Three Things from Six Years in Venture
Confession time: I’d actually meant to finish (it’s been in drafts for like three years) writing this on my fifth anniversary at Uncork Capital (née SoftTech VC) but like so many things in the early days of the pandemic it was put to one side in favor of trying to figure out stuff like how bad things might get in the early-stage fundraising landscape (barely at all, as it turned out), how on earth to get a three-year-old to participate in “distance learning” (impossible) and how many Zoom happy hours in a week were too many (four). Weeks turned to months, we fell into a groove at home and at work, and then it seemed too far along to finish writing this (until, at least, my next work anniversary). So here we are.
Today I’m celebrating six years as a venture capitalist. The date would have almost passed me by (again!) if it weren’t for a kind Slack message yesterday from my colleague Ashley and I’m determined to finally press publish on this piece today. There are countless VCs who are more experienced than me, and a great many who are better, wittier, more engaging writers (my proofreader Logan Bartlett strongly suggested I mention him here) but each person’s path is unique and I want to share some of the key learnings from my last six years on the other side of the table.
I came to venture as a former founder and angel investor. My company, Huddle, had raised a lot of VC over the years ($80M or so) and I’d personally invested in almost 40 seed-stage companies myself, including names you might know like Postmates, Pipedrive, Intercom, Calm, Tray.io, and Bugsnag (and a bunch you probably never heard of). I quickly learned that as much as I’d seen, it was only a tiny fraction of what happens when leading and papering a venture deal, and that dealmaking is just a fraction of what one does as a venture fund manager.
I’d been asked recently what would be the top three pieces of advice for new and aspiring venture capitalists, so — six years in — here are my key learnings:
You know basically nothing
There is so much to digest when you first start investing and that feeling of bewilderment will never totally disappear: there are new technologies and business models to understand; the intricacies of portfolio, fund, and LP management; new and interesting ways later stage investors can screw you over when things go less-than-perfectly with an investment.
It all reminds me of a childhood trip to Disney Land. You’re in line for the amazing Star Wars ride and every time you think you’ve reached the front of the queue (sorry, “the line”) you turn a corner and the line extends in front of you again. And again. And again. Venture is kind of like this. Whenever you think you’ve got it all figured out, something will happen that brings you down with a bump and reminds you that — like Jon Snow — you know nothing. And that’s OK — the best investors I know are humble enough to admit this and curious enough to want to keep learning.
Your network is your superpower
A benefit of having been around the startup ecosystem for a decade before making the leap to venture was that I’d met a lot of people — founders, technical and commercial leaders, journalists, analysts, etc. I’d been lucky enough to work with a lot of them (or even luckier to have been able to invest in a few of them) and was able to call in favors. These people became an extension of my own expertise and network: they’d help me diligence deals, lend their social capital and help me win competitive deals, and often help my portfolio as potential customers, partners, advisors, employees, or advocates.
Like any living thing, your network requires constant care and you should be extremely careful not to fall into the trap of only taking. I’m a firm believer in karma and the more you put out, the more you’ll get back: take care of your network and they’ll take great care of you. And if you serve the entrepreneur you just invested in and live up to the promises you made, they will likely become a huge advocate you can call on in the future. Ditto for your co-investors: provide outsized value for them and they’ll help you over and over.
I’d been told this going in but I now totally appreciate it: it’s *all* about the people.
You don’t want to be the smartest person in the room
One of the magical things about working in venture capital is the opportunity to surround yourself with incredible people — people who are smarter than you, more driven than you, have deeper expertise in an area than you’ll ever have. VCs should be excellent generalists but we should be in awe of the founders we back. This may sound obvious but if you’re sitting with a portfolio company and find yourself thinking that you’re the smartest person in the room then you’re either delusional or you’ve made a terrible investment decision. Neither of these is a good thing.
On a similar track, I often get asked by entrepreneurs how involved I like to be in the business. The lazy answer is “it’s kind of up to you” — we’ll be as involved as the founders want us to be, up to a point. We’re a sounding board, an advisor, a coach, someone to high five with or commiserate with. But we’re definitely not there to run the business and make operational decisions. Again, if that happens we’ve made an error in making that investment!
There’s so much more to say but I’ll wrap here by thanking the Uncork team for supporting me over the last six years as I figured stuff out. And, of course, thank you to the founders and execs of the thirty (!) companies I’ve had the pleasure of investing in, who trusted me to play a small part in their journies. 🚀