Every few weeks, I meet someone that very much wants to either get into the venture capital business or wants to do better work in the VC business.
I’ve written a little bit about this topic in prior years including what I’ve observed in great venture capitalists.
When I ask someone why they want to be a VC, I often hear the obvious. Things like a passion for technology, a love of startups, a confidence that he/she can spot the next big thing.
In my mind there are three critical parts to this gig.
Thing 1: Finding investment opportunities.
There are different strategies and different styles, but ultimately, it’s often investing in things early and before everyone else shares the same insight. This is my investment philosophy. Anyway, this is critically important but it’s not sufficient. That leads me to the second thing.
Thing 2: Be a great partner to the startup
In the early stage investing business, most startups don’t work out. So most VCs are dealing with a portfolio that has many investments that are struggling or worse. VCs that serve on boards have a duty to do their best to help the company though these tough times. It’s very stressful and intense. It requires some combination of being proactive, being engaged and being patient. It requires dealing with a problematic co-investor(s). It can be about founders that don’t get along. Or a cash crunch. Or a lawsuit. Or cultural issues. And it happens a lot. It’s likely the least understood and appreciated part of this work. And when I meet someone who wants to be a VC, I spend a fair amount of time talking about this part. If this sort of thing feels allergic to you, then this business isn’t for you.
Thing 3: Be a great partner inside the firm
This one is rather self explanatory but vital. A good partner inside the firm is someone who helps their fellow partners, provides honest & direct in all communication, is patient during tough times, open to new ideas and debate, is respectful. Amongst other things cares about the team more than anything else.
I still have a great deal to learn about this topic but after 13 years of doing the work, I feel some comfort in writing down my experiences. But like most things, I am in a work in progress.