๐One year ago I joined @INCLUDED_VC as a Fellow on its inaugural programme.
Problem: Lack of diversity in VC, lack of diversity in terms of who VCs back.
Solution: To (literally) change the face of VC.
๐A mega-thread on what I've learnt
Problem: Lack of diversity in VC, lack of diversity in terms of who VCs back.
Solution: To (literally) change the face of VC.
๐A mega-thread on what I've learnt
๐ฉ๐ ๐บ๐๐๐ต๐ ๐๐. ๐ฟ๐ฒ๐ฎ๐น๐ถ๐๐
#1
Me in 2019: VC is cutthroat
Me in 2020: VC is way more collaborative than I thought
VCs are only as good as their (good) deals.
And good deals can come from anywhere. Your past, an unknown or someone known.
#1
Me in 2019: VC is cutthroat
Me in 2020: VC is way more collaborative than I thought
VCs are only as good as their (good) deals.
And good deals can come from anywhere. Your past, an unknown or someone known.
Powerful incentive for VCs to build/keep a good reputation.
Especially because everyone is doing due diligence on everyone else.
LPs on VCs.
LPs on LPs.
VCs on LPs.
VCs on startups.
LPs on startups.
Startups on VCs.
It's like an even more confusing version of Inception.
Especially because everyone is doing due diligence on everyone else.
LPs on VCs.
LPs on LPs.
VCs on LPs.
VCs on startups.
LPs on startups.
Startups on VCs.
It's like an even more confusing version of Inception.
Highlights interesting tension in VC:
Individuals VCs who - if they stay in the industry - play a long game, being helpful to potential founders/founders even if there isn't an immediate win.
vs.
Funds. 8-12 years where they need returns and exits. Something of a short game.
Individuals VCs who - if they stay in the industry - play a long game, being helpful to potential founders/founders even if there isn't an immediate win.
vs.
Funds. 8-12 years where they need returns and exits. Something of a short game.
#2
Me in 2019: It's going to be all about excel.
Me in 2020: Math matters, but it isn't overwhelming.
In the words of one VC, "it's a people business"
Me in 2019: It's going to be all about excel.
Me in 2020: Math matters, but it isn't overwhelming.
In the words of one VC, "it's a people business"
#3
Me in 2019: VC must be really really complex
Me in 2020: With a little effort, you can demystify VC.
And so much of the wisdom is simple (as is the best wisdom).
The complexity comes in execution.
Me in 2019: VC must be really really complex
Me in 2020: With a little effort, you can demystify VC.
And so much of the wisdom is simple (as is the best wisdom).
The complexity comes in execution.
๐ข๐ฏ๐๐ฒ๐ฟ๐๐ฎ๐๐ถ๐ผ๐ป๐ ๐ผ๐ป ๐ฉ๐ ๐น๐ถ๐ณ๐ฒ
#1
VCs have to cultivate a lot of opposite traits
E.g.
Humility - reality that the startup they back is likely to fail 8/10 times (if lucky).
vs.
Confidence - this startup is one of the 2/10 that will win!
#1
VCs have to cultivate a lot of opposite traits
E.g.
Humility - reality that the startup they back is likely to fail 8/10 times (if lucky).
vs.
Confidence - this startup is one of the 2/10 that will win!
Reminds of me @morganhousel article on the trajectory of great ideas
"lasting results often requires traits that are polar opposite to each other"
collaborativefund.com/blog/ideas/
"lasting results often requires traits that are polar opposite to each other"
collaborativefund.com/blog/ideas/
Also applies to founders.
Are they going to be able to grow as fast as the company?
Are they self-aware enough?
Vs.
At the same time, are they insane enough to build a billion dollar company?
Are they going to be able to grow as fast as the company?
Are they self-aware enough?
Vs.
At the same time, are they insane enough to build a billion dollar company?
#2
VCs live in a strange world where it can be hard for them to tell if they are doing well, especially at more junior levels
- Length of fund cycle, with returns potentially many years away
- 1-2 startups in 10 a hit (if lucky)
VCs live in a strange world where it can be hard for them to tell if they are doing well, especially at more junior levels
- Length of fund cycle, with returns potentially many years away
- 1-2 startups in 10 a hit (if lucky)
#3
VC is crowded, so a need to differentiate.
Massive emphasis on firm/personal brand.
Writing and storytelling are actually tip-top skills for a would-be VC.
But some VCs forget about humility.
twitter.com/vcbrags?lang=en
VC is crowded, so a need to differentiate.
Massive emphasis on firm/personal brand.
Writing and storytelling are actually tip-top skills for a would-be VC.
But some VCs forget about humility.
twitter.com/vcbrags?lang=en
A really standout and current example about putting ideas into the public who I like is @sariazout.
sariazout.substack.com/p/check-your-pโฆ
sariazout.substack.com/p/check-your-pโฆ
#4
VCs have to have a good game face.
