PS#037: My Playbook for Building Your VC Network (Part 1)

To kick off the back half of the year, I’m excited to launch another series.

In this one, I’m going to share my playbook for building your VC network.

As I’ve mentioned before, in order to be a successful (or even effective) investor, you need to have an established, trusted, and sustainable network.

This network is a critical part of the role because it helps uncover proprietary insights (i.e., things not found on the internet). These insights will often be a foundational piece of your investment theses and the conviction behind your investments.

I’ve used this process to build trusted networks across a wide variety of industries, including enterprise SaaS, AI, legal, compliance, financial services, climate tech, civil infrastructure assets, and much more. Each time I started out as a complete novice in these spaces, but was able to quickly deepen my understanding through this playbook.

Over the next few issues, I’ll walk through…

• Why building a network matters

• Where to start building your relationships

• My playbook for creating & maintaining your network

I believe that if you do this well, you’ve given yourself an incredible advantage in the competitive world of venture capital investing.

Why does building a network matter?

I think we can all agree that building a network matters.

We’ve been told this throughout our careers (whether in venture or otherwise) and we’ve all felt the benefits of having a strong network. However, I’m not here to speak about why “generally” having a network matters. I’m here to be more specific.

In VC, having a strong and trusted network plays an important role in three key areas…

• Deal flow

• Diligence support

• Market intelligence

Let’s walk through each of these in a bit more detail.

Deal flow

When it comes to venture capital (and the investment world in general), proprietary sourcing channels are a key differentiator. This is a core part of what LPs (“Limited Partners”) look at when they invest in venture funds.

A strong, trusted network can create proprietary deal flow.

As investor with a trusted network, you may gain access to deals before they are broadly announced to the market (i.e., pre-empting a round), exclusive opportunities for you (i.e., structuring a non-competitive round), previously closed rounds (i.e., opening a round), etc.

Since access to deal flow is everything in this industry, it can be a superpower.

Diligence Support

Once you’ve gained access to a deal, you still need to decide if it’s worth one of your select investment opportunities. This is where a strong, trusted network can again pay dividends.

If you’ve built your network properly, you’ll have access to investors, operators, subject matter experts, etc. that will help you understand the opportunity at a deeper level. These won’t just be individuals you call out of the blue, but individuals where you can have a real, honest conversation about the value of a product/solution or how an industry really works.

This information is invaluable as you move through the investment process.

Market Intelligence

This is similar to diligence support, but plays beyond just the diligence process.

When you’re plugged into an industry or sector, you can provide significantly more value to the members of that community (e.g., founders, investors, operators, etc.).

This might show itself during a first call where you have a really informed conversation with a founder, winning them over. It might be during the investment process when you’re able to bring potential customer introductions, earning your right to invest. Or, it might be post-investment when you’re able to provide important guidance for how to grow the business in its next chapter.

If you have a strong, trusted network, you’ll understand these pieces at a deeper level and be able to provide more value to those building in the space.

Who should I include in my network?

Alright, now that we know why we need a strong, trusted network, the question becomes – who should be included in it?

This is a great question.

First, we're going to break it down at a high level and then we’ll dive into more of the specifics as I outline my playbook (this will come over the next few issues).

At a high level, your network should include…

In the next few issues, we’re going to talk about (1) each of these categories in much more detail, (2) how we provide value, and (3) a process for creating & maintaining your network.