Stronger together: how VC-founder partnerships can make a transformative difference

What does a win-win scenario look like where both founders and venture capital funds come out with much more than they went in with? It is natural that founders nurturing a powerful new idea for a startup primarily perceive VC funds as a financial partner. With mentors, advisors and confidants already in place, many don't require more from their VC investor.

Where the relationship is right and truly supportive on both sides, a multiplier effect can come into play which powers the scale-up of the business and delivers the VC greater returns. The successful partnership of textured hair startup Ruka Hair and venture capital fund Backed illustrates this virtuous circle.

Enter Ruka Hair and Backed VC

Ruka Hair is a company whose mission is to bring joy back to textured hair care by creating innovative, high performing products that don’t compromise on ethics or safety. Despite being only four years in the game, Ruka Hair has become the UK's first and only black-owned hair concession to open in an upscale department store. Their brand has been seen on the likes of broadcasting and radio host Julie Adenuga, sprinter Dina Asher Smith and actor Demi Singleton.

Ruka Hair co-founders, Tendai Moyo and Ugo Agbai explain how their business idea stemmed from having experienced firsthand the exclusion and deprioritization from mainstream beauty. Powered by a passionate community of consumers and hair professionals, they've created an ecosystem of products that truly meets the wants and needs of people with curly, coily, and kinky hair.

A powerful partnership

Ruka's vision caught the attention of the team at Backed. Co-founder and partner Alex Brunicki describes Tendai and Ugo as "remarkable, magnetic founders that have both the tactical hustle and strategic vision to build a great, enduring company. We are predominantly a deep tech, enterprise focused fund so it takes truly special people to deviate from our core themes." Whilst financial investment inextricably links VC and founder, these essential factors demonstrate the importance of human relationships and connection from the outset.

Tendai recalls that through their early conversations with Alex's team at Backed, what truly resonated was "their balance of deep, forward thinking around transformative technologies with a genuine commitment to nurturing people and community"

Nothing is off limits, from celebrating company wins, developing a fundraising strategy to discussing complex internal team issues

Tendai and Ugo were introduced to Backed through one of their early angel investors, Ian Hogarth. "Ian saw Backed as uniquely equipped to understand our vision: how our consumer-facing offerings - core human hair extensions and wet products sold through traditional channels - could power the biotech side of our business. This approach leverages consumer insights and infrastructure to position lab-grown hair as a leading, viable alternative to human hair."

This technical differentiator is what Backed is seeking when considering consumer-focused businesses for investment. In addition, they look for "defensible product differentiation, a margin advantage or access to an untapped market. Ruka's development of their synthetic extensions product is an example that illustrates all three."

Nothing is off limits

For Alex, a VC really adds value through acting as "trusted, strategic thought partners to our founders. Nothing is off limits, from celebrating company wins, developing a fundraising strategy to discussing complex internal team issues. Ultimately, we aim to be advisors and shock absorbers for the winding road of building a company."

For Tendai and Ugo, whilst Backed's unwavering financial commitment, despite economic uncertainty, was a standout quality, what makes the VC's contribution so exceptional is the things they have provided, beyond just funding. "Backed has been essential in offering strategic guidance, connecting us with supportive investors, and even providing emotional support through tougher times. They’ve created a truly safe space for open dialogue, which, as leaders, is rare but invaluable. This holistic support has strengthened not only our business but also our resilience as founders, equipping us with the tools needed to navigate the complexities of the start-up journey with greater confidence."

For Backed, this support is intrinsic to their approach. "Time and leverage are critical: we focus much of our attention on our early-stage investments where our skill set is best suited and this type of support is most important," explains Alex. "This means we are often less involved as companies scale and may roll off the boards of our most mature businesses. We also have an incredible internal team at Backed that supports our founders and companies in areas where, as Partners, we are not best suited to provided world-class advice. This gives us the leverage to spend our time most effectively and on more strategic or sensitive issues."

Tendai and Ugo experienced firsthand this commitment to core values. They describe Backed's co-founders Alex Brunicki and Andre de Haes as a "calming influence, especially in chaotic moments" and praise their ability to move against the grain. Their advice to other mission driven founders who are looking for VCs to partner with is to ensure that their values are aligned. "You'll be working closely with these people for years on a journey that will likely consume a large part of your life. Liking and respecting each other is essential!"

Tips for founders and VCs

We asked Tendai and Ugo to set out the top three qualities that founders should look for in a backer. They recommend finding an investor who:

• Helps you step back and see the bigger picture.
• Is trend-aware. While many VCs claim to be independent thinkers, few truly are. 
• Truly understand your values as founders and with whom you can build a good relationship.

We also asked Alex to share Backed's top tips to building authentic and tangible founder support, beyond the financial. He sums this up in four key ingredients:

• Build enough trust that founders feel comfortable sharing sensitive issues.
• Seek to reduce and not contribute to founder stress.
• Act as a shock absorber when challenges emerge.
• Avoid advice that is too general.