Asymmetries of expectations between VCs and founders.
Inner VC monologue: probably gonna fail
Founder: this is greatest startup youโll ever have chance to invest in
VCs have to have a good game face.
Asymmetries of expectations between VCs and founders.
Inner VC monologue: probably gonna fail
Founder: this is greatest startup youโll ever have chance to invest in
#5
VC is more of a feelings business than imagined.
Remember one learning pack fronted with a beautiful quote from Maya Angelou:
โI've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel"
VC is more of a feelings business than imagined.
Remember one learning pack fronted with a beautiful quote from Maya Angelou:
โI've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel"
๐ญ๐ฌ ๐๐ฝ๐ฒ๐ฐ๐ถ๐ณ๐ถ๐ฐ ๐๐ฎ๐ธ๐ฒ๐ฎ๐๐ฎ๐๐
#1 Maddy Cross Talent @NotionCapital.
"Unicorns higher leaders faster than other business".
Or "go big on the big guns."
I'm not a unicorn, but 2020 taught me hiring = most important decisions I'll make.
notion.vc/resources/unicโฆ
#1 Maddy Cross Talent @NotionCapital.
"Unicorns higher leaders faster than other business".
Or "go big on the big guns."
I'm not a unicorn, but 2020 taught me hiring = most important decisions I'll make.
notion.vc/resources/unicโฆ
#2
@d_blomquist taught the cross-transferable lesson on the value of long games and going beyond 1-trick ponies:
@creandum have won big on the gaming sector.
Done so, by backing teams able to build games companies, not a single game.
blog.creandum.com/the-beginning-โฆ
@d_blomquist taught the cross-transferable lesson on the value of long games and going beyond 1-trick ponies:
@creandum have won big on the gaming sector.
Done so, by backing teams able to build games companies, not a single game.
blog.creandum.com/the-beginning-โฆ
#4 A good pitch deck
Why?
Proprietary insight, deep understanding of problem, clear go to market, team born to do this.
medium.com/@collinmathildโฆ
Why?
Proprietary insight, deep understanding of problem, clear go to market, team born to do this.
medium.com/@collinmathildโฆ
#5
VCs are futurists, have to imagine what the future will look like
But they are flawed like everyone, biased, subjective
So thinking about how to think is a critical skill - i.e. mental models
Check out @farnamstreet or @AskeladdenTX book list
askeladdencapital.com/80-20-mental-mโฆ
VCs are futurists, have to imagine what the future will look like
But they are flawed like everyone, biased, subjective
So thinking about how to think is a critical skill - i.e. mental models
Check out @farnamstreet or @AskeladdenTX book list
askeladdencapital.com/80-20-mental-mโฆ
#6
Good VCs are methodological - almost surgical - in terms of how they assess startups
VCs donโt see immediate results of a decision. So have invest a lot in refining the decision-making process.
Check out @HowardMarksBook memo, You Bet!
oaktreecapital.com/docs/default-sโฆ
Good VCs are methodological - almost surgical - in terms of how they assess startups
VCs donโt see immediate results of a decision. So have invest a lot in refining the decision-making process.
Check out @HowardMarksBook memo, You Bet!
oaktreecapital.com/docs/default-sโฆ
One more thing on storytelling.
Many VCs set out their predictions on where a sector or technology is going in an investment thesis.
One personal favourite is @foundersfund which cheekily takes aims at most of VC.
foundersfund.com/the-future/
Many VCs set out their predictions on where a sector or technology is going in an investment thesis.
One personal favourite is @foundersfund which cheekily takes aims at most of VC.
foundersfund.com/the-future/
The co-called three VC sins
Being in a category that is too small
Being in the right category, but picking the wrong team
Not getting enough equity
Being in a category that is too small
Being in the right category, but picking the wrong team
Not getting enough equity
#9
Whether a founder or wannabee VC, understanding fund dynamics is critical.
I.e.
- Understand where a fund is in its cycle to see if itโs got capital left.
- Remember itโs not about one investment, sometimes up to 50% fund kept back for follow-on investment.
Whether a founder or wannabee VC, understanding fund dynamics is critical.
I.e.
- Understand where a fund is in its cycle to see if itโs got capital left.
- Remember itโs not about one investment, sometimes up to 50% fund kept back for follow-on investment.
#10
If you want to get into VC, some brief thoughts as @pinverrr has this down:
- Develop your opinions
- Hone your writing
- Ask obvious questions
- Make micro-investments if you can or create a fantasy portfolio
Do all of this in public
breakinto.vc/228adc60656240โฆ
If you want to get into VC, some brief thoughts as @pinverrr has this down:
- Develop your opinions
- Hone your writing
- Ask obvious questions
- Make micro-investments if you can or create a fantasy portfolio
Do all of this in public
breakinto.vc/228adc60656240โฆ
Also workout what type of VC you want to be
Domain expert - what it says on the tin
Operator - a scaler
Networker - a connecter
Working in a startup recommended, but not all startups are created equal.
