Year 1: Behind the Scenes of VC
Time flies when you’re learning. About a year ago, I came onboard with the M25 team. Since then, a lot has changed and I have learned something new every day (but failed at documenting 🙈). Here is how I spend most of my time at “work”:
Performing Due Diligence:
At M25, I am in charge of managing and performing much of the due diligence (DD). It means that I do research on companies that we are closely looking at. This includes financial, market, and product analysis and sometimes customer and founder reference calls as well.
Since we invest in early-stage companies, most of the time we have to get creative at how we evaluate them and that’s part of the job.
When I start DD process, I usually* know what the company does because I might have met the founders or sat on a call with them along with one of the directors. I like to start with understanding what the core functionality of the product is by either demoing the product or talking to someone else. Then I look at the market size by either finding existing data or coming up with a way to calculate it. Once that’s done, I get a quick check from Victor.
Next, financial analysis. This is tricky when the company has no revenue and projections are changing constantly, but I focus on the assumptions, specific Key Performance Indicator(KPIs), and the unit economics (what they could be and what they will be). After the team combines their notes from various types of call, I read through and format them.
After we complete all of our steps in DD, we decide as a team whether to recommend this investment or not.
I never knew people spent so much time reading and writing emails. Most of the communication between startups, founders, and portfolio companies (portcos) happens over email. They are usually about following up on certain metrics, asking for docs, asking questions, congratulating for milestones, sending interesting information, and making intros.
It can take anywhere from a few seconds to a few minutes to write the first draft and do a grammar check. Then I try to read it over from the receiver’s POV, make some changes, and send it.
I wrote about 200 emails in the past 30 days — might not seem like a lot but it’s hard to write well-informed emails when the tone of the email is not transferrable.
Networking is the 🔑 to success at being a VC.
It is not about how many people you know but who you can reach out to regarding a topic or issue (took me a long time to realize that). This is a work in progress but I’m getting better at it by reading and learning about specific industries.
I was struggling with it in the beginning because I felt like I didn’t know what I was doing and I didn’t have enough “experience.” All of that changed when I reached out to my team about it.
I try to meet at least one new person in the industry each month and really get to know them. Events and happy hours are a great way to get introductions to new people.
(👋🏼 DM me to talk about anything)
Managing Internal Data:
Another part of my role is to keep track of all the data that we create and gather. This comprises of decks, docs, sheets, and portco information and metrics.
This system is constantly changing because we are continuously improving on how to manage it.
But when all is said and done, my one rule is: If a task has to be done more than 3 times, AUTOMATE IT — either find a trigger or write a script.
I have learned more in the past 12 months than during any other time period in my life, and here’s hoping to top that next year ✌️
*Certain deadlines take priority and I might not fully know what a company does before starting DD.
About Abhinaya Konduru
Abhinaya is an Analyst at M25. She splits her time between new investments and portfolio companies. She majored in Finance and Mathematical Computer Science at University of Illinois at Chicago. While she was there, she led the finance student organization and co-founded the Portfolio Management Team which is now one of the largest organizations in the college. She was also a part of numerous programs to help increase digital literacy in the community by partnering with Google and Blue1647. She enjoys programming, making videos, and data visualization.
M25 is one of the most active venture capital firms focused solely on early-stage investments in the Midwest. Their objective, analytical approach has helped support their thesis and craft what is known as an ‘index fund of Midwest startups.’ M25 has already invested in over fifty companies since their inception in 2015, and continues to invest in over twenty companies each year. Their collaborative, forward-thinking style and diverse array of investments across industries and business models throughout the region has quickly established them as a key node in the Midwest startup ecosystem.