5 Unexpected Takeaways From My First Month in Venture Capital
When you think about venture capital, what first comes to mind?
When I asked my friends this question, one responded with a quip about Dragons’ Den, and another with a comment about the archetypal “finance bro.” And to be completely honest, my answer probably would’ve been pretty similar if I had been asked this question even a year ago. But now, with just one month of venture capital under my belt, what comes to mind are the passionate people, incredible ideas, and continuous learning in the industry. So, how did my answer to this question change so much?
My interest in venture capital really began last year, when I started a personal investment portfolio and began reading books on the topic. I found it fascinating and started to seriously consider a career in investing. At the same time, my background in both business and computer science also drew me to the world of startups. Some research led to the discovery that venture capital is a perfect blend of my two passions, so I applied for my first co-op at the institutional fund StandUp Ventures.
Working at StandUp has been a revelation — below are five key things I’ve learned from my first month in VC.
1. There is no course (or book, or university club … ) that can prepare you for a role in venture capital
A few months prior to starting at StandUp, I asked the team for any book recommendations. The classic Venture Deals by Brad Feld & Jason Mendelson was suggested by my colleague, Lucas Perlman, as well as the accompanying online course. In all honesty, as I went through those resources, nothing made much sense. It was like reading a med school textbook when all you’ve completed is grade 8 biology.
But over the past month, concepts have started to click! I’ve been reading through investment memos and cap tables, conducting due diligence on potential investments, looking at other funds’ investment approaches, and consolidating historical investment data for our fund — the last of which sounds incredibly boring, but is probably the best way to understand it all, I swear!
Meeting with founders and hearing their stories has also helped me see that seed stage investing is very much betting on the people, not necessarily the product or technology, while later stage investing has more of an emphasis on those other elements. I’m now beginning to understand what we do, how we do it, and why. As my team often says, having a role in VC is like doing an apprenticeship. The best way to learn is on the job.
2. People get into the industry from all backgrounds, not just the classic investment banking, etc. route
Before my interviews with StandUp, I did the customary Google search on the people interviewing me and was very surprised by what I saw. For example, our brilliant Managing Director, Michelle McBane, went from chemical engineer to VC, with many steps in between — I could write an entire book about her career.
As shown by Michelle’s journey, you don’t need a specific background to succeed in this industry. Michelle has a passion for entrepreneurship and getting capital to extremely worthy founders who are often overlooked, and her track record certainly speaks for itself. So, don’t be intimidated by the industry just because you haven’t been an investment banking associate at Goldman Sachs!
3. The skills required for the job aren’t just finance-related
Much to my surprise, no technical questions were asked during my interview. All that studying valuation and brushing up on accounting, for nothing! Well, definitely not for nothing — but although having a strong foundation in finance is important, there’s so much more to the job.
Every day is different: sometimes you’re meeting with founders pitching their company, other times you’re researching an industry you didn’t even know existed. Continuous learning is a huge part of the role, along with meeting new people, thinking about problems that otherwise never would’ve crossed your mind, and so much more. For example, a project I’ve been really enjoying is helping foster a community among our amazing founders, and brainstorming ways to help them get more women into tech.
The financial side of VC and due diligence is important, but the job isn’t done once you’ve made an investment! Supporting your portfolio companies is equally as critical. That requires an understanding of not just finance, but the actual drivers — people, processes, and systems.
4. VC is more of a long game that enables change in the world, not just just another form of asset management
Before starting my role, I didn’t quite understand the scope of a venture fund or how it actually made money (sorry Lucas, you probably didn’t know that when you hired me). But now that I understand it all a bit better, I’m starting to see how venture is about more than just investing.
Thinking back to a recent conversation with my colleague, Katie Eva, she confessed that when she was young, she thought that venture capital was just wealthy people making personal investments (think Dragon’s Den). Katie started at our firm less than a year ago after spending several years in the startup ecosystem, and had never really intended to go into VC. Instead, she ended up here because of her passion for making capital more accessible to underrepresented founders, after experiencing first-hand the barriers for women who are fundraising.
Lucas has a similar passion — he lived in Tanzania for a couple of years before starting at StandUp, where he ran a charity whose goal is to enable the growth of local businesses. Now acting as the Board Chair, he’s continuing to help provide founders in Tanzania with access to accelerator programs, affordable capital, and a community of mentors and fellow entrepreneurs.
To be frank, I don’t think the average business student really knows what venture capital is. Everyone always talks about how they want to break into VC, and most are probably attracted to it because they think it can be a pretty lucrative career. But in my opinion, people like Lucas, Katie, and Michelle are the ones who really get what venture capital is about. Money isn’t the reason to get into this industry, a passion for entrepreneurship and innovation is.
5. The gap for women getting funding & women in venture is way bigger than you probably think
Possibly the biggest surprise for me was the extreme barriers women face, both in venture and in getting funding. I knew it was bad, but not that bad.
For instance, remember the whole Robinhood drama from earlier this year? Well, in just five days, Robinhood raised more money than an entire year’s worth of capital invested into women-founded startups in the U.S. — $3.4 billion, according to PitchBook. Robinhood alone received 2.5% of the $150 billion invested by VCs in 2020, while all women-founded companies only got 2.3% of the total that year. To make matters even more astonishing, that 2.3.% last year was actually a decrease from the previous year.
That tiny percentage is not for a lack of women-founded ventures. In the U.S., 28% of startups had at least one woman founder in 2020. And despite receiving significantly less capital, women-founded ventures are better investments than their male counterparts, delivering substantially higher revenue — more than twice as much per dollar invested.
One solution to the gender investment gap? Get more women into venture. Multiple studies have shown that women VC partners are twice as likely to invest in startups with at least one woman founder, and more than three times as likely to invest in startups with women CEOs.
Another bonus of women-led funds? They have a track record of outperforming male-led funds. With less than five percent of American VC firms having a woman partner, it’s clear how necessary it is to get more women in the industry.
So, if you’re a woman considering venture capital, go for it! Women are changing business in countless industries, and venture capital should be no different.
Going back to the opening question, what comes to mind now when you think about venture capital?
If you’re interested in learning more about this career, check out this excellent list of resources on the subject. With a passion for entrepreneurship, a love of innovation, and a drive to democratize access to capital for all, venture capital might just be the right career for you.