I’ve been an avid baseball player ever since I was 5 or 6 in little league, all the way through Varsity in High School. Over the course of my “career,” I played nearly every position in the game – ranging from pitcher to catcher to right field. Even at the Varsity level, I think I covered five positions: 1B, 2B, 3B, RF, LF. Although each position had its unique nuances, I learned that to add value in a myriad of situations, it was best to be a utility player with a lot of versatility. This meant that I was never the flashiest player on the team, but nevertheless fundamental to its success.
I am learning that the same thing applies to venture capital. When I was initially trying to crack open doors in the VC world, my communication always reflected my belief that I could pick great companies. I would speak about what I’d learned via my angel investments. Or even bring investment theses to meetings with me. But my proposed value to a firm never extended beyond analysis and research. And while it’s true that making investments is the underlying function of a VC, it is complemented by a much wider whole. In VC, being a utility player is the best way to win.
Over the past six months, my role has shifted from one 100% focused on analyzing potential investments to a mix of analysis, along with: connecting our portfolio companies with mentors/clients in our network, sourcing new client leads for our companies, sourcing new hires for our companies, building relationships with brands, formulating the right story for successive financings, staying current with market valuations/terms/trends, and much much more. I once heard David Hornik state that he feels silly checking the “financial services” box on career forms. I now realize that VC is one part financing, nine parts everything else.
When aspiring VCs are educated in the classroom – typically business school – the main networking advocated is with other VCs. This is a problem. Although this makes sense superficially because you’ll want to syndicate investments, have “friendlies” to bounce some companies off of to see if they’re ready for a new round, etc, this advice ignores the fact that these relationships will also develop organically by the very nature of working closely with people in your industry. Unless you enter the industry at the Partner level, you’ll have several years to build relationships amongst the VC crowd – and you’ll get to know dozens of firms, many of them intimately. I’d go as far to say that my biggest mistake (and regret) of business school is that I focused the bulk of my networking efforts on friends who were entering VC and taking jobs as investors. In reality, I should’ve focused on building deeper relationships with friends focused on Tech PM/Corp Dev/VP Sales jobs, or even just marketers heading to P&G, Kraft, Deere, etc.
Further, the reason this matters to aspiring VCs is because of differentiation. It’s easy to ask a prospective startup “what makes you different?” or “why will you win?” but too few young VCs ask themselves the same questions. With only a couple hundred active VC firms, most investors will ultimately connect at one level or another. Where you’ll differentiate is in your broader networks: how well you can assist with hiring, introducing potential partners, or even selling on behalf of the company.
Don’t get me wrong, at the end of the day, financing and sustaining a business via investment is primary. But in the world of VC, I’m learning that it’s the expected table stakes. To differentiate and grow, you need to bring something unique to the table. Great VCs are highly self-aware. Consider what you unique angle and relationships you bring to the game and it will go a long way in career growth.