Why should VCs hire Associates?

The question: Why do venture capital funds hire associates to source if most good deals come directly through partners?

This was a question posed on Quora and it resulted in an outpouring of thoughts that were made more lucid by putting them in writing. 

The answer:

a. They teach me stuff and expand my thinking;
b. They add another smart perspective around investment discussions;
c. They allow me to leverage my skills and let me do more of what I’m best at; and
d. They might be my future partner.

I came to venture investing with a very particular set of skills, few of which one would call “conventional” in the venture sense. I didn’t grow up in VC. I am not a serial entrepreneur. I was a fairly well-known angel investor, and that certainly exposed me to many kinds of businesses and enough data to develop a view on the elements of founder success. But I have gaping holes in my knowledge and experience that my partner Brad – and our associates Jesse and Amy – help to fill. And I am thankful for all I learn from them every day. They make me better, without question. So while they are learning and growing at their tender ages, I am doing so as well, albeit at an age somewhat less tender than theirs :-). 

I also find that my younger colleagues have a level of empathy for founders that is both refreshing and helpful, particularly because many of our founders are much closer in age to them than to me. They also dive deep into the guts of our founders’ businesses and those in which we are considering investing, giving them a level of clinical knowledge and “vibe” of companies that is hugely valuable when either deliberating over whether or not to make an investment or to make a specific recommendation to one of our companies. By giving them voice and armed with data and insights from their deep investigations, Jesse and Amy have had and will continue to have a marked impact on the decision-making at IA Ventures, and our Limited Partