental truth: one hour spent with your highest-potential company creates fundamentally different value than an hour spent with your lowest performer. Every platform investment - whether it's your team's time, your network connections, or your event budget - should be evaluated through the lens of potential returns.

This doesn't mean abandoning your commitment to your founders. It means being strategic about how you fulfill that commitment in a way that maximizes impact for your fund, your LPs, and ultimately, the founders who will drive your returns.

The most successful funds align their platform resource allocation with the same disciplined approach they apply to capital allocation. They categorize their companies by ownership and potential, monitor their resource distribution, and focus relentlessly on supporting the companies with the right-sized support that will drive fund performance.

As you evaluate your own platform strategy, ask yourself these questions:

• Do we have a clear framework for evaluating portfolio company potential?

• Have we aligned our platform offerings with this framework?

• Are we tracking how we allocate platform resources across our portfolio?

• Does our resource allocation match our return expectations?

I get it - these are tough questions to ask and even tougher to answer honestly. It’s why I spend a significant portion of my time working through exactly these challenges with clients, as many funds struggle to objectively assess their own resource allocation.

The challenging truth is that platform discipline requires making hard choices. But those choices are exactly what separates mediocre funds from exceptional ones.

This post is brought to you with the help of Yaffa Abadi of Abadi Brands, a premier personal branding firm for leading executives and VCs.