PS#051: 5 Qualities of Successful VCs

Over the course of my career, I’ve had a chance to meet and connect with a lot of really successful venture capitalists.

After observing, learning and speaking with many of them, I’ve come to see the qualities that drive their success. There are a lot of the obvious things – hard work, perseverance, etc. – but there are also some smaller, tactical qualities that show up in more of an “everyday” context.

Today, I’d like to talk about those smaller, tactical qualities.

I believe this success in this industry is built 1% at a time, each and every day.

I think we would all like to achieve the level of success of some of the premier venture capitalists, but… What exactly does it take?

Let’s take a closer look…

#1) Time management.

We all get the same 24 hours.

I’ve mentioned this before, but venture capital is all about time management. How you spend your time on a daily basis will ultimately determine your output.

For investors, the opportunity cost of mismanaging your time can mean a weak deal funnel, poor diligence, and (in the worst case) missing out on potential investment opportunities.

The best investors understand that you need to put in the daily deposits. They have planned their schedules to make sure they are spending enough time on the core activities, whether it be research, sourcing, taking first calls, diligence efforts, supporting portfolio companies, etc.

I think of this as your daily and/or weekly schedules. Key question being…

Are you allocating enough time to the core activities to make you successful?

#2) Prioritization.

While similar to time management, I think about prioritization a little differently.

Within those time allocations, are you prioritizing the right next steps, activities, and/or opportunities?

In every step of the venture process, we are deciding what to prioritize, whether it’s what leads to move to first calls, what first calls to push into diligence, what pieces of diligence matter most, and, of course, where we should ultimately invest.

The best investors have learned from their prior experiences and understand how to prioritize. They know their mandate, they know where they should focus their efforts, and they prioritized being exceptional in certain areas (vs. all areas).

This of course begs the question…

Are you prioritizing the right things to be successful?

#3) Speed.

This industry moves fast (very fast at times).

Whether it’s a deal in process, a new wave of technological innovation, or the growth of your portfolio companies, the whole world of startups/venture capital moves fast.

As new investors, we need to be ready to move fast as well.

The best investors in the world can move fast because they are prepared. They’ve done their homework on their space, built a trusted network of investors and ecosystem players, and have learned how to make quick decisions with limited information.

The best investors put in the work. Then, when the opportunity presents itself, they are prepared to move quickly and decisively.

So, are you prepared?

#4) Winning mentality.

The best investors want to win.

The beauty of venture capital is that the scoreboard tends to be pretty clear. It comes down to one key metric – can you build a portfolio of investments that provides exceptional returns?

The best investors know this and are focused on building a portfolio of world-class investments. Of course, they don’t all become winners, but that’s the goal.

So, what does this mean on a daily basis?

It means putting in the extra hours sourcing and researching your spaces, becoming a subject matter expert for your areas. It means actually providing value to startups by making investor introductions, bringing customers to the table, helping with partnerships, and providing market intelligence. It means showing entrepreneurs and management teams that you’re the best partner for their business, that you’re someone worth making an owner.

A winning mentality means striving to be the best in all that you do as an investor.

#5) Reputation.

Your reputation is all that matters.

Once you lose your reputation, the game ends.

The best investors recognize that they built their reputations over days, weeks, months, and years. They also know that they could lose it all in a second over one poor decision.

Venture capital is a relationship-based industry (and a small one). You can expect every interaction you have with a founder, management team, employee, investor, etc. will be shared with others in the industry. The longer you play the game, the more people you meet, the farther that reputation will spread. In the end, your reputation could be the difference between winning a deal and losing one.

Approach each and every call, meeting, and interaction with this in mind.