I was VC Fund Manager for less than a year… Here’s what I learned.

Recently, I took a crash course in venture capital. For the better part of a year, I was a Fund Manager in Big Red Ventures (BRV) — a micro venture capital fund, run by Cornell MBA students. It was a phenomenal experience, one where I was surrounded by the best and brightest. Our team made three investments: RedRoute, Datalogue, and Repairogen. Every day, I was forced to get a little bit better — mainly due to the excellence of my colleagues. No egos and no drama: just a bunch of MBAs passionate about VC. I couldn’t have been luckier.

As MBA candidates, we had complete autonomy to manage the fund — though we often leaned on our advisers when in doubt. Through the experience, we learned a ton from each other, the entrepreneurs we invested in — and those we didn’t — , and our mentors.

Here are some of the things I learned along the way:

  1. Great pitches don’t necessarily mean great ideas

As humans, we are wired to make snap judgments. If someone’s to blame, perhaps it’s our ancestors. For the latter, quick decisions were a necessity. Hesitation could spell disaster, if not death. Decisions are informed by our perceptions — irrespective of the latter’s proximity to reality. VC is no different.

It’s easy to be wowed by entrepreneurs who have a knack for charisma and oratorical prowess — traits thought to reflect leadership, competence, and ambition. It’s also easy to turn off our critical-thinking gaze when someone “looks” the part. Nevertheless, said traits don’t always equate to great ideas, much less venture-fundable ones.

Each pitch should be evaluated on the merits — no shortcuts. Whether you find someone to be articulate or unintelligible, humorous or dull, ideas should be challenged — ideally to the same degree. This is not to suggest that humor, confidence, and oratorical ability are obsolete. Quite the opposite.

To a founder, those skills are invaluable — they can help to secure clients and motivate employees. Nevertheless, charisma is not a substitute for an awesome idea. Nor can the former rescue an idea devoid of commercial merit. In other words, having “presence” is unequivocally advantageous. It’s just not sufficient to guarantee entrepreneurial success.

In short, acknowledge your biases, do it again to be sure, and continue to challenge ideas, no matter your affinity for an entrepreneur. Remember, great pitches don’t necessarily = great ideas, and great ideas don’t necessarily = great pitches.

2. Being a true value-add VC is hard but doable

There are 798 VC firms in the U.S. — down from 1001 in 2005. Nowadays, few firms are hurting for cash. With the VC ecosystem awash in dry powder, coupled with startups receiving multiple term sheet offers, VCs must effectively distinguish themselves. If not, they risk losing quality deals.

From an entrepreneur’s perspective, the best VCs offer more than cash: they deliver non-monetary resources that boost a startup’s chance of success. Andreessen Horowitz comes to mind, as it’s known for revolutionizing this model.

As a micro fund, BRV’s dry powder can’t rival its larger counterparts’. Nor will it lead rounds. Thus, we needed a powerful narrative to frame BRV’s value proposition. Since our team was relatively new to VC, this proved challenging. However, we discovered that there were areas where we could assist. Here’s what we did:

a. Human capital is the backbone of any startup. This is especially true of early-stage ventures. What we may have lacked in terms of experience, we offset in terms of having strong connections. As MBAs, our networks are vast. Using our contacts to find talent not only benefited our portfolio companies, it helped the investors with whom we partnered. In return, we improved our deal flow apparatus, further deepening our connections across the VC ecosystem. As such, we played up our capacity to find and connect our investees with the right talent pipelines to accelerate their development and growth.

So, the takeaway is this: don’t underestimate your value nor the value of whom you know. Even if you’re brand new to VC, even if you feel overwhelmed, you can still make an impact. Your relationships might be the difference between startup failure and success.

b. Perception and brand are powerful variables in the context of entrepreneurship. Venerable brands that invest in or associate with a startup can help the latter attract talent, recognition, and follow-on capital. Our team learned to take that philosophy to heart.

We realized that our check was more than just commas and zeros — it carried with it the clout of Cornell University, giving our entrepreneurs the instant legitimacy they craved. That legitimacy was a form of currency — capable of attracting more capital, customers, and talent.

Moreover, we emphasized that our investees would be able to tap the resources afforded to a premiere institution of higher learning. Indeed, scholars, who are at the forefront of their domains, would suddenly became accessible to our investees — providing insights that would have otherwise been unavailable.

So, the takeaway is this: don’t ignore the strength of powerful brands. Be sure to take care of yours, too. A strong cohort of associations, when leveraged properly, can be invaluable to startups.

3. Diversity needs to be improved at all levels within the VC/startup ecosystem

This point is redundant… but it still needs to be said. More heterogeneity is needed within VC. More diversity not only shapes better decisions, it also improves our capacity to identify the next wave of innovations — improving our society and increasing its competitiveness.

As a Fund Manager, it became quite evident that few women and persons of color were involved in pitching or making investment decisions. Given the U.S.’ changing demographics, how can we expect to spot the very best opportunities, if not all hands are on deck to do so? I trust and remain confident that Silicon Valley will figure this out, in time. In the name of innovation, we simply cannot afford for it not to do so.

Indeed, my time with BRV has informed a great deal of how I view VC and has sparked a curiosity that will drive me to learn more and more. I can’t wait to see what my next experience (good or bad) teaches me.

Gerald is a Fellow at Impact America Fund and an MBA graduate of Cornell University, where he was a Fund Manager in Big Red Ventures. Previously, Gerald was an emerging markets consultant, working on food security and technology commercialization projects across Africa and the Caribbean. He is passionate about the intersection of technology, culture, and social impact.

You can follow him on twitter @Gmasejr

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GVCdium

GVCdium is a place to discuss the business of VC. Its goal is to facilitate a better understanding of the work behind every deal and valuation - lifting the veil on an industry that often plays its cards close to the chest. To submit a story, email admin@goingvc.com

Gerald H. Mason, Jr.

Written by

Building something new. @Techstars, @ImpactAmerica, @Cornell, @Hampton

GVCdium

GVCdium

GVCdium is a place to discuss the business of VC. Its goal is to facilitate a better understanding of the work behind every deal and valuation - lifting the veil on an industry that often plays its cards close to the chest. To submit a story, email admin@goingvc.com

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