Domain expert - what it says on the tin
Operator - a scaler
Networker - a connecter
Working in a startup recommended, but not all startups are created equal.
I'll end on VC macro-narrative (i.e. see recent New Yorker piece).
Every VC I've spoken to recognises limitations of the current VC model.
This is structural. Charlie Munger famously said "show me the incentives and I'll show you the outcomes."
newyorker.com/magazine/2020/โฆ
Every VC I've spoken to recognises limitations of the current VC model.
This is structural. Charlie Munger famously said "show me the incentives and I'll show you the outcomes."
newyorker.com/magazine/2020/โฆ
Hard reality is 75-90% of VC backed startups fail.
VCs need to generate enough returns (3x+) to pay their own costs, lenders (who are paid first) and hopefully make some dough after all that.
a16z.com/2015/06/08/perโฆ
VCs need to generate enough returns (3x+) to pay their own costs, lenders (who are paid first) and hopefully make some dough after all that.
a16z.com/2015/06/08/perโฆ
Failure rate means VCs optimise for winners (ideally unicorns).
This need for winners = strong preference for companies that can dominate the market they are in.
To do this, VCs have provided startups oodles of cash to enable "blitzscaling"/hyper-growth tactics.
This need for winners = strong preference for companies that can dominate the market they are in.
To do this, VCs have provided startups oodles of cash to enable "blitzscaling"/hyper-growth tactics.
This playbook has led to direct/indirect negative impacts for society.
But VCs arenโt a monolithic entity.
Many Iโve spoken to are critical of what @fredwilson calls โfundraising as a strategyโ startups.
avc.com/2020/11/thoughโฆ
But VCs arenโt a monolithic entity.
Many Iโve spoken to are critical of what @fredwilson calls โfundraising as a strategyโ startups.
avc.com/2020/11/thoughโฆ
VCs make for easy targets.
For most part they are trend hunters, laser focused on finding startups with products that the market (and often we) will buy and adding-value.
We can't outsource all the ills of capitalism - and a culture of instant gratification - to VCs alone.
For most part they are trend hunters, laser focused on finding startups with products that the market (and often we) will buy and adding-value.
We can't outsource all the ills of capitalism - and a culture of instant gratification - to VCs alone.
Every single one of the VCs who support @INCLUDED_VC are committed to supporting the next-gen of VCs who want to reimagine how the industry works.
Many said โVC needs to be disrupted.โ
So if there was an unofficial mantra for the programme it is โbe the change."
Bring it on.
Many said โVC needs to be disrupted.โ
So if there was an unofficial mantra for the programme it is โbe the change."
Bring it on.
What's next for me after Included VC?
1. Vlogging on impact-focused ventures fuelled with @cahouser's wisdom.
2. Supporting startups into public procurement with @Catch22.
3. Make my own investments.
1. Vlogging on impact-focused ventures fuelled with @cahouser's wisdom.
2. Supporting startups into public procurement with @Catch22.
3. Make my own investments.
Why?
I'm exploring impact entrepreneurship/#tech4good .
Lots of scepticism whether impact is a standalone thematic focus, with many VCs I spoke to saying "impact should be in everything."
The debate continues, but I want to show why it matters.
techcrunch.com/2020/05/21/whyโฆ
I'm exploring impact entrepreneurship/#tech4good .
Lots of scepticism whether impact is a standalone thematic focus, with many VCs I spoke to saying "impact should be in everything."
The debate continues, but I want to show why it matters.
techcrunch.com/2020/05/21/whyโฆ
Finally some thanks.
Especially grateful to the magical @NikitaThakrar, @ChrisTottman1 and Stephen Millard for creating @INCLUDED_VC
Through a tumultuous year of world events, they've stayed the course when others might not have.
Especially grateful to the magical @NikitaThakrar, @ChrisTottman1 and Stephen Millard for creating @INCLUDED_VC
Through a tumultuous year of world events, they've stayed the course when others might not have.
@NotionCapital @seedcamp @M12vc @mourocapital enern @creandum @Kfundvc @daphnivc @wilsonsonsini @mangrovevc @Nik_Krawinkel grateful for your support and for your efforts to create positive change.
And to @mpavel123 @_susiemeier @ines_stre @cee @arrola @ShabirV @LundborgCecilia @Kamski @yanndecroos @michaeltefula @garystew I'm personally grateful for your generosity in sharing your time, knowledge and experience.
And a final final thank you to the @axeliaklein who was the inspiration for making this thread.
โข โข โข
Missing some Tweet in this thread? You can try to
force a refresh
ใ
