The New Wave of VC

Venture capital. Ah, those two words ingrained in the hearts and minds of Silicon Valley, yet when put together, leave a bad taste in the mouths of many people you talk to. Most people will often call VCs “vulture capitalists,” due to notions about predatory practices. People get an image in their head of greedy financiers prying the pockets of wishful entrepreneurs. There is a thought that VCs are just another crop of financiers trying to make a killing. I’m not going to say that’s wrong, but like everything, it’s more complex than that.

Let’s break it down. In my understanding, venture can be interpreted as the start of a new company, endeavor, mission, or purpose. Traditionally and today, ventures are startups. Capital is money, and in the history of human civilization, cash is king. Individuals and firms with access to capital carry influence, but that’s common sense — you know that.

Venture capital is the funding of early-stage startups, which are high risk, but also potentially high reward. VC is also the mechanism through which investors and entrepreneurs interact, and that is not strictly tied to money.

Since it is involved with so many technology startups, the success of venture capital generally rides the waves of tech booms, bubbles, and busts. The first instance of VC happened when the “Fairchildren” split off from William Shockley, started their own company, and were backed by Arthur Rock. Since then, large firms like Kleiner, Perkins, Caufield and Byers and Sequoia Capital have dominated the industry by backing companies like Apple and Amazon. They still continue to be large players in Silicon Valley.

Traditionally, VC meant capital, bits of advice, and giving up a board seat. Yet, venture capital is changing. Some of the new startup success stories we have heard about lately, such as Airbnb, Uber, and Dropbox have been backed by relatively new (last ~10 years) firms like Andreessen Horowitz, Google Ventures, Y Combinator, and First Round Capital. These, along with others, are structured slightly differently than the typical VC firm.

Andreessen is built like a Hollywood talent agency. They look at CEOs of startups, and surround them with the best possible resources to get things done.

Google Ventures is taking into account the new push for design and is actually deploying whole teams to take companies through “design sprints,” which will hopefully mitigate risk.

Y Combinator funds startups in large batches and has built up something that is very popular now — the startup accelerator.

First Round has engineered a whole platform meant for startup business development.

This kind of stuff was unheard of in the VC world 10–15 years ago.

And what’s most interesting about these new trends and themes is the shift of power from the hands of investors to the hands of entrepreneurs. If you’re starting a company, and it gets hot, you can decide who you want to invest in you. Also in terms of personnel, venture capital firms used to be built up with financiers and PE guys. Now, founders want investors who are operators, entrepreneurs. Founders want to work with people who have been through the grind themselves. But, most of all, they are looking for understanding.

This brings me to the new wave of venture capital. In the past five years, firms are sprouting up that reflect a solution. Great founders want and need genuine understanding from an investor. Places like Lowercase Capital, Thrive Capital, Ludlow Ventures, and Homebrew are all about creativity and hustle. These firms weren’t necessarily started by people who had run their own companies in the past like Marc Andreessen or Paul Graham. People like Chris Sacca, Josh Kushner, Andy Dunn, Jonathan Triest, Peter Boyce, and Hunter Walk are creators and hustlers. By starting their own VC firms, they are establishing themselves as entrepreneurs. Many of these firms are built on the premise that being an investor entitles you to nothing. Matt Mazzeo of Lowercase Capital often helps founders in the back of an Uber. It’s not a glamorous meeting in an oak-paneled boardroom. Blake Robbins at Ludlow Ventures told me that they answer their portfolio companies’ customer service calls, just to help out. Chris Sacca hangs out with founders and hears their stories on sidewalks.

The new wave of VC is built on youthful enthusiasm, generosity, and trust. A lot of these investors are young. When I asked Chris Paik of Thrive Capital about being a VC out of college, he told me that age is just a number. If you have conviction as an investor, it doesn’t matter how old you are. But in order to be successful, you have to punch above your weight class, as he says. These VCs want to help out their companies and more importantly, they want to build friendships with entrepreneurs they can trust. This is something a good founder will take over a stodgy board member any day. These guys are currently investing in the Ubers and Airbnbs of tomorrow. Sacca is already doing it. His funds have yielded the highest returns for LPs due to successes like Twitter, Instagram, Uber, and Kickstarter.

So, this past year, I have had the opportunity to interact with founders and investors from all over. I love working with entrepreneurs, and I am very passionate about helping them break down problems. I believe that unless a problem is keeping you up at night, you shouldn’t pursue the solution or idea and try to turn it into a company. I am sleeping well, so I shouldn’t start a new venture (not yet, at least!), but I do want to be involved in this world of disruption and optimism.

I want to be a venture capitalist.

Now, hopefully this piece makes you think there’s more to it than the desire to make money. I have a real aspiration to hustle and create. I want to build relationships and friendships that aren’t siloed off as work-life balance. I want to live my life with people I trust and value, socially and professionally. I want to seek insights into humanity and work on big picture stuff. I want to be part of the next wave of VC, which still embodies the ethos of this wave, but has more women, more people of color, more emphasis on problems in developing nations and in realms like space exploration and life sciences. I want the next wave to keep generating consumer products and continuing to build enterprise systems.

It’s risky, it’s crazy, and chances are, being a VC won’t lead to success. But a year out of high school and after having professional experiences, I realize you must love what you do. However trite that saying may be, there’s no point of committing to something in life if you are motivated by factors other than passion. At the end of the day, it doesn’t really matter what individual achievements I, Aashay, accomplish or how much money I make. I am one out of seven billion. What does matter is how many lives I am able to impact, how many people I help, and how I can enact positive change for the future of this planet.

I want you to challenge me on this piece. Critical feedback will contribute greatly to my learning. I want to hear your thoughts, opinions, and concerns. I might be dead wrong (I’m only 18 with little experience!), but then again, I might be exactly right.