7 Lessons From My Summer in VC

Hi all,

Last summer, I spent around 2 months at Vickers Venture Partners based in Southeast Asia and I thought I’d collate my notes on what I learnt in my time there. This is part 1 which is what I took away about the venture capital world in general, and I will do a part 2 going more into detail about the industries I got more excited by. I enjoyed my time immensely and felt that my input actually helped (a small bit at least), which is always nice.

I am grateful for the mentorship I received at the firm and the time spent giving me constructive feedback on the research pieces I put forth. The team was incredibly inclusive and welcoming to interns — I was allowed to attend events on their behalf + meetings. I was even given a chance to source a company, meet them, and lead the conversation, which gave me the chance to stand on my own feet and generate questions and thoughts (a huge thank you to my mentor, Charlz, and the whole team.)

As a little background, I’ve been exposed to Venture Capital/Startup world in bits previously — having worked for Rialto (a platform for venture profiles connecting VCs and startups), an amazing nanotech startup battling glaucoma (Avisi), participated in a bunch of accelerators (shoutout to Videru) and tried my own stints in eCommerce. That being said, I wanted more of a hands-on experience from the investing side, which I definitely got with Vickers. I was introduced to the world of advanced technologies — propositions that have an underlying science to them, and can be protected by IP. I really enjoyed getting out of my comfort zone — researching topics like autonomous vehicles, battery tech, and medtech.

Culture of the country informs investing strategy

Through a small foray into venture capital, I was introduced to the sharply contrasting cultures behind investing. My research on top tier Chinese VCs demonstrated to me that their strategy was allocating entire portfolios or spin off mini venture companies to fund seed-stage rounds in order to get into unicorn companies very early on because of the nature of Chinese exponential growth. A few of the top tier Chinese VCs rule the market, and manage massive funds, many of them government-linked (see: Alibaba, QiMing, Tencent, Baidu). Looking to US VCs, the pattern is more segmented into ‘thematic investments’, for example specific venture funds allocated for healthy living and wellness (see: Prolog Ventures) or Venture funds dedicated to minority entrepreneurs (see: Bumble Fund). This mirrors the type of ventures coming out of each country. Chinese startups tend to use rapid repetition and execution to deliver validated learnings in record time (some companies use the “Shan Zai” method or ‘bandit’ method) and consumers are not too UI/UX focused but utility-focused. It is therefore not uncommon for international VCs to sharply change their overarching ‘strategy’ across regions.

Attend seemingly complex talks on things you’ve never heard of

I attended events through this internship I had absolutely zero initial understanding of — one of them being about Moore’s Law and the Future of Chip Technologies. When I debriefed with my mentor, what stuck with me was the importance in attending events because knowledge accumulates. Huge takeaway was that a lot of learning happens almost subconsciously; just the exposure to new topics can impact the empathy/understanding of a pain point you’d never personally experienced.

Note to self: attend more cool and random talks at Penn, take more cool/random classes — learn to know what you don’t know.

Embrace that the 80/20 rule is more like a 99/1 rule

The 80/20 rule is the Pareto Principle that suggests 80% of your results come from 20% of your effort (think about it, it usually applies to a lot of things in life). However, in VC I feel like this margin of success is even slimmer — VCs meet tons of startups (maybe 100+ a year), and only really invest in a handful. In the payoff case, the 1% startup that becomes a unicorn is enough to offset 99% of other investments they made that funding round.

Taking time to build relationships early pays off in the long run

The important part of relationship building is creating an initial contact with the VC and updating them so that they witness milestones being completed and progress that was predicted actually evolving to more than expected. Building from a chance meeting at a startup conference to an intro chat and then an update to actually considering investment is a pretty typical path for startups in relationship building. VCs aren’t hasty to invest, and will take the time to monitor the progress a company is sending. Always under promise and over deliver.

Building a network is one of the most important things to do — because time invested in having an intro conversation or having a friend in a good place will pay off by reducing the time needed to contact someone cold.

Categorize things into vitamins or aspirins

As a lot of my time was spent researching startups and trying to comprehend pain points I’ve never personally felt, I found some terminology floating around in order to anchor my understanding of a value proposition. I read this post by Lightspeed Ventures where they categorized startups into vitamins or aspirins — a vitamin being something that is not necessary but ‘nice to have’, and an aspirin being something necessary to function.

Support from all ends

I think with the shiny title of VC there tends to be an over-emphasis on the front facing end. Something I really appreciated was also getting to see the hard work that demonstrated the mechanics behind VC — the term sheet evaluation and negotiation, and the legal structure behind the glamor of investing (thank you Joanna and Mhamed for walking me through the term sheets). I liked how VC was a combination of both quant and qualitative skills — the ‘valuations’ of companies were more vague than initially expected. Whilst there was a need to look into CAGR or P/E multiples, most of the time the prospect of the company was already proven by initial traction and potential growth rates.

Your words don’t need to be elaborate, they have to be impactful

From watching many pitches and hearing the feedback from actual investors, I came to realize that some of the best pitches were ones that condensed very broad and elaborate topics into a simple problem and a solution structure. They made it easy to comprehend the issue and made it feel personal. I found this subtitle on a slack channel I was part of — and I can’t seem to find the writer of the comment — but I really liked the sentiment behind it. Clarity of language usually reaps a high correlation with the persuasiveness of an idea.

Those were my takeaways! Thanks again to all who provided mentorship and if anyone has questions, feel free to message me.

Nicole