I am still learning the formula of what makes a great venture capitalist. In an examination of other successful investors and my own numerous deficiencies, I’ve composed a theory that the best venture capitalists are a Jack/Jill of all trades and a master at a couple. Here’s how to bend the arc of your career toward venture capital.
Jack/Jill of all Trades
Although venture capital seems like a team sport, so much of the work is on your own, one-on-one with entrepreneurs and co-investors. Yes, investment decisions are made as a group, but there are 10x as many decisions made at the portfolio company level that require fast turn around times and made outside the figurative four walls of the venture firm.They are made during a board meeting. It’s for this reason that it is important that a VC have a wide range of competencies as broad as the challenges that portfolio companies face. When I was starting out in the business, my wife asked me once if there were any classes from business school I didn’t use. I gave it a lot of thought, and realized that the answer was “no”.
The other reality about the venture business is that it is getting more competitive. Money is available in more places with less friction. VCs are currently in the “full service” business, and to continue to justify the full service costs, VCs are going to have to bring more value to investments. This underscores the point that a broad range of skills and experience is crucial.
Master at a Couple
Strong VC firms are deliberate about mixing talents. As much as being a Jack/Jill of all trades helps on the front lines, it’s also critical to have some specialization in a firm. This can be functional expertise (e.g., technology, marketing, operations, sales, finance) or industry or business model (e.g., SaaS). This allows the firm to tackle opportunities/handle crises more adeptly and allows a firm to match the skill set (and personality) of an investment professional with that of an entrepreneur. Empathy and experience breed trust and partnership with management teams. It gives us a chance to help our companies better and ultimately achieve better outcomes. For those that develop a known expertise are rewarded with deal flow. So in addition for striving to be a Jack/Jill of all trades, keep in mind what specialization you might develop. I usually recommend to people to develop that specialty (or as many as 2 or 3 specialities) around something they are passionate about, since that’s the only way in my mind to continuously maintain the expertise.
Preparing and Positioning Yourself
There are not many shortcuts to marinading a chicken breast. It just takes time. The same is true for becoming a Jack/Jill of all trades and a master at a couple. This is why most people who enter the VC industry do so not only after work experience and an MBA, but generally later in their careers. At that point, they have been exposed to range of challenges that allowed them to develop a wide range of skills. But there are younger, less experienced people who make it into the industry. How? Besides a big dose of luck, many of those people are what I call “good athletes.” When I was a kid, I went to a charity basketball tournament at a local high school gym with some local C-list and D-list celebrities. There was one big celeb there, the Baltimore Oriole’s Cal Ripken. While there were some good hoops players on the court, Cal destroyed them all. He could dunk, out dribble and out run anyone on the court. Good atheletes are usually good at a lot of sports. I don’t mean good athletes literally — I mean that smart, hardworking and curious people tend to excel in many different situations. So often you are hiring for potential when you are hiring at the lower ranks. Venture capital is an apprentice business, which is why firms are okay hiring good athletes with the intention of molding them through apprenticeship.
Below are some characteristics/skills that I think make up great VCs. It’s not an exhaustive list. and no one VC has all of these, especially earlier in their career. Remember, it takes time to marinade. For most people, VC is a career destination, with many stepping stones before. Assess yourself on these dimensions, and don’t limit yourself to professional experience. If you are weak in various areas, and if VC is not a short term option, seek jobs/roles that will help you round out categories in which you are weak. Given the odds of a venture capital job are slim, a sensible stepping stone ought to be a plan B. The more experience you have in each of these categories, the more appetizing you will be to a venture fund.
- Deal-oriented environments/can survive constant changes in priorities
- Worked at a startup (operations/founder)
- Strong network/makes friends easily/likable/”likes people”
- Industry expertise
- Intellectual curiosity/trend spotter/eager to learn continuously
- Comfort with risk/decision making with incomplete data
- Technical/product expertise (software, medical, etc.)
Remember that none of these is a strict prerequisite for venture. It’s a mosaic.
Connecting the Dots
When I first interviewed at OCA, I realized it was a technology fund, but no one on the team had built technology before joining OCA. I connected (a) the strategy of the fund, with the (b) current investment team and © suggested how I could fit in and help the firm carry out its strategy better with my specialization. I’m thankful they took a risk on me. I say it was a risk because at the time I had very little real business experience. Yes, I worked for a consulting firm, but strictly as a software engineer.
When approaching a venture firm, one should have a highly-customized argument about how one fits in. Connecting the strategy with your specialty and in the context of the current team can be a very effectively way of selling yourself to a firm. It’s a time-consuming process to examine funds’ strategies and investment teams, but that’s the way to give yourself the best chance. This, of course, is in addition to communicating that you are a “good athlete” with a willingness to learn.