Collected Advice for Aspiring VCs
Word cloud of the advice collected
I have recently come across an amazing thread on Twitter. Started by Samir Kaji, he broadcasted the following question to the ever present venture capital community on the platform — “What is the best piece of advice you could give an aspiring new VC that you wish you had before you started”?
The thread has garnered a lot of varied responses from some of the most prolific VCs active on Twitter. I filtered out the (purely subjectively) best pieces of advice, loosely categorized and annotated the tweets. See the result below — hope it is useful for some budding VCs out there!
All credit goes to the people as quoted below, original Twitter threads can be found here and here.
On The Investment & Decision Making Process
Never confuse a good story with a good product. Never confuse a good product with a good company. Never confuse a good company with a good investment. (Stephen Fleming)
Invest in founders you would want to work for (Jonathan Struhl, Indicator Ventures)
Have conviction in your judgement if you’ve done the work to understand the opportunity and don’t “borrow conviction” from other firms/investors (Justin Caldbeck)
Do all the great investment you can as quickly as you can. Worry less about ownership and boards at first. You can enhance those in the next batch. (Jason Lemkin, SaaStr)
Don’t rush into every exciting deal as most pitches will sound amazing. Instead get to know the team and, it sounds cliche, invest in the people. Focus on those who articulate the ways they will fail and how they will mitigate them instead of those who think its all blue skies. I would add to not convince yourself to do a deal. If the the initial impression is “no” then 99% of the time it should likely remain “no”. (Eric Dadoun)
Embrace teams that challenge your views/hypothesis. Challenge teams that confirm them. (Shahin Farshchi, Lux Capital)
On Empathy
Ask yourself whether the person pitching you is smart and has done enough homework — and if they have, push yourself to try to see the opportunity from their perspective. It’s too easy to be dismissive. (Charlie O’Donnell, Brooklyn Bridge Ventures)
Be empathetic to the entrepreneurial journey/how challenging it is. Be on time, treat them w respect, follow up,etc (Justin Caldbeck)
Make sure your significant other is on the same page. First 3 funds will be 10 years of non stop fundraising and hustle. Similar advice for founders too. (Hustle Fund VC)
On Mentors
1. Investing: find a mentor who has built brand / mktg that drives deal flow
2. Fundraising: find a mentor who has raised >$100M from inst investors
3. IR / back office: find a mentor who has gone thru multiple annual audits / made distributions / made it to carry (Dave McClure, 500 startups)
On Respect and Being Founder-First
Respect the time of a entrepreneur (Jeffrey Silverman)
Take a hippocratic oath to do no harm to founders and startups whether you fund them or not, which seems like it should not be a thing, but absolutely is.(Garry Tan, Initialized Capital)
On Reputation
You make your money on your winners BUT you make your reputation on everything else. (Jay Kapoor, Launch Capital)
Work hard for your founders. Don’t confuse building a personal brand with building your long term reputation. Building your personal brand is critical for new VCs — you need to promote yourself + your portfolio. But the day to day work of helping founders is what you are remembered for over time and much of what we all do together is not glamorous and can’t be shared on social media. (Jon Sakoda, Decibel)
It’s all about reputation: with founders, co-investors and LPs. You need to work hard for successful founders, and work harder for challenged ones. Pass as swiftly as possible. Your role is to give critical feedback, and help make tough decisions — not be a useless cheerleader. (Jeff Clavier, Uncork Capital)
On Specialization
Become really strong at one key element of the job (sourcing, company building, networking) and really deep in a promising domain (Matt Carbonara)
Establish a sector/business model/ACV/etc where you’re the absolutely best person for founders to talk to. There’s a ton of capital out there, and differentiation is key. (Leo Polovets, SusaVentures)
On Saying No & Managing Time
Be quick to say no and always provide a firm response either way. (Dan Hannum)
Learn how to say no gracefully (Bo Nam)
Avoid burning yourself out by taking too many meetings. Say no often — more often than you’d like. Be strategic with how you spend your time. (Cyan)
Be generous with first meetings, discerning with second meetings. Always try to add value. Quick no > long maybe. It’s all about people. (Lily Lyman, UnderscoreVC)
On Not Following the Herd
Don’t follow the crowd; it is probably most seductive when you get started (Farooq Abbasi)
Don’t invest based on heat, based on other’s evaluations. Invest based on whether you believe it can and should work. (Garry Tan, Initialized Capital)
Bonus All-Encompassing Advice
Work incredibly hard at understanding where the future is going. Be deep. From there source an amazing deal, build a great relationship with a founder and get an amazing investment done. Check your ego at the door. Get great checks written and build. (Fred Destin, Stride.vc)
Be founder friendly
Treat each deal like it is your only one
Communicate more with your LPs than you might think
Stories are good, but numbers and external validation is better
Have something to show before you ask LPs for a second check
(Daniel Frankenstein)