About a year ago, I asked why more VCs aren’t using coaches.
Given the uncertain career paths for VCs, the unique dynamics around partner promotion within and across firms, and lack of clear direction on how to best spend your time on a day to day basis, it felt like investors would benefit from talking to someone who could provide some guidance.
After all, it’s something they recommend founders do.
What followed was a stampede of newly minted associates, ambitious principals aiming for partnership positions, emerging GPs navigating their firms through fundraising, and even a few experienced partners looking to optimize their time in order to compete with up and comers.
I honestly wasn’t prepared to handle the interest—and it didn’t stop. Every week, new VCs inquired about coaching even though I had barely put it out there. I wasn’t intending on making coaching my main activity, but I found it incredibly rewarding.
I coached investors to promotions, first board seats, internal personnel decisions and even a long overdue resignation.
Here are a few key things I’ve learned...
If you’re in venture capital and you’re trying to make partner somewhere, should you get some operational experience somewhere and then come back? It’s a question my VC coaching clients ask all the time.
Yes! 100%.
You should be like Sarah Tavel. You should source Pinterest while at Bessemer, then “[join] as a "utility player" before we had product managers, and [become] the first PM at Pinterest.”
That will lead you to ultimately become a Partner at Benchmark, one of the top venture capital firms in the entire world.
Easy peasy.
Of course, you just have to find the next Pinterest, which IPO’d for $10 billion, but that’s just a small detail.
If the United States is going to continue to solve tough problems with technology, we have to have the ability to collaborate—to work together as a diverse population. That starts at the top, by example.
Kamala Harris represents the best American story we can write—the daughter of two PhD students from different cultures who came here to study. She went on to serve her fellow citizens for decades in the legal system and then in national elected office, keeping people safe and fighting for justice.
She even gets high marks from her husband’s first wife, who considers her a dedicated co-parent and a valued part of her family. This is the kind of person you would co-found a startup with—not a guy who destroys the careers of just about everyone who works alongside him.
The people who simply don’t get paid by Trump comparatively consider themselves lucky.
Generally speaking, I think it’s easier to answer the question, “Is this manager going to be sought after to fund the best opportunities in X space/geo/etc?” than it is to try to figure out whether an individual founder will be successful with a particular startup idea. Once you’ve answered that question, you can dive into their ability to sort through their deal flow, do deal selection and the administrative functions of running a fund. Most of the criteria I listed above is all about being someone the very best and highest potential founders want on their cap table—and that’s the most important path to having great returns.
The fundraising process sucks for about a million reasons—not the least of which is that investors often lack clarity and transparency in their communication. Still, there is somewhat of a method to their madness. Because feedback is usually given quickly and somewhat dismissively due to the sheer size of the average VCs funnel, founders walk away from the process feeling like VCs didn’t quite understand what they were doing, or they don’t understand the market.
This is some of the worst thinking anyone trying to make a persuasive argument can make—that if you only fully understood me, you would agree with me.
Founders need to shift their thinking to an assumption of understanding—that investors who see thousands of pitches per year probably do understand what a founder is doing the vast majority of the time, and have simply decided that the risk/reward for investing in their company simply isn’t as good of a deal as others they’re currently looking at.
That’s a hard pill to swallow—that perhaps you’re objectively not measuring up compared to other companies. This can be the case at the very same time you’re experiencing bias, microaggressions, and discrimination.
The due diligence question I got asked most when I started was whether or not I could continue to source good deals outside of First Round Capital, where I had worked as a Principal before starting my fund. I spent a lot of time telling investors how much I didn't need that brand because it was helpful to my fundraising pitch. I wasn’t being negative—I was trumpeting my ability to be independent.
I certainly wasn't going to say, "Oh, yeah, that's going to be hard--First Round is a great brand and has a tremendous network of resources that would make me a better investor. I'm going to need to work twice as hard to piece that together independently."
How successful would that fundraising have gone?
I have no idea, because that’s not what I did.
If I had that mindset, I would certainly have become a better investor and I can see that now.
Articulation of a focus area accomplishes a few critical things for an investor:
Inbound content marketing for deal flow—because you want your brand to get you on a founder’s list of smart people to talk to, especially if you don’t think the brand of your firm and your position within that firm will guarantee you all the best deals.
A focus and filter for networking—because otherwise, you’ll find that you could wind up in a meeting with anyone for any reason because any connection could theoretically lead to a future deal.
It signals expertise—because the best founders like talking to someone they don’t have to explain remedial things to, let alone someone who at least has an interest in what they’re doing.
The question is what to focus on.