What do I love most about being in venture capital? Working with entrepreneurs of course. The people we invest in (and I say people, because they are truly what you are betting on) are dreamers. They wake up every morning and dedicate all day – 25 hours if they could – to making their ideas a reality. And even though my first day in the industry didn’t include working with these entrepreneurs directly, it’s clear that it’s in the near future plans.
Just like consulting, it’s unrealistic for me to jump in day 1 (or even week 1) and think that I have enough context and domain knowledge to start adding value immediately. At IBM, it typically took 2-3 weeks upon joining a new project to get up to speed on who’s who and what we are trying to accomplish. Getting started in venture is no different. Before I can lend a helping hand to our portfolio companies, I need to know everything about them. And I don’t just mean reviewing their business plan or pitch deck. In the coming days, here’s a few things I’ll be focused on to get up to speed:
- Online research: Reading through the companies website, social channels, and publicity in the news will help you understand the branding it’s consumers see.
- Due diligence reports: This of course includes a brief overview of the company and business model, but it also highlights the market, the team, go-to market strategy, and areas of potential risk. Within these reports, you may often times also find correspondence between the VC firm and the portfolio companies. These discussions help you understand, to a certain extend, the type of relationship that has been developed between the two parties.
- Term sheets: These contracts lay out the investment details which include capital investment, equity distribution, and pay out details. Within term sheets, you can also learn about how the board of the company is structured.
- Meet the team: Where possible, it’s always beneficial to meet the entrepreneurs themselves. Even 15-30 minutes over coffee can reveal a lot about the people and culture that make up the company.
This process is of course important for those entering VC, but I’d argue that people looking to join start-ups should also mirror a similar diligence progress. Part of what VC will teaches is how to identify successful start-ups (or at least those with defendable potential). Anyone trying to break into the start-up world, likewise, will also want to make sure they join a company that will not only last, but make it big.
Day 1 is over. Onto day 2. The pursuit of relevance continues.
