Originally published here.

Every business is defined by its customers — but it’s not always obvious who an organization’s customers really are. When it comes to VC firms, investors have historically and unsurprisingly viewed their limited partners (LPs) — the source of VCs’ funding — as their customers.

But in recent years, investors have begun to rethink this traditional mindset. In the early 2000s, some VCs began suggesting that the entrepreneurs in whom they invested were their true customers. Today, this narrative has grown increasingly widespread, with more and more VCs claiming that they view their founders (not their LPs) as the customer.

However, despite the rising popularity of “founder-friendly” venture capital, many investors continue to struggle to implement a founder-as-customer approach in their daily operations. They may even ask for input using a traditional customer satisfaction survey, but these surveys are generally not very effective at sourcing real, constructive feedback. What does it take for VCs to move beyond platitudes to actually serve the entrepreneurs they fund as effectively as traditional companies serve their customers?

As the president of a corporate VC firm, I’ve learned that we’ve best served our entrepreneurs as customers when we use a proven, customer-oriented methodology: NPS, or Net Promoter Score.

First publicized in a 2003 Harvard Business Review article by Bain & Company’s Fred Reichheld, NPS involves asking customers a single question: On a scale from 1 to 10, how likely are you to recommend this company to a friend? Customers who give ratings of 9 or 10 are classified as “promoters,” those with ratings of 7 or 8 are “passives,” and those with ratings of 1 to 6 are “detractors.” Then, to determine a company’s Net Promoter Score, you just subtract the percentage of detractors from the percentage of promoters, resulting in a measure that ranges between -100% and 100%. Companies can then use this metric to evaluate overall brand sentiment and identify opportunities to improve customer loyalty.

This metric has been shown to correlate with growth across a wide range of industries and is a proven methodology for soliciting and acting on customer feedback in traditional business environments. While other approaches to measuring customer satisfaction involve lengthy surveys and vague, sometimes less-than-relevant questions, NPS is particularly powerful because it is easy to implement and offers targeted insight into a key driver of business success: how likely customers are to proactively either recommend or say something negative about a brand. As a result, while the methodology is not without its critics, today, more than two-thirds of Fortune 1,000 companies use some form of NPS.

In fact, many VCs explicitly encourage their founders to use NPS with their own customers — and so it’s only natural that VCs looking to serve their founders as customers will benefit from this tried-and-true approach as well.

Despite the wealth of research demonstrating the effectiveness of NPS in traditional business environments, VCs have been slow to adapt the methodology for their own organizations. Answering the call to treat their entrepreneurs as customers, some VCs have implemented other forms of satisfaction surveys — but these ad hoc efforts don’t have the research-backed benefits of NPS. Traditional satisfaction surveys simply ask how happy someone is with your product or service, while NPS goes a level deeper to ask whether they would put their reputation on the line by recommending you to a colleague or friend. As a result, when implemented correctly, the NPS approach can help you unearth feedback that a simple satisfaction survey would be unlikely to ever uncover.

To fill this gap at TDK Ventures, my team and I began implementing NPS with the founders we invested in. Over the past five years, we’ve worked with nearly 40 startups, and we’ve found that NPS is an unparalleled tool to guide and empower us to better serve our entrepreneurs. From discovering that we could add additional value for our founders by offering marketing support to realizing that we should be doing more to communicate check size expectations up front, this approach has helped us identify ways to improve our founders’ experiences and ultimately drive growth both for the companies in which we invest and for ourselves. In addition, we’ve learned that NPS can be effective even with a relatively small portfolio: In our first year, we had a portfolio of just 12 startups, but NPS still helped us uncover vital insights to better serve our entrepreneurs, such as their need for counsel on non-dilutive financing.

Our approach to implementing NPS is particularly effective because it includes not just the likelihood to recommend question, but also two qualitative follow-up questions: What are we doing well? and How can we improve? While founders might otherwise hesitate to share negative feedback with their investors, starting by soliciting positive feedback makes people much more open to sharing real, constructive feedback as well — which is critical to ensuring that we learn where we need to improve.

So, what does this look like in practice? Below, I outline a four-step approach to bring the NPS methodology to life in a VC fund:

Start by asking the questions. Importantly, to demonstrate how much you value your customers’ input, this communication should come from the head of the organization. It should also be personalized to demonstrate a white-glove approach, and it should be low-friction: Invite founders and their team members to share their responses by replying directly to your email, rather than asking them to use some unwieldy survey system or impersonal form.

In addition, to avoid relying solely on input from the person we know best and work with the most at a given startup, we make a point of soliciting feedback from at least three people at each of our portfolio companies. Thanks to this approach, our first survey achieved an 81% response rate (with 29 responses from the 12 portfolio companies in which we had invested at that point), and our 2024 survey achieved an 80% response rate (receiving 90 responses from 31 startups).

It’s also important to avoid mentioning the idea of NPS, promoters, or detractors. Instead, simply ask the questions without providing too much background or context that might bias the responses you receive. You should also be sure to thank respondents promptly, and while you can ask clarifying questions when needed, never challenge their responses or react defensively. If they mention a serious issue, make it clear that you will look into it and get back to them as soon as possible.

