October 16, 2024

Case Study: How Base10 Partners Transformed Portfolio Governance with Novata

Background

Base10 Partners (Base10) is a venture capital firm known for its focus on technology founders solving real-world problems and its donations to create scholarships for students from underfunded colleges and universities that want to break into the tech industry. 

Base10 believes in building well-governed, durable businesses to create outsize returns for investors (their Limited Partners) and maximize these donations. To advance this goal, the firm sought to integrate governance data across its entire portfolio, understanding that better governance leads to stronger businesses and long-term growth.

The Importance of Governance Data

At Base10, integrating governance data goes beyond checking boxes for reporting requirements. It’s about creating long-term value for companies and ensuring their sustainability. 

“Governance can make or break a company,” said Nathan Swartley, Chief of Staff at Base10. “A lot of what we focus on — treating your employees well, managing risks, and compliance — is just good business. The data clearly show that mission-driven companies with excellent standards of transparency and governance have better IPOs and long-term performance.”

The Challenge

Before partnering with Novata, Base10 faced several critical challenges with the data collection process:

  • Lack of Scalability: Base10’s initial approach to gathering governance data was informal and inconsistent. The team primarily collected insights through conversations and one-off surveys with a select few companies, primarily those in later growth stages. Nathan explained, “We had almost a hundred portfolio companies, and it just wasn’t scalable. We didn’t have a single repository for the data, and it wasn’t structured in a consistent fashion.”
  • Time-Consuming Process: Without a streamlined system, collecting data was slow and resource-intensive. “If we didn’t have Novata, we’d still be in the process of collecting the data as we speak,” Nathan noted. Manually conducting governance assessments required extensive meetings, back-and-forth communication, and follow-ups, which drained the internal team’s time and resources.
  • Inconsistent Data: Without a unified framework, it was difficult for the firm to draw meaningful comparisons between portfolio companies. “The data wasn’t structured in a consistent way, which made it hard to see where companies stood in relation to each other,” said Nathan. This inconsistency hindered the team’s ability to offer tailored, actionable recommendations to their companies.

Impact & Results

Base10 onboarded Novata to scale governance data collection across its entire portfolio. By implementing Novata’s platform, Base10 could efficiently gather and organize data on critical governance metrics, ranging from compliance and risk management to employee engagement and emissions tracking. 

In the first year of using Novata, Base10 saw the following results:  

  • # of metrics collected from portfolio companies: 1,200 data points across 100 companies
  • Time frame for data collection pre-Novata: 3-4 months
  • Time frame for data collection with Novata: 3-4 weeks
  • Portfolio response rate: >90%

Outcomes

  • High Participation Rates: Over 90% of Base10’s portfolio companies participated in the governance data survey, far exceeding expectations. Portfolio companies found the process of participating in the survey straightforward, with Nathan sharing, “We got zero questions about the substance of the survey. That speaks for itself — the process of using Novata and answering the survey was dead simple, which is exactly what we wanted.”
  • Increasing Data for Early-Stage Companies: By expanding governance data collection efforts to the seed and early-stage companies in its portfolio, Base10 is helping founders build strong, sustainable businesses from the outset, helping to avoid the need to backtrack on governance issues later on.
  • Positive LP Feedback: Limited Partners (LPs) were impressed by the depth of governance insights Base10 could provide, with Nathan noting, “LP feedback has been amazing — they see that we really understand where all of our companies stand.”
  • Improved Investment Decisions: This data will continue to be integral to Base10’s due diligence process, influencing investment decisions and providing a more comprehensive view of a company’s long-term viability. “If a company isn’t committed to good governance or doesn’t treat their employees well, these factors could make or break an investment,” Nathan noted. 
  • Portfolio-Wide Visibility & Actionable Recommendations: Novata’s platform gave Base10’s investment team better visibility into where each portfolio company stands in terms of governance maturity relative to others. The structured data allowed Base10 to provide tailored, actionable recommendations to portfolio companies, ensuring they make progress year over year.

Looking Forward

With the success of the first year of data collection through Novata, the Base10 team plans to focus on making year-over-year comparisons to track the progress of their portfolio companies and help them continue improving their governance practices.

“Our goal is to measure our companies every year and show tangible progress,” Nathan said. “We believe these practices make our companies more valuable and sustainable in the long-term.”