How To Become a Successful VC in 5 Years
This post originally appeared on Quora in answer to this question: If I want to be a successful VC in 5+ years, what should I do today to prepare myself for that role?
A VC has several major responsibilities:
- Get access to great dealflow.
- Given dealflow, pick the best companies.
- After picking best companies, do everything possible to help them succeed.
If you want to become a successful VC in five years, I'd work on each of these skills. There are many ways to improve each one.
To get great dealflow:
- Build out your network. Meet tons of VCs, founders, engineers, researchers, etc.
- Master a horizontal skill, such as growth hacking, mobile dev, or SaaS pricing. If you're the "go-to person" for something founders and investors value, they'll want to talk to you, even if you're not a VC yet.
- Master a vertical, like 3D printing or CRM software. Again, if you're an expert in some field, founders and other investors will want to talk to you, whether or not you're a VC yourself.
To learn how to pick companies:
- Take an associate role at a VC fund. Sit in on meetings, listen to the questions that VCs ask and the decisions they make. Compare their decisions to the ones you would've made.
- Make small investments through sites like AngelList and FundersClub. FundersClub provides 10 to 20 pages of diligence materials for many prospective investments, which is a lot of information for making your decisions.
- If you lack the capital for small investments, create a fantasy portfolio. Keep track of companies you would and would not invest in, and why you think they would/would not make for good investments. Monitor those companies over time.
- Read books and blogs about venture capital. (Just search Amazon's book section for "venture capital.")
- Find mentors in the VC community. Most people are happy to share their knowledge and experience when asked.
To learn how to be useful:
- Build out your network. Along with improving dealflow, a network that's wide and deep is a great asset for helping founders.
- Master a business vertical or a horizontal skill. Again, these are good for improving dealflow, but also great for being helpful.
- Interview founders. Ask them what they want help with, where they wish they had more help from investors, who their favorite investors are, and so on.
- Be helpful, starting today. Whenever you can, try to help startup founders. Practice makes perfect.
Make several amazing angel investments.
Or, found something venture-backed that returns 5x to 10x to VCs.
Or, get as senior a role as possible in as hot a company as possible, and network with a lot of VCs. This is a tough way, because there are so many startup execs ... but on a percentage basis, it seems to represent a decent amount of VCs.
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