4 Success Factors in VC: Turning Luck into Consistent Performance

What does it take to become a top-tier ventures investor and make your own odds rather than subject yourself to the luck of the draw?

Looking at the best performers, there are four qualitative factors that determine an investor’s success in the ventures industry. They have nothing to do with luck. And they are often overlooked:

1. Reputation

2. Preparedness

3. Networks

4. Activity

Reputation means having excellent moral fiber, consistently acting with the highest level of integrity, diligence and professionalism, working closely with your portfolio companies, through thick and thin, over extended periods of time. Reputation is not fame, it is being recognised by peers and founders for producing excellent, purposeful results within the relevant circles.

Preparedness is the ability to gain unparalleled insight into the market, industry or product of your (prospective) portfolio companies. Gaining a genuine understanding of the entrepreneurs and their vision, the resources at his/her disposal and the product-market fit in order to help founders fend off risks and seize unique opportunities.

Having wide reaching, unique and dense networks is an essential part of identifying and building lasting relationships with all types of actors in the innovation ecosystem (corporates, co-investors, angels, incubators, universities, industry leaders, etc.). Its importance cannot be overstated. Through credentialising (vetting startups and founders through your networks) you will make better investment decisions. Through referrals you will gain access to many of your hottest deals. Through word of mouth you will build your reputation and through your ties to specialists you will offer your startups invaluable insights and opportunities for growth.

Activity is not only being an active and committed investor with a foot in the market you are addressing, but also being a productive member of the startup community. Participating, educating, learning and having a positive influence in developing the ecosystem and entrepreneurship as a whole.

These four factors are a consequence of passion, hard work and persistence. They are the fundamental reason why top tier investors statistically and consistently deliver stellar performances in venture capital. They take luck out of the equation, allowing you to make your own odds in the apparent chaos of the startup world.

Excellence is being able to perform at a high level over and over again. You can hit a half-court shot once. That’s just the luck of the draw. If you consistently do it… that’s excellence. Jay-Z

Questions? Ideas? Comments? Give us a shout @ j12ventures.com.