Working in VC world - Is it for me?
While glamorous from outside, let us take a sneak-peek of the industry from an insider perspective!
Hello Friends! 🙌
So finally I am penning down my first post, I will be honest this has been pending from a really long time. This is a topic realted to #VCcareer, which I feel is highly misunderstood by young aspirants. The objective is to clear some myths and look at #vccareer with a realistic lens.
So let us do some myth-busting,
Before answering the question in the title directly, let us first understand - what draws people to a venture capital role :
Its a glamorous job: While there is lot of buzz in media around who is going to be the next Unicorn and who have been the early backers of that startup, once you are inside the industry you will realise very soon the pointlessness of all this unnecessary hoopla. Startup events & conferences will feel like time-sink and go much lower on the ROI ladder
I will be so close to entrepreneurship: You know what’s most close to entrepreneurship : it is being an entrepreneur. Simple. VC is an investing role, and operations is a very small part of your job description. Your job is to become a better investor not to be an operator.
I am a finance grad and VC investments sounds like my thing : Well yes if you have majored in finance, investments is the real deal. But hang on! Venture is not stock market investing where you will be making complex financial models, we are talking about startups here, there is hardly any number crunching and almost ‘zilch’ finance skills required when it comes to seed investing
I would understand how the top entrepreneurs think: It is data-scarce industry and for one to be sitting at the sidelines and understanding deeply why Byju’s made that very acquisition, why Khatabook raised those crazy funds and not other ledger apps etc. is very difficult until you have network with senior team members in those companies.
Seeing 100 decks in a quarter will make me smarter : Avg. time spent on one pitch is less than 2 mins almost 80% of the time, because in those cases you just say a quick no. 20% of the companies on which you are delving deeper you will learn about the insights which the entrepreneur had while building the business, but mind you, you would be getting companies across segments. There is hardly any substantial domain understanding you gain from such a diverse dealflow
I will shape strategy for exponentially growing companies : A investor is a cheerleader from sidelines, it is the founder who runs the startups. By meeting or talking to founders once a month you hardly shape any strategy of the firm. Infact as the startup grows the role of an early investor just keeps on diminishing.
Now that we cleared some air, let us try to understand then how does it feel to be in this industry :
Where is the data dude!🙄 : There is always a lack of data and one has to dig in from scratch for any data points at all. Data or no data, you have to move forward and be in a decision making mode.
Am I on the right path? : VC role has a long feedback loop, there is no easy way to understand what makes a good VC, until you spend a few years discovering the patterns and creating mental models for yourself, there is hardly any feedback that you will get on what to do better
You say ‘no’ more than 95% of the time : This is an emotionally draining role as you would be saying no to entrepreneurs almost everyday. You would have to be thick skinned to not get affected by this and learn to let go. Yeah you guessed right meditation helps😇!
You have to make quick decisions : Most valuable asset for a VC is his time, which he would like to spend time the most with great founders and startups and quickly kill conversation with not so interesting ones . Some of the best investors are just ruthless with their time
Why does it feel like I learned nothing : This is a generalist role. Your peers in other sought after careers would be building domain expertise and you would be thinking , what am I expert in? Hello!
Show me the money 💰 : Contrary to folklore, there is not boat loads of money to be made here. If any, you make it only in the long grind and when you consider the risk-reward you take compared to your peers, you are bound to be disappointed
Why my boss always reject the deals I like : It is a subjective world, you may work your ass-off for a month or two on a deal and it may get rejected in seconds by Investment Committee. That’s the nature of this job, accepting it and moving on will prevent the heart-burn
Dejected already ??
Did I chose the wrong topic for my first post 🙃. Let us try to see also the sunny side of being in VC 🌞.
If you are in venture and despite all the downsides you still love to be in it, then these maybe the probable reasons :
Love being in the company of entrepreneurs : Irrational Optimism of the entrepreneurs rub off on you. You want to be part of their journey in changing the world.
Supporting underdogs who are taking on the Goliath : You want entrepreneurs to succeed because you see in them a rebel charting his or her path to change the rules of the game,and you are in this for the true spirit of capitalism🍻!!
Continuous learning mode : You like to meet people from different backgrounds and you gain understanding of the latest trends in varied sectors. And intellectual stimulation matters to you more than the money you have made
You’re a venture personality : You like to play the long-term, patience is your natural game, can’t get over your curiosity etc. More on this in some other post!
Like the decision making environment : In venture you take decision everyday, in fact your poker skills do come in handy here
If the points above resonate with you then you are going to love being in this industry. Sometimes it helps to remind oneself of the reasons why one is doing what he or she is doing.
Additional Reading/watching:
Watch what Ritesh Banglani (Stellaris) have to say in this video
A presentation by Subroto Mitra (Accel)
I have started this newsletter to share my learning in venture investing with VC aspirants, fellow investors and entrepreneurs. Idea is to connect the dots in the data-scarce VC world.
Happy to hear your suggestions on what else I can cover in my writings, I can be reached here. I intend to write more on career in VC, on deciphering the mind of a VC investor & and sharing good resources that I come across. I would try to publish atleast one article each week.
If you like what you read, then do share this in your network
Such an insightful post. I Hope you do more of them on Venture Capital and other related domains!
Very insightful! As someone who's always looked and wondered how awesome it would be working in this space, this article did bust some myths but it makes me want to get into the space sooner!