PS#102: Navigating the “Great Unbundling”
There’s a lot to unpack with the last Preferred Shares issue.
However, I’d like to focus our time on (1) tackling this new set of opportunities, and (2) lessons to be learned from this rising generation of investors.
For the sake of brevity, let’s get started.
Two Paths: Mega Funds and New Firms.
As I mentioned in the last issue, the shuffling of investors has created new opportunities for aspiring investors.
To be more specific, with every change in position, there’s likely going to be the need for a new team as well. For new firms, this will certainly be the case. And, even at established firms, if someone is coming in to run their own investment vertical or take on a position of leadership, they’ll likely want to build out their own team.
Therein lies the opportunity.
Tackling this new set of opportunities.
For those looking for a role, I’d take the following approach…
(1) Create a list of the new firms.
Kyle’s article did a great job of highlighting the new funds being created from this new generation of investors. Build a list, figure out their focus and see if you can provide value. They are all likely looking to hit the ground running. If you’re able to provide deal flow, introductions, etc. that will be a great start. Remember, these investors hustled their way to the top. They will want to see the same from you.
(2) Follow the news, track the job changes.
Most of the major newsletters will provide announcements on promotions, job changes, etc. Start tracking these promotions and job changes. They will help identify where new teams are being built, firms that are growing, etc. In particular, I’d focus on positions of leadership.
For each of them, take a look at what they’ve done historically and what they are looking to focus on in the future. This will give you a clear understanding of what is of value to them. From there, it’s about following the many approaches I’ve discussed to engage with investors and provide value.
(3) Pattern-matching for the future.
Finally, I actually believe that this trend will continue.
Why? A few reasons…
the venture capital industry continues to grow,
we’re hitting another transformational era of technology, and
“building in public” is becoming easier and easier.
I think these three factors will allow more and more stars to be born in this industry.
So, with that being said, I’d see if you can figure out the next set of investors who will be switching roles, starting new firms, etc. If you can build relationships with them in advance, I think really exciting opportunities will follow.
Lessons learned from these rising stars.
As you might have noticed, I’m a big fan of best practices.
When you’re watching really talented people succeed in a given space, I think it’s always worth asking, “What are they doing really, really well?”
In this case, I want to highlight some of the lessons learned from this rising generation of investors…
(1) Create a brand.
Pretty much all of these investors are known quantities in some form or another. Some have built incredible social media followings, others have deep expertise, and some have established a reputation for being great partners for founders. There’s a lot of different ways to do this, but it’s a critical piece of the puzzle.
(2) Learn the VC skill set.
If you want to be able to do this on your own (to any extent), you need to be a “full stack” investor. You need to learn how to generate deal flow, evaluate companies, perform diligence, structure deals, transact, handle a Board, manage a portfolio, provide liquidity, etc. You need to learn it all, top to bottom.
(3) Establish a track record.
At some point (hopefully when you’re ready), it needs to be YOU taking the swings. It can’t be sitting behind another partner, the deal needs to be yours. This isn’t easy, especially in the complicated dynamics of VC firms. Unfortunately, it can’t be avoided. You’re going to need to establish your own track record, where the performance of those deals is directly tied to you.
(4) Cultivate LP relationships.
Ultimately, if you ever want to launch your own fund or be a GP of some kind, you need to have access to capital. That’s the most important part of this whole game. If you have access to capital (i.e., LPs), then you can keep going, keep investing. In many ways, this is the final level of being a venture capitalist.
One last thing...
Before we go, one last comment… It’s going to be hard.
Finding a firm or an opportunity where you’re able to do these things is difficult. You’re going to have to take risks, push yourself, work hard, and fight for your opportunities.
It can be a fun ride, but it’s certainly not easy.
The good news is that you don’t have to figure it all out today.
Take it one step at a time.