To illustrate this, below is the email template I send to our portfolio companies every year. Of course, you can adapt this template to fit your voice, but be sure to stick to the basic elements to capture the benefits of NPS:

If I don’t receive a response, I’ll send a maximum of two follow-up messages over the course of three weeks. After all, our founders’ time is precious, so I understand that not everyone will be able to reply.

Once you’ve collected all the responses, it’s time to identify trends and common themes. While the numerical scores can help you determine whether you’ve been moving in the right direction, the real value of NPS is in people’s answers to questions two and three. After reviewing all the data, unearth and organize the actionable feedback that your entrepreneurs have shared.

For example, over the years I’ve received feedback that some entrepreneurs could use more support with certain functional areas like non-dilutive financing or marketing. Another common theme in early NPS surveys was surprise or disappointment with the size of the investment we were able to make, while other respondents suggested we should get a more explicit green light before sharing their information with co-investors. Importantly, while we can’t make changes based on every piece of feedback we receive (e.g., our maximum check size is limited by fund size constraints), we are often able to extract at least some actionable takeaways (e.g., the need to communicate check size expectations more clearly). These are the kinds of valuable insights that a traditional satisfaction survey would be unlikely to surface as they require respondents to feel comfortable giving real constructive feedback.

In addition, while these survey questions don’t ask for input on specific team members, founders will sometimes offer feedback on individual people unprompted. These proactive comments can be especially meaningful, whether they’re a positive spotlight highlighting someone who’s gone above and beyond or constructive criticism emphasizing an opportunity for improvement.

Responses like these demonstrate just how frank and direct entrepreneurs can be (even in non-anonymous surveys) — if you create a safe space in which they can share their feedback freely and without fear of reprisal. While unexpected feedback can be difficult to receive, it’s also incredibly valuable, and I am always grateful when founders are willing to share these critical insights. I’ve also found that reviewing this feedback together with my team — reflecting on our shared areas for improvement and collaboratively exploring creative solutions — can be a powerful trust-building exercise, bringing the internal team closer and making the entire organization more effective.

Of course, you can’t do everything at once. To turn your entrepreneurs’ actionable insights into real change, it’s vital to prioritize the highest-impact actions you can take — for both the entrepreneurs you’ve already invested in and for those you will want to invest in going forward. It’s also important to act fast: The startup world moves quickly, so if you wait too long to implement, it may be too late to make a difference.

Since launching TDK Ventures, my team and I have made numerous changes to our operations in direct response to feedback from our annual NPS surveys. For example, in response to feedback that our entrepreneurs could use more support with finances, HR/recruiting, and finding customers/building ecosystems, we recruited non-investment principals in each of these areas. Similarly, in response to feedback that some of our early-stage portfolio companies didn’t have enough (or any) experience in marketing, we created a marketing principal role to give portfolio companies a blueprint and coach them.

We’ve also made a handful of process changes. For instance, in response to feedback that entrepreneurs were disappointed by our relatively small check sizes given the depth of our due diligence review, we refined our communications to ensure that clearer expectations were set up front and that our due diligence was more right-sized to the stage of the startup. In addition, while we strictly adhere to all confidentiality agreements, we received one suggestion to secure explicit signoff before sharing a startup’s information with other investors. In response, we improved our process to ensure thorough confirmations with each founder before sharing materials.

Finally, don’t forget to close the loop by communicating changes back to the people who gave you the gift of relevant feedback. This doesn’t mean spamming people incessantly; if you aren’t making specific changes based on their feedback, there’s no need to send unnecessary updates. But for the founders who shared quality, actionable input, this can be a great opportunity to express gratitude and further cement your relationship.

Here again, it’s important to personalize communications. Rather than sending a blanket email, thank your founders individually for their specific input, and demonstrate exactly how you’re acting on it.

In my responses, I always make sure to start by expressing my genuine appreciation for their helpful input. I then describe the specific, tactical changes that we’re making to address the issue they identified. And time and time again, I’ve seen just how impactful this approach can be: In one case, I received the following reply just five minutes after sending such a message: “Wonderful to hear Nicolas!! You just reinforced the reason for my ‘10’ [rating] below.”

Of course, every firm is different. While TDK Ventures has had success with this approach, it may not work for all VC firms. Smaller or younger VC firms with fewer companies in their portfolios may be less likely to glean as many useful insights, simply because they won’t have access to as much feedback as larger firms. Moreover, while I have found NPS to be incredibly valuable in my own experience, more data — that is, more VCs trying out this methodology — would further validate its effectiveness. As with any initiative, experimentation and iteration are critical.

But in general, if you expect your entrepreneurs to listen to their customers, it’s only fair that you listen to yours, too.

The four-step approach I’ve outlined is an easy way to both capitalize on the untapped ideas your entrepreneurs can offer and to ensure you’re able to provide them with as positive an experience as possible, ultimately increasing the chances that they’ll recommend you to their networks. This is a true “equal-win” for VCs and entrepreneurs: It makes the VC better at serving its entrepreneurs (which benefits startups), and it inspires those entrepreneurs to become champions of the VC, ultimately helping VCs connect with even more great entrepreneurs and access ever stronger investment opportunities.