Cowabunga! Venture Capital is young, green and hungry for pizza!
1 year ago, my answer to “Do VCs possess any startup DNA?” would have been a pretty heavy nope. 11 months ago, I started to work for a VC fund and to my surprise, startup and VC DNA is very similar. Research and data yields that people working for VCs are young and up for some action. Therefore, this introduction shall bring a few thoughts and statistics regarding this cultural “mutation” and will be the start of the ‘Teenage Mutant VC’ (TMVC) blog series!
Turning teenage
Weird sentence, but there are mainly two reasons why you can say that the VC industry is everything but old. First, on the startup side — people you work with are mostly around their 30s and an HBR study shows that these young guns are even founders of super successful startups. In addition, Yourstory published that founders who raised 2m+ of funds worked only 10 years prior to that milestone. Second, an empirical study of 43 European Venture Funds resulted in a 30% fraction of employees who are around their 30s. Even though, the data set includes behemoth VCs, VC analysts and investment managers make up for a big chunk and on top have pretty founder-ish CVs. So, indeed the claim TMVC is a valid one. Note: The sample of approx. 1,000 VC employees yields a median team of around 12 investment professionals, 6 partners and 6 overhead functions. Link to data summary.
Mutations at all ends
The mutational taste of VC has also quite a few facets — let’s go for my top 3. First, the underlying rationale of all VC investments: finance companies to achieve abnormal growth rates. For instance, revenue-wise, a top investment has to evolve from a little bug into a flying Godzilla within 5–7 years to make the VC maths right. Second, the organizational mutation a VC investment triggers (which is one of the major challenges a startup faces). E.g. growing from 10 to 50 FTE requires recruiting 2nd level management and CEOs giving up on operational tasks — tough one. Third, the emergence of new funds led by younger partners and ran by younger teams. Back when I was on the startup side, we either thought the investor was like a banker or a rich ex-manager looking for a fun way to make high returns. But as we can see in the database, even the older and larger organizations fit to the TMVC hypothesis.
Reason for this series
I think there is a lot of complexity, craftsmanship and glamour when it comes to VC. From a junior position, I think that Teenage Mutant VC can shed light on different aspects and be a valuable source of information for startups in fundraising as well as for young people working in the same or related positions.
A short notice on myself: Lukas, analyst at Capnamic Ventures — an early-stage venture fund from Germany. Former first employee in a startup and helped to manage marketing, sales and quite some fundraising. Studied business administration and of course the stories of the beloved Ninja Turtles! Cowabunga!
