How to hack into Venture Capital

10 years ago, I was a washed up entrepreneur, a lost-wet puppy unsure what to do next.

I am now a solo GP, having invested over $100m and currently deploying a new $100m.

This is a thread on how to hack your way into VC.?

Or at least how I did it.

Lots and lots of folks want to get in VC. It seems like a cushy job (its actually not, but I will let you figure that out on your own) and its high status makes it very popular.

This means tons and tons of competition with every job opening being swamped by amazing applicants.

The path of breaking into venture via getting a job with a VC firm is a viable strategy, but it is long, hard, and incredibly competitive.??

The path I took followed another vector and I am actually surprised how few folks are taking it.

In 2015 I had just sold my company and I was wandering around trying to figure out what to do next.??

@AngelList had just launched a new product around syndicating venture investments and after the encouragement of @gilpenchina I decided to try it out.

A company I had been advising, @branchmetrics was closing a series A from @NEA and I syndicated a small part of the round on AngelList

I drafted a memo about why I loved the company and posted it to the platform.

A day later $200k was raised and suddenly I was an investor.

On angellist LPs all over the world can choose to join deals and put up their capital.?

They want access to startup investments as becoming a LP in a traditional VC fund is available to only the richest.?

The syndicate lead gets 15% of the profits when the deal exits.

That year while I wandered around lost, I syndicated five more deals, deploying ~$1m. ?@gilpenchina helped me by pointing his LPs at my deals.

The trick to Angellist syndicates is finding deals with top VC leads.

The LPs can key off the lead and it didn't matter I was a newbie.

I had no idea what I was doing in the beginning.?

Even with a decade as a founder in silicon valley, it was shocking how steep the learning curve was.??

But I was lucky, 2015-2021 was an amazing time to be a VC.? Every idiot with a checkbook looked like a genius.?

Me included.

Every VC will tell you luck is a huge part of this job.? Huge.??

In 2016 I got lucky.??

GM bought Cruise for $1B.??

I had invested a year before.?

Suddenly I looked like a genius.??

Those years from 2015-2021 were insane.? With zero interest rates, investors were desperate for places to deploy capital and venture went on a tear.??

More and more and more capital, meant more markups and incredible paper IRR.? I was running at 50% irr a year.?

Every year.

Thankfully we were able to get a bunch of exits during those years too, with 13 of my companies getting acquired.??

It was pretty awesome.??

We all got drunk on how smart we were.

The rise of inflation and the eventual increasing of interest rates in 2022 put a pause to the party, but the strategy and tactics I used to hack into venture are still viable today.??

Here are those steps:

1. Position yourself so you never have to ask permission from anyone.

It takes ten years and tens of millions to figure out if an investor is good at this job. Thus very few new seats open.?

No one will give you the keys.?

You have to take them.

That means don't go looking for a job in venture.?

Don't go to rich people asking them to give you money for a fund.??

Don't create a 10 year path where you do a bunch of steps to become a perfect VC.??

Don't ask a bunch of VCs for meetings so that you can learn the job.

2. The secret to venture is simply finding great entrepreneurs who are starting awesome companies.?

Thats it. They are the finite resource, finding them is the hardest thing. Your job is to find them (I will leave how to another thread).?

My trick was networking like a MFer.

3. Once you find them your job is to be so fucking useful to them that they could never imagine not wanting to return the favor.?

Be crazy useful and the doors will swing wide open.??

Never ask for quid pro quo upfront.

Since I had gotten to know a lot of VCs in my decade running around Sand Hill road raising money, my most valuable skill was helping them raise capital.?

When you introduce a founder to someone who invests you win a double favor. They both owe you.

4. Now the goal is to get on the cap table to create your track record.??

A trick for me was helping them raise capital from a well known VC with name recognition.??

With that social proof any allocation in a round was suddenly very valuable regardless of who I was.

5. Once you have an allocation in a round with social proof you will find it pretty straightforward to get someone else to put up the capital and give you carry.?

People like me will co-syndicate the deal, other VCs will give you a scout deal, your rich buddies will be excited

If there is a well known firm leading, you will find the hard part won't be get getting someone to invest in your allocation

The hard part will be keeping it

Elbows get crazy sharp when a firm like Sequoia is investing

A lot of investors do very well following smart money

6. Now comes the actual hard part. Do it again. Be patient. Be useful to your founders.?

This is a crazy long road. Every year you will hopefully get more proof points. You will learn. Your portfolio will grow. Lps and the ecosystem will take you more seriously.?

Grind…

Thanks for reading this overly long thread.?

I look forward to hearing your thoughts.?

I am always on the hunt for great entrepreneurs and if you find one I would love to help you begin your journey of hacking into VC.