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In this special episode, I have compiled the best insights and actionable learnings on what it takes to be a great VC investor from 10 amazing interviews I recorded over the last two years with early and late-stage investors.
The Partners and Leaders featured in this podcast, represent firms with a combined $160 billion AUM from funds including General Atlantic, Andreessen Horowitz, Lightspeed, Bain Capital, and more.
If you want to dig deeper and listen to any of the complete episodes, you can find the links included below.
You’ll hear from 10 investors:
David Haber, General Partner at a16z. Link to original episode.
Rana Yared, General Partner at Balderton Capital. Link to original episode.
Howard Morgan, Chair and General Partner at B Capital & Co-Founder of First Round Capital. Link to original episode.
Matt Harris, Partner at Bain Capital Ventures. Link to original episode.
Mercedes Bent, Partner at Lightspeed Ventures. Link to original episode.
Latif Peracha, General Partner at M13. Link to original episode.
Dan Rosen, Founder of Commerce Ventures. Link to original episode.
Martin Escobari, Co-President of General Atlantic. Link to original episode.
Emmalyn Shaw, Managing Partner at Flourish Ventures. Link to original episode.
Tidjane Deme, General Partner at Partech. Link to original episode.
In this episode, we learn from:
1. Qualities of a Great VC Investor - David Haber, General Partner at a16z
Before a16z, David founded Bond Street, a NY fintech that aimed to transform small business lending in the US. Bond Street was eventually acquired by Goldman Sachs in 2017. When discussing his perspective as an entrepreneur raising money, he emphasizes that what founders really want is an investor who has deep conviction in what they are building and are able to make investment decisions based on their own analysis rather than what other investors think. Having conviction in one’s own ideas and being willing to take non-consensus positions is what can eventually lead to tremendous success as VC.
2. Always Master the Details of Every Investment - Rana Yared, General Partner at Balderton Capital
Balderton's Rana Yared offers investors advice on effective communication and business strategy. She emphasizes the importance of being knowledgeable about details, prosecuting business with a clear conscience, and ensuring one's message is attuned to the audience through careful consideration of tone and delivery.
3. Find Smart Ways to Support Founders - Howard Morgan, B Capital & First Round Capital
Howard co-founded First Round Capital along with Josh Kopelman almost two decades ago. They invested the first three years using their own capital. Eventually, they raised First Round Capital Fund II, which they invested in 70 companies, two of which were Uber and Roblox, resulting in a combined market cap of $150 billion once they went public. While he is modest and attributes a lot of their success to luck, Howard also recognizes that a key part of their success was helping founders help each other through networks and peer groups, where founders and company leaders could get quick answers to questions from their peers.
4. Be Bold & Build a Great Reputation - Matt Harris, Bain Capital Ventures
Matt Harris has been investing in fintech for almost 30 years with a stellar track record. He highlights the importance of being bold and willing to back founders with controversial ideas, as they can build the most interesting companies. Importantly, great investors must be self-aware of their own biases and deliver on promises to founders, especially in challenging times (not just easy times). Finally, he characterizes the investor role as synthesizing and articulating different observations from portfolio companies and the wider industry, rather than trying to predict the future.
5. VC is an Introspective & High Energy Job - Mercedes Bent, Lightspeed
Mercedes discusses the lessons learned from many years in VC and having served on multiple boards. She’s learned that venture capital involves constant sales and pitching (similar to a sales job), which requires a lot of stamina and energy. Moreover, it’s important to have a crisp idea and understanding of one’s strengths and unique value proposition, as the best founders usually have several options at the time of raising capital.
6. If It's Not a 'Hell Yes!" It's a "Hell No!" - Latif Peracha, M13
Patience and conviction are key when it comes to VC investing. Latif has also learned to trust his gut feeling and to avoid focusing too much on potential losses at the time of an investment. Instead, VCs should evaluate the potential opportunities for large gains. Finally, (and this is my favorite insight from Latif) if an investment is not eliciting a "hell yes!" from the team, then it’s a “hell no!”
7. VC Requires Analytical Skills and Sharp People Insights - Dan Rosen, Commerce Ventures
Much has been said about what makes a great VC. For Dan, the key is to balance a blend of quantitative analysis and leveraging personal networks. He emphasizes that while connections are important, particularly for early-stage startups, true differentiation comes from having a clear investment thesis and strategy that aligns with developing trends in a sector and allows an investor to support companies in their growth.
8. Focus on Long-Term Value Creation - Martin Escobari, General Atlantic
Collaboration is critical in young, rapidly evolving industries. Martin argues that collaboration amongst investors leads to critical scale and success of an ecosystem, while the opposite approach can lead to slower growth and disappointing outcomes. As the market has become more competitive, Escobari argues that great investors need deep domain knowledge, an ability to help companies grow through value creation, and a truly global approach.
9. Domain Expertise is the Winning Formula in VC - Emmalyn Shaw, Flourish Ventures
Emmalyn is a very experienced investor who’s seen it all in VC. She’s now convinced that to build a strong investment firm that can win in a competitive market, it’s critical to have deep industry expertise, coupled with a global approach. Having specialized knowledge and presence allows for powerful cross-learning opportunities. Additionally, successful investment partnerships are built on qualities like emotional intelligence, humility, collaboration, and a willingness to work as a team toward shared goals.
10. Invest Alongside Someone With Local Presence - Tidjane Deme, Partech
Tidjane argues that having a local presence and practical knowledge when investing in African (or emerging) markets is paramount. Local presence allows investors to have a deeper understanding of the market problems, industries, and value chains that startups are trying to disrupt. It also helps build connections in the business ecosystems. He thinks that having a diverse operator background in the investor team is also important so they can provide good advice and feedback to companies based on experience.
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What Makes a Great Investor? Strategy Masterclass from 10 VCs with $160B in Collective AUM