What market research skills are most in-demand for VC?

Its one thing evaluating or assessing an existing market. It takes another level of skill to evaluate opportunities that are creating new markets. This often happens in deep tech areas, where technologies never thought of before translate into unlocking levels of thinking or creativity difficult to asess.

In web3 investing, nail market sizing by diving into on-chain analytics, tracking user activity, and leveraging industry reports. Don't just follow trends; understand the underlying dynamics. Tip: Stay agile—web3 evolves fast. Regularly reassess your data and assumptions to stay ahead in this dynamic space.

In the venture capital (VC) landscape, certain market research skills are particularly in-demand. Firstly, proficiency in data analysis and interpretation is crucial for assessing market trends and potential investments. Strong financial modeling skills aid in evaluating the viability of investment opportunities. Industry knowledge and the ability to conduct thorough due diligence are paramount for informed decision-making. Exceptional communication skills are essential to convey complex market insights effectively. Additionally, staying abreast of emerging technologies and disruptive trends enhances a VC professional's ability to identify and capitalize on innovative opportunities.

Usually someone shows up with a TAM (Total Addressable Market) and then says we are going to achieve a percentage of TAM. Thats not a bad approach but usually leads to projections which are overstated. I tend to look at more granularity in market sizing. 1. What is the price of your product? 2. How many will you sell? 3. How often? 4. What is the churn? 5. What is you Customer Acquisition Cost (CAC) 6. What is your profit or loss? 7. How much cash do you need to get there? You can then usually represent based upon that approach that you are a small percentage of TAM or of a regional market based upon population or number of customers.

Customer segmentation is critical for VCs as it aids in understanding diverse customer groups, ensuring startups target the right market segments effectively. This process involves analyzing various customer characteristics like demographics, buying habits, and preferences, providing a detailed view of the potential market. It's not just about identifying who the customers are, but also understanding their behaviors, needs, and motivations. This depth of insight is invaluable for VCs to evaluate a startup's potential for success and market fit, as well as its ability to adapt to changing market dynamics. In Los Angeles, specifically, your understanding of the local customer is almost as important as the broader market as a whole.

In the web3 realm, customer segmentation is pivotal for investors to grasp diverse user needs and behaviors within blockchain projects. Blend qualitative insights from community forums with quantitative data like on-chain activity. Tip: Engage with the crypto community directly, leveraging decentralized platforms for valuable user input. This grassroots approach adds depth to your understanding of diverse user segments in the evolving web3 landscape.

This can help you to understand more about your customers' wants and needs, to tailor products and marketing activity to meet these specific needs, and to identify segments of the market that will be most profitable to you. Markets tend to be segmented in four main ways: Geographically – country, region, city, or zipcode. Demographicly – age, gender, occupation, income, or ethnicity. Psychographic4ly – lifestyle, values, hobbies, or interests. Behaviorially – buying behavior, spending habits, social media interactions, or customer feedback. However, customers can segment their customers in any way they want, so that it is most useful to them.

This is one of the MOST IMPORTANT things for me. YOU MUST have COMPETITORS. Someone who pitches me and says "we have not competition" is jsut an immediate HARD NO. You either have not done your homework, or have so much EGO that you cannot see that you have competition. OK so how do you find them.. 1. Find industry analyst reports, it should give you a good start. 2. Look for conferences which surround the product or vertical that you serve, you should find plenty of people doing something similar to your company. 3. Find an investment bank that serves your vertical, look at their clients, should be a good indicator. 4. Look for trade associations that serve the vertical, their membership should be chock full of information.

Every startup needs to know its competitors better than they know themselves. If you come across this type of company, you can be confident about its performance in the market. As a VC, you also need to be well-versed. I am often aware of competing projects even before I delve into the pitch deck. In analyzing how the company is doing compared to others, it will also be helpful to know about raised funds, team development, hiring plans, and participation in various initiatives. It shows who is running the game and who is just trying not to lose the peloton. I try to keep track of such information daily. Sources include portals, newsletters, and other funds and founders. Use them, and competitive analysis will be a piece of cake for you.

How Does Competition Affect Market Opportunity? Not necessarily the way one might think... - Helps bear cost and workload of educating the market - Legitimizes and reduces perceived risk of new product category -Attracts enabling services and technologies -Attracts analysts and an ecosystem around product It’s not whether your product has competitors, it’s whether your product is competitive. You need to figure out how differentiated and defensible the company’s value proposition is to customers and whether it will stay compelling over the longer term. If there is pull from customers, and you can get comfortable that it is a top buying priority for an identifiable population, you are looking at a solid market opportunity.

In the web3 investment arena, competitive analysis is your compass for navigating blockchain projects. Dive deep into on-chain activity, scrutinize community sentiment, and assess how projects position themselves in this dynamic space. Tip: Beyond traditional analysis, actively participate in decentralized communities to gauge sentiment and uncover unique insights. In web3, understanding the community dynamics is as crucial as evaluating the technology.

I think Web3 projects could do with KISS and have decks for specific clients or projects. Start with a strong opening like a question? Make it clear what the purpose of this presentation is about e.g. to "acquire your investment" In a "Sales" or business development scenario stick to 3 topics max. Only tell them what they don't know, people are busy with short attention spans. With Key takeaways at the end and a close asking for the business. This could be used by Web3 start up to close investors for example.

If it is a very early company, I at least try to understand: What is the Financing Risk: What is the timeline to growth funded by cashflow? Does the company need to raise capital from bigger investors down the road? If so, how likely is it for the company to attract these investors? (2) What are the Expected Returns: How will the dilution created by any future rounds of financing affect the returns of the early stage investor? Capital efficient businesses tend to have a greater variety of exit options, including some with faster times to exit.

This is at the core. For lack of another way to start most youngsters who enter the VC / PE business start here. This is also boring for a partner to work on so we usually ask freshers to create models for all investment case files. Stage two of financial Modelling is industry analysis where we understand the additional value created by setting up a new co. However the people who succeed from the scores of people who make financial models are people who understand the economy , market segment , network and read.

Competition and projections will always be in demand. It’s simple business. For that reason, my post-traction clients always put a huge focus on their financial model.

The importance of financial modeling skills directly relates to the stage of financing. For companies at inception or at the seed stage ... there's really not much(or anything) to model. As an investor you want to get a feel for how much you want to own, and if you're aligned on price and terms with the founder. Your spreadsheet is probably just a handful of cells. On the other hand -- if it's a pre-IPO company raising a final round of private capital, completely different story. Then you're knee deep in Excel sheets and DCF analysis. For folks looking to pursue jobs in seed stage VC, I'd caution them on getting too wrapped up in mastering financial modeling. It's MUCH less important than building your network & your investment thesis.

For Preseed and Seed stage investors modelling is not part of the day to day. Far more important is the ability to evaluate a budget and poke holes on it. Financial modelling because more and more important as the company matures. The closer a startup is to an IPO the more relevant these skills will become.

Here's the single thing you can do that will make your presentation materials 10X more effective ... that most people just don't do. Make sure your slide titles are a sentence that communicates the main idea of the slide. So, instead of a slide title that says "Market Sizing" you would say "The AI communication market is $10 billion and growing 30% YoY". This will benefit you whether you're presenting live, or if your presentation materials are being consumed offline. VC's are super busy, so make it easier for them to consume what you create.

In web3 investing, effective presentation skills are crucial for conveying the potential of blockchain projects. Craft a narrative that skillfully integrates technical intricacies with market dynamics. Tip: Engage with the crypto community through traditional and decentralized platforms. Fluent communication in both blockchain and finance languages enhances your ability to articulate value propositions in this evolving space.

How about PRACTICE ??? Get in front of a mirror. Practice what you are going to say. Practice it AGAIN. Practice it in the SHOWER. Practice it on the way to work. Practice it while you exercise. Practice it when you get home in front of the mirror. By now you should have the pitch down cold. If not repeat these steps tomorrow. If by the third day you still do not have it, stop. Ask someone else from the company to present, you are not the human who should do the presentaion.

Find the way of making the deal not the reason to kill it. It is effortless to find a way to reject any deal. Defending it is much more challenging. And requires a cross-cutting analysis. How you sell the startup inside the team matters a lot. Start building a coalition within the team to support your efforts. Gather data to support your assumptions. Also, look for ways to manage the risks of investing in a particular company. Moreover, use co-investors who have their thoughts on a specific project. Give everyone an answer as to what this company will be for the investment portfolio in the best-case scenario. It will show everyone that you are betting on the right horse.

I disagree with this: the most important skill in VC is fundraising. If you can build relationships with top decision makers and can raise funds for yourself and help your portfolio founders do the same, you would be the most in demand person in a world where capital is not cheap anymore.

It's one thing to consider late-stage technical or financial diligence, quite another to possess a holistic perspective that can be applied in the early-stage when information is sparse and futures uncertain. To consider an investment, assess the team, market, tech, and other investors - often in that order. And to do this while understanding how each element interconnects, while simultaneously remaining humble and avoiding your own biases, is a challenge many seem to face.

Critical thinking is vital for the venture capital role. VCs will receive a mix of entrepreneur created data coupled with reputable sourced data. The VC should be able to synthesize and discern unfounded assumptions from facts. Nothing should be taken for granted, because facts can sway the decision one way or the other. Moreover, a strong reading comprehension ability will come in handy when reviewing legal documents which are a vital part of a VC's job.

Market research starts with number crunching. And ends with the ability to make a call to an industry person and asking his numbers / opinion. Or asking about the way forward at his company. Something that’s not readily available. The first u develop at college. The network you need to develop every day. That’s what will get you promoted. Research also includes ability to understand supply chain and value chain of an industry. Now that’s something you will need to really work on. It’s a process. Eventually we all get there.

Interpersonal skills. Know how to build relationships with LPs, other funds, and entrepreneurs. Understand how to connect them so they start working productively towards a mutually agreed goal. Aligned people shape the world. All else are technical skills easy and simple to replicate.