This is a great series from Hunter Walk, who asked a few dozen investors (myself included) to share "One Thing You Wish People Better Understood About Venture Capital."
When I began my startup career in 2009, venture capitalists were far more behind the scenes than we are today. As a former comms leader, I remember having to beg reluctant investors to talk to the press for Box's funding announcements. And while we're now rather noisy as a group (understatement!!), there's still so much about the craft and business of venture that's invisible to the broader startup ecosystem.
When Hunter published today's installment, I was amused by the (unplanned) parallels between some of our submissions. Tl;dr: There's no one winning playbook for venture, feedback loops are incredibly long, finding your approach and repeatable edge is what matters.
From Ethan Kurzweil: "It takes time (as in decades, not years) to learn the art of opportunity identification and hone one’s individual style for engaging founders. Also, because the feedback loop is very long, the advice we give founders – to move fast and iterate – is hard to put into practice as a venture investor. This leads to the second non-obvious thing about the profession: one has to have long-term faith in our ideas and approach to the market way in advance of real success. The interim measures that get celebrated (winning deals, having one’s deals marked up quickly) are more often than not uncorrelated with ultimate success and the best measures of early progress are more emotion than science. Patience, optimism, and a little bit of blind faith are required to be good at the craft."
From Lily Lyman: "There are many ways to make (and lose) money in this asset class, to construct a portfolio, to source and win investments, and to help (or not) founders build companies. There are now enough data points?to show that any of these models can work and not work. And trying to copy someone else’s playbook won’t work?because this venture market is now saturated enough and competitive enough – you have to have a point?of view on your edge, and how that edge will deliver outsized returns, repeatedly."
From me: "There’s no go-to playbook for building a successful venture firm—you can be brilliant or mediocre with any number of strategies. As someone who is newer to investing and firm-building, it’s been fascinating to learn from peers who have total conviction in their portfolio construction, sourcing edge, decision-making process, value-add, etc…and at the end of the day, that conviction is probably more important than the approach itself. True feedback loops are incredibly long in venture; for emerging managers, you’ll raise subsequent funds well before you have the luxury of knowing where that first fund will land. Finding the approach that works for the partners—and can sustain you through all the ups and downs—is what matters."
