Three Lessons Learned after (almost) Three Years in the VC World

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This post was triggered by a discussion I had with a friend during which we talked about the lessons we learned since we are on the VC side. As usual with everything I write, I don’t pretend to hold the truth nor that it applies to every situation. Just take it as an input to make your OWN opinion / sauce.

Soccer vs. Tennis: on the differences between working in a startup and in a VC firm.

When I explain to my friends the difference (keep in mind this is my opinion only) between working in a startup and working in a VC firm, I very often use an analogy with sport. Startups are like soccer teams, you must play well together to perform well as a team, whereas Venture Capital is more like the Tennis Fed & Davis cups: you compete as a team, but each player is playing individually on the court, and whether he loses or wins his match only depends on him. On a soccer pitch, if the players don’t pass the ball to each other they can’t win.

It doesn’t mean that a good team spirit is not important in a VC firm, but 80% of your success as an investor is tied to sourcing and picking deals, deep diving into trends, constantly learning, building your personal brand, networking and helping the founders of your portfolio. All of which is mostly done “alone”. This is why some VC firms are performing well despite the fact that the Partners can’t stand each other and don’t need to spend more than a couple of hours working together every week (generally during the Monday team meeting).

Again, I’m not judging and saying it’s bad, it’s just what it is, and it’s due to the nature of the business.

Lesson learned: if you come from the startup side and are considering joining the VC industry, be aware that it’s a totally different world. That being said, having a “team player” mindset is a great way to differentiate in this industry.

On a side note, I’m extremely happy to work for Point Nine Capital because we have a very strong culture when it comes to trusting each other (and in addition my teammates are awesome). I might sound biased, but tbh if it weren’t be the case, I wouldn’t stay (and we’re hiring :-)).

Portfolio support: VC firm didn’t get “unbundled” (yet), but we the way we support founders is changing.

One of the competitive advantages of VC firms was “information asymmetry” with founders. Because we invest in plenty of companies, we can build unique knowledge and collect data that a team of non-backed founders doesn’t have access to. Accessing this “expertise” was a benefit of taking money from VCs.

But the situation has changed in the past couple of years. You can now find countless “shared experience” articles written by successful founders, industry benchmarks and data points shared by VCs and video libraries created by the best incubators. There’s such an explosion of knowledge available that many predicted a great “Unbundling of VCs” a.k.a the three core competitive advantages of VCs (money — knowledge — network) being available publicly to everyone. The “information asymmetry” between founders and funds is disappearing (the “knowledge” component).

My observations after three years supporting founders is that this explosion of content is awesome, but it also a creates several problems:

  • FOMO: too much content creates Fear Of Missing Out and founders fear to miss the latest great sales, marketing or product tactic that another company or a successful entrepreneur just shared. It’s harder to pick and apply the right playbook.
  • Noise: this trend does not only create FOMO but also a lot of noise which can distract founders and make them lose focus.
  • Success distortion: now that every single company shares its smallest successes (and how they did it), many founders have the impression that everyone else is “killing it”, and they are the only ones struggling.

Lessons larned: So yes, this explosion of knowledge is impacting one of our core competitive advantages as VCs, but we are (currently) still well positioned to to help founders with the issues I just mentioned:

  • Curation: provide founders with the good resources / advice at the right time (timely advice >>> advice flood).
  • Focus & Internalization: help founders stay focused and help them “internalize” the hundreds of advice they receive and read <= Crucial.
  • Mental / Emotional support: not everyone is killing it and building a startup is hard, so this is our role to support founders in that perspective.

Side note: if I carry on with the sport analogy, VCs are almost becoming sport / player agents :-)

“Founders / Go-to-Market Fit” is as crucial as “Product / Market Fit”

“Founders / Go-to-Market Fit” is probably one of the aspects that I underestimated the most when I entered the VC industry. The different SaaS go-to-market strategies (Enterprise, Transactional, and Self-service) are all very well documented on the internet. But what I underestimated was the importance of the fit between the founding team and the required go-to-market. When it comes to this fit I saw three scenarios:

  • Scenario 1: the founding team is already experienced with their go-to-market strategy.Then it’s mostly about execution. Ex: a founding team with experience selling to enterprises and building a SaaS for this segment.
  • Scenario 2: the founding is not experienced with the required go-to-market strategy, but they are fast learners and/or have the right “DNA”. Then it’s all about learning fast and hiring experienced people when it matters. Ex: first-time entrepreneurs.
  • Scenario 3: the founding team is not experienced with the required go-to-market and they are not fast learners or don’t have the right “DNA”. It’s going to be hard.

And it’s not as obvious as it seems. I saw experienced founders fail because they didn’t have the right “DNA” for a specific go-to-market and didn’t adapt fast enough.

Lesson learned:

Don’t underestimate the difficulty of a “go-to-market” strategy if you’re not experienced with it. It’s always harder than what you think.