Launching Your Career in Venture Capital

Summary

In this session, venture capital expert Angela Lee discusses strategies for developing a successful investment thesis. She emphasizes the importance of focusing on one sector to build expertise, using a structured approach to evaluate investment opportunities. Key traits for successful founders include customer empathy, organized hustle, and data-driven decision-making. Lee also advises aspiring investors to develop a point of view by engaging with industry leaders, attending events, and reading extensively. The session provides actionable advice on navigating the venture capital landscape and honing skills for effective investment decisions.

Takeaways

• 😀 Start with one focus area in venture capital (VC) to build expertise before diversifying. This allows for a more refined strategy.
• 😀 Develop a personal investment scorecard using categories like People, Problem, Progress, and Price to evaluate companies and investments.
• 😀 Prioritize ‘People’ (40%) in your investment scorecard, followed by ‘Problem’ (30%) and then ‘Progress’ and ‘Price’.
• 😀 Avoid investing too early — it’s important to hear at least 50 pitches before making your first investment decision.
• 😀 Don’t overemphasize progress or revenue; early-stage investments should focus on the strength of the team and market opportunity.
• 😀 Key traits of strong founders: customer empathy, organized hustle (professional persistence), and being data-driven learners.
• 😀 As an investor, focus on understanding the market and customers deeply, as this is often more critical than financial metrics alone.
• 😀 Build a venture capital investment thesis by gaining expertise in specific sectors, such as EdTech or digital health, before broadening your focus.
• 😀 Venture capital is an apprenticeship-based career: learning by engaging with industry professionals, attending events, and developing a strong point of view is crucial.
• 😀 To begin your VC journey, identify three people to talk to, three events to attend, and three key reading resources to develop your perspective.
• 😀 In VC, learning is ongoing; use resources like Bessemer’s roadmaps and case studies to refine and test your investment thesis over time.

Q & A

What is the first step Angela recommends when starting in venture capital?

Angela suggests starting by evaluating your expertise and interests. She recommends creating a chart with categories such as expertise, interest, network, stage, sector, geography, and founder. This helps identify areas where your skills align with potential investment opportunities.

Why does Angela advise focusing on one area when entering venture capital?

Angela advises focusing on one area initially because it's a steep learning curve. You'll be learning both about the industry and the venture capital process itself, so adding a second area of focus too early could overwhelm you.

What does Angela mean by 'organized hustle' in evaluating founders?

Organized hustle refers to a founder's ability to be persistent and proactive while maintaining a thoughtful and respectful approach. Angela values founders who balance empathy with effective follow-up and relationship building, without coming across as aggressive.

What key traits should you look for in a founder according to Angela?

Angela identifies three key traits: customer empathy, organized hustle, and being a data-driven learner. A founder should understand the customer deeply, be able to hustle in an organized manner, and use data to make informed decisions and improve their business.

What does Angela mean by 'progress' in an investment thesis?

In Angela's framework, 'progress' refers to the company's growth metrics, such as revenue, customer acquisition, or other tangible results. However, she cautions against relying solely on progress, especially in early-stage investments where other factors like team and problem-solving ability are more critical.

How does Angela suggest developing your point of view for investing?

Angela recommends creating a 100-point scorecard to evaluate investments. Break down your priorities across areas like people, problem, progress, and other criteria that matter to you. Then, write a detailed description of what 'good' looks like for each element, which helps in forming a consistent investment perspective.

Why is it important to hear multiple pitches before making an investment decision?

Angela suggests listening to at least 50 pitches before making your first investment because early-stage investing involves a long funnel. You need to gather diverse perspectives and experiences to understand what makes a good investment and avoid rushing into decisions.

What is the key difference between Angela's two programs: 'Venture Capital' and 'Building a VC Investment Thesis'?

The 'Venture Capital' program focuses on the practical aspects of the investment process, including sourcing deals, due diligence, and post-investment activities. The 'Building a VC Investment Thesis' program, on the other hand, focuses on developing a strategic perspective on a specific sector or geography and writing an investment thesis.

What is the recommended order of taking Angela's programs and why?

Angela recommends taking the 'Venture Capital' program first, followed by the 'Building a VC Investment Thesis' program. The reason is that the first program teaches the deal process and how to evaluate companies, providing a foundational understanding. The second program then helps you apply that knowledge to a specific sector or focus area.

What three action items does Angela recommend for someone starting to develop their investment point of view?

Angela recommends three action items: 1) Write down three people you want to talk to, 2) Identify three events you want to attend, and 3) Choose three resources (books, articles, etc.) to read. These steps help you immerse yourself in the industry and begin forming your own investment thesis.