I asked some investor friends to share, as the title suggests, one thing they wished people better understood about venture capital. There were no ground rules other than to specify that ‘people’ could be founders, politicians, LPs, etc and that it would be default attributed but anonymous if they desired. Reporting out in batches of five. Here’s Part V:

VC is a profession! That sounds obvious but the perception continues to be pervasive that the job can be done as a side hustle without full-time focus and years of learning the trade. It takes time (as in decades, not years) to learn the art of opportunity identification and hone one’s individual style for engaging founders. Also, because the feedback loop is very long, the advice we give founders – to move fast and iterate – is hard to put into practice as a venture investor. This leads to the second non-obvious thing about the profession: one has to have long-term faith in our ideas and approach to the market way in advance of real success. The interim measures that get celebrated (winning deals, having one’s deals marked up quickly) are more often than not uncorrelated with ultimate success and the best measures of early progress are more emotion than science. Patience, optimism, and a little bit of blind faith are required to be good at the craft. [Ethan Kurzweil/early stage investor, new firm TBA]

[hunter: When Ethan first joined his previous firm Bessemer Partners, he told me it would just be a few year stint before a startup. Obviously it was longer 🙂 and I’m excited for him to take a different type of entrepreneurial journey building his own firm with some industry friends. As to the “it takes a long time” advice. Yes, although I believe there are ways to ‘learn faster’ – which includes great mentorship, experiencing business cycles, and actually working to service investments not just make them. ]

One thing I wish people better understood is that venture not only requires conviction in founders, businesses, and markets, but it also requires conviction in a point of view in firm-building.

There are many ways to make (and lose) money in this asset class, to construct a portfolio, to source and win investments, and to help (or not) founders build companies. There are now enough data points to show that any of these models can work and not work. And trying to copy someone else’s playbook won’t work because this venture market is now saturated enough and competitive enough – you have to have a point of view on your edge, and how that edge will deliver outsized returns, repeatedly. 

That leads to my second thing I wish people understood – that this business is hard. 😉 

As a side note, another thing I wish people (especially women and other underrepresented talent) understood is that while venture is a money-management and investment business, it doesn’t require a deep finance background to do it (at early stages). I talk to a lot of great women (particularly deeply seasoned operators) who disqualify themselves from pursuing venture because they think they don’t have the finance background for it. That part can be learned! [Lily Lyman/Underscore VC]

[Hunter: 100% regarding run your own playbook. It’s an essentially aspect of the firms we back via Screendoor – are you understanding the fundamentals and physics of this business while somehow developing a strategy that is different enough to matter. The world doesn’t need more of the same VCs.]

To the outside, all VC firms pitch founders on essentially the same product—there’s a range of check and fund sizes, wrapped in some kind of marketing. But when you look under the hood, the variation in how investors approach this job is staggering. There’s no go-to playbook for building a successful venture firm—you can be brilliant or mediocre with any number of strategies. As someone who is newer to investing and firm-building, it’s been fascinating to learn from peers who have total conviction in their portfolio construction, sourcing edge, decision-making process, value-add, etc…and at the end of the day, that conviction is probably more important than the approach itself. True feedback loops are incredibly long in venture; for emerging managers, you’ll raise subsequent funds well before you have the luxury of knowing where that first fund will land. Finding the approach that works for the partners—and can sustain you through all the ups and downs—is what matters. 

And for founders: having curiosity about how potential investors approach their job can be a real edge. How do they make decisions, what have they learned from their most successful bets, what math are they doing for any one investment? Not only will they likely enjoy talking about this, but it will give you a useful glimpse into their worldview and incentives. [Ashley Mayer/Coalition Operators]

[Hunter: I sometimes ask founders to think of their cap table early on as a recipe where investors are ingredients. The best dishes have mix of components in proportions which make sense. Where we can, we try to help a founder understand what they might want to add and examples of individuals or firms that spike in that area. For example, Ashley’s background in marketing and comms (across B2B and B2C) differentiates her from many other emerging managers.]

Your portfolio is your brand. Even if you don’t have as large a following on socials as Hunter (!), if you have a clear investment framework and partner with founders consistent with that thesis you can quickly build a reputation. Having a strong POV also helps with finding…

LP/GP fit. Despite talk of industry consolidation in venture (which wouldn’t be a good thing for founders or the ecosystem), there seems to be an increasing appetite for smaller funds from institutional LPs, in recognition of the fact that they outperform. You just have to find LP/GP fit, or the folks who are in the market for your particular POV. Unfortunately, LP investment theses are rarely shared the same way VC ones are; you can ferret them out by talking to other GPs, for which there is luckily an amazing…

GP founder community! Just like founders constantly swap notes and pay it forward, there are many supportive communities of founding GPs who graciously open their rolodexes to one another and share guidance on new firm development. New managers should actively seek them out. [Leshika Samarasinghe/Twine Ventures]

[Hunter: Portfolio is your brand!!! My slight variation is “Your portfolio page is your thesis” but we’re getting at the same thing. Your job is to invest. And all the punditry, market maps, and so on doesn’t matter if you’re not in great companies which match your articulated focus areas.]

Part I: Andre Charoo, Bill Clerico, Ryan Hoover, Amy Saper, and Dan Teran.

Part II: Victor Echevarria, Chris Neumann, Micah Rosenbloom, Alexa von Tobel and Roseanne Wincek.

Part III: Maya Bakhai, Paris Heymann, Nakul Mandan, Eric Tarczynski, and ANONYMOUS

Part IV: Diana Kimball Berlin, Jake Gibson, Jesse Middleton, Adam Nelson and Nikhil Basu Trivedi.