Most people don’t actually know what a VC does. Even many of my friends and relatives think I’m living out one long episode of Shark Tank, whereby I just sit on a throne waiting for founders to pitch me, and give a thumbs up or down like I’m Joaquin Phoenix in Gladiator.
This couldn’t be further from the truth, and we often wear as many hats as the founders we look to invest in. It’s part of what I love (and sometimes loathe) about the job. Hopefully this gives aspiring VCs, founders, my confused friends/family, and anyone else interested, a better look into the many roles we play as VC.
Think we make our decisions in a vacuum after just hearing a pitch? Try again. We have to dig into an industry (or a person/team) to learn everything we can about incumbents, competitors, market size, sales cycles, unit economics, workflows, and regulations. Then we have to talk to actual and potential customers, and see how they’d feel about a product that may or may not even exist yet. We’ve written checks within a few days, and have also tracked a company for 9 months before committing.
This one can be a lot of fun. The best way to learn about a product/service/app is to try it out for yourself and learn the nuances of the customer experience. We’ve tested hardware, on-demand-services, messaging apps, weird foods, and random apparel, just to name a few. We’ve accumulated some pretty sweet swag along the way. (Unfortunately I didn’t get the chance to test out Roam before investing)
Dealflow is the lifeblood of any VC, and it needs to be earned (Where Do Deals Come From?). We’re constantly networking with founders, investors, potential clients, and talent. After-work and weekend events are par for the course, resulting in overconsumption of pizza and crappy beer. We also wind up traveling quite a bit, mainly between the tech hubs (NYC, SF, LA, Miami, Chicago, Boston).
We roll up our sleeves when necessary: high-level strategy, marketing plans, financial models, business development. At Corigin, ¾ of our team are current/former founders ourselves, and leverage that experience to provide support and fill team-gaps. All first-time founders make mistakes, many of which are common and avoidable.
One of the most significant value-adds we can provide a portfolio company is leveraging our network of operators. Increasing headcount is one of the main ‘use of funds’ of a typical raise, and getting the right talent can make or break a startup. We not only help fill the ‘top of the funnel,’ but will aid in the interview/diligence process, as well as ‘sell’ the company to the candidate.
Being a founder is hard. Really fucking hard. The emotional highs and lows are unmatched, and worse, often need to be hidden behind a façade of ‘always crushing it’. Founders need to keep themselves and their teams motivated, and their investors always on their side. Many of these amazing founders are experiencing difficulty and/or failure for the first times, and have zero outlet. We try be part of the support system, often just by listening. For more on this topic read “Dismantling the myth of the self-reliant CEO.”
Then there’s the ‘couple’s therapy’ we play for our co-founders. You wouldn’t believe some of the shenanigans that go on behind closed doors.
ABC — “Always Be Closing” (I think I watched Boiler Room over 200 times in college). Founders aren’t the only one selling. As VCs, we sell ourselves all the time — to potential founders, other investors, and recruits. We sell on behalf of our portfolio companies as well — to other investors, potential hires, and most importantly, customers! Anyone who follows me on any social media channel can attest.
Our founders are the real stars of the show here. Sometimes the best move is to step aside, watch them do their thing, and give ’em one, big, slow-clap.
Fortunately, this is one we don’t have to deal with. A typical VC can spend up to a year raising for a new fund, and will have to ‘rinse & repeat’ every few years. More to come on #FundProblems
Image credit: CC by Anthony Easton