VC: Expectations vs. Reality
Authored by Timothy Krause with contributions from Benoît Georis, Karol Szubstarki, Dominik Tobschall, and Namratha Kothapalli.
How do people typically get their start in the world of venture capital? And once they’ve started down the path, how do expectations match up with reality? If you’ve asked yourself these questions, look no further. We’re here to cut through the hype and clear the mist the best way we know how — by asking people who’ve done it.
Each story has its own beginning
Starting a career in venture capital is often not a cookie-cutter type thing. Some come from traditional business backgrounds, technical backgrounds, entrepreneurial backgrounds, or a mix of all of the above.
Take Benoît Georis from Elaia VC for example. Transitioning from a Ph.D. in Artificial Intelligence to a co-founder to his current role as the Investment Director at Elaia was based on practical experience. “I really learned by doing. I got a chance to mentor and found many companies across many sectors, and this is something that enables me to be more empathetic and supportive of the founders I back as a VC”.
For others, serendipity is a major theme in what brought them into VC. “My journey in VC was quite unplanned,” shares Karol Szubstarki, Investment Director at OTB Ventures. “Eventually, a discussion over a coffee with the director of Intel Capital translated into the opportunity to support the VC team after hours. The learning curve was steep and working two full-time jobs for a time was quite demanding, but the ability to participate in deals was very rewarding and exciting ultimately.”
Social media buzz vs. daily reality
After several years in VC, people often discover that the reality does not match expectations. Watching the buzz on Twitter and Techcrunch gives a hyper unrealistic picture of what a career in VC is really like. Karol, in hindsight, now shares that “the job actually involves a lot of heavy lifting (and it’s not always super exciting), meaning document reviews, endless discussions with lawyers, deep dives into financials, and more.”
In addition, spending a lot of time on specific action points can be difficult due to the wide variety of ever-present duties on one’s plate. Dominik Tobschall, Principal at Speedinvest, says, “in stark contrast to working on your startup, in venture there is always something happening with your portfolio companies. There are always new interesting companies to look at. Really focusing on something and going deep on it is much more rare.”
VC is unique in the sense that patience and perseverance are key to success in the long term. “The feedback loop is quite long. It takes five years to know if you’re good,” says Benoît. “We need to be willing to be patient, stay invested even without instant results and gratification.”
Opportunities for change
Many investors learn that, like any other industry, VC is not perfect.
There are also several lessons VCs can learn from startups. One such lesson is that teams with varied skillsets are more likely to succeed. Benoît puts it this way, “Don’t always just hire individuals from your bubble because it’s easy.” Another golden truth that VCs should keep in mind is that a company’s customers should always be the number one priority. “We, as VCs, need to constantly keep in mind that we are in this business for startups, not the other way around,” notes Karol.
In addition, many gaps exist in the overall VC ecosystem. “Much more money should go to emerging managers that try new things,” says Dominik. “It should be much simpler to build new funds.” Potential new ideas range from providing capital to smaller niche SaaS companies that won’t have the opportunity to scale to a large exit (a model that a handful of funds in the US like Indie VC utilize), or make it easier to raise new funds for emerging managers who don’t have the capital base to survive for years without a regular salary.
Parting wisdom to aspiring VCs
For those aspiring to enter VC, keep in mind that expectations often don’t match reality and that many various backgrounds and paths into VC exist. Benoît suggests to “be curious about tech and innovation trends; get in touch with VCs; get an internship; see how you like it; test your willingness to work at this pace.”
Does this all ring true to you? Did anything surprise you? Feel free to share your own experiences in the social comments, contact me directly via LinkedIn or hit up the contributors on Twitter @Timothy__krause, @BenoitGeoris, @DominikTo and @nkothap42. You can also find out more about the Speedinvest Deep Tech investment team on our website.
