5 Things About Careers (in VC) Nobody Told Me — Part II
If you can’t invent the future, the next best thing is to fund it. — John Doerr
There’s a lot of hype around working in Venture Capital. Much, and very good, has been written and said about how to get into VC: see here to understand what a tech investor actually does and here and here for a compilation of key resources to start thinking like a VC. Personally, it was Venture Deals and The Twenty Minute VC podcast that got me first interested in VC and then through the interviews.
But today I want to take a step back and look at Venture Capital as a career, especially for juniors. Last summer I wrote a post about my key learnings in careers in general and promised to write one about VC specifically. It’s about time I do.
Disclaimer: the following is based on my own experience of many years as a VC investor — time flies but many more to come! — and opinions are solely my own.
Let me start by the obvious: anybody who knows me knows I love being a pre-seed/seed investor. It’s my dream job. It’s a people’s business backed by metrics. There’s breadth and there’s depth. And there’s the impact and the responsibility that comes with it. It’s about learning new things every day — new business models, new technologies, new sectors — , first-hand from those disrupting the status quo. And the energy is electrifying, as we VCs are a bunch of startup yonkis on steroids. I really couldn’t ask for more from a job and I am privileged to have found in Samaipata VC a platform and a team that empowers me to grow as an investor every day.
But now I know that when I decided to move from investment banking into VC there were key points on being an investor that I didn’t even anticipate. Things that I’ve actually come to like and/or learned to accept as part of a job I love, but that I wish I had known before making the move.
Because career moves are some of the most important decisions we make in our 20s and we should do so with the most complete data set possible. So, I’m sharing with you the 5 key things about being a VC that I’ve learned on the job and that anybody seriously considering a move into Venture Capital should be taking into account. There are many more but these seem to be the less obvious ones —judging by the degree of surprise shown by the faces of those who listen to them. In no specific order.
VC is (most times) more about autonomy than about team work
This was one of my biggest surprises/wrong assumptions, especially coming from such a team-based job as banking. In VC you run your own pipeline. You source your deals, you analyze them and push for them internally. As juniors, you need to gather partner support around a deal to see it through, but up till then, you are pretty much on your own. Which is great if you value autonomy and ownership, as I do. However, being a lone wolf is far from ideal — so I recommend that given the job is not inherently team-based, you look for a VC fund with a strong team culture where ownership and autonomy is balanced with team projects.
First and foremost because as a junior, if you are working on your own and never with more senior people, you will most likely be missing out on (learning from) the most interesting deals and companies. KPIs: do they run team projects?; do associates take observer seats at boards?; how do partners work with associates on a deal — are they mere resources or do they have a (real) voice?
Secondly, because most VC funds tend to have small teams, there’s lots of travelling and quiet offices can feel lonely coming from working in bustling floors. KPIs: Team drinks, ski trips, off-sites, Lunch & Learns…they are important.
VC is (most times) more about breadth than depth
After launching a D2C brand from my living room and working on it for over a year, I realized — to my own amusement — that I’m not one to focus on one single problem (or set of related problems) for very long. If forced to choose (as we all are by limited time), I rather learn less about more than more about less. I am more into understanding than into knowing.
That’s why VC is perfect for me. On a single week I can be looking at (and learning from) startups from sectors as diverse as epigenetics, manufacturing and sustainable fashion. That’s what keeps me going and feeds the monster of my curiosity. But that’s just me, some people hate the feeling of not knowing.
Over time, you do build depth and expertise over specific models and sectors that you see over and over again, especially if you are thematic like we are — the onion theory we call it at Samaipata: you go deeper and deeper as you peel layers. Also, because as a seed investor we get heavily involved in the companies we invest in, you end-up building expertise over their specific business models and sectors. But it takes time and you will (obviously) never know as much of a business as its founders. VC is far more about horizontal than vertical knowledge.
KPIs: no facts here, just some soul-searching for you: Are you comfortable knowing you know nothing and constantly navigating the unknown or do you rather always be sure you know? Are you a hummingbird or a penguin?
VC is (most times) more of a long-term game
As VCs, our mind is set in the future. We invest in growth, thinking of where the world will be 5 to 10 years from now, and stay in our companies for that long. And that’s exciting. However, that also means that for years, we don’t know how we are doing as investors. Feedback loops are very long in Venture Capital. So, you need to be patient (or learn to be).
Moreover, you need a lot of self-confidence and emotional stamina. Because during those foggy years in which you don’t know if you are a star or a lost cause, there will be tons of ups and downs. There will be times when your pipeline is hot, your Investment Committee (IC) will approve one of your deals, your portfolio companies will report strong results and you’ll feel like you are flying in the moon. But there will also be months (even years) where you don’t seem to get excited about much, your IC doesn’t either and your portfolio companies will not all be doing great. That’s when you need to hold on and keep hustling.
KPIs: make sure you have quarterly targets, OKRs and performance reviews. I have found that having clear and measurable short-term goals and reviewing them with your seniors helps a lot to know what’s expected from you and reduces the anxiety of not knowing how you are performing, especially during times of deal scarcity. Mentors and even coaches, inside and outside the industry, are very helpful to help putting things into perspective.
VC career paths are (most times) not straightforward
This is another big surprise for those of us coming from banking and consulting, where career paths, as long as they might be, are clear from day one. In Venture Capital, that’s usually not the case, especially for Associates (Principals usually get hired to eventually become Partners so it’s a bit of a different story).
Venture Capital funds are made from small very entrepreneurial teams but that doesn’t mean they grow like a startup. VC funds grow in 2–4 year cycles as they raise a new fund and need more people to deploy the new money and take care of a growing portfolio. Same cycles apply (usually) for promotions. Moreover, many funds see Associates as a two-year programme and have no plan for them to become Principals. This is neither a positive nor a negative thing, it’s just a key point to clarify early on as to avoid misalignment of expectations and consequent frustration down the line.
KPIs: make sure there’s an agreed career plan, with clear milestones in terms of targets to hit and time to hit them. It’s not so much about how quickly you can make Principal and/or Partner, it’s about whether there’s the possibility, what the requirements are and whether the structure is in place to get you there.
VC might make you a cynic, but it shouldn’t
As a VC, a big (and difficult) part of your job is to say ‘No’. We meet hundreds of companies a month and analyze very closely dozens a year to end-up investing in only a handful of them. That means hundreds of ‘No’s’.
And as many of you might have already noticed, VCs are — ironically — not natural risk-takers. Just take a look at our academic and professional backgrounds. Hence, with all those ‘No’s’, there’s the risk that we might eventually forget what we are here for and fall into the trap of becoming cynics, skeptics of everything, constantly looking into what could go wrong (i.e. reasons not to invest).
But that’s not our job, our job is to fund the future, which means venturing and betting into the unknown. Thus, we have to constantly remind ourselves that we are here to invest in key strengths, not in lack of weaknesses. It’s about identifying the key points we need to reach conviction on in order to invest (at Samaipata we call them deal makers) and the rest…well the rest is fixable and we are betting the founders will figure it out. We have of course to be aware of the key risks but not let them drive our investment thesis if we haven’t identified them as deal makers.
After all, we (most) VCs might not be big risk-takers by nature but we for sure are optimists at heart.
📝 Read this story later in Journal.
👩💻 Wake up every Sunday morning to the week’s most noteworthy stories in Tech waiting in your inbox. Read the Noteworthy in Tech newsletter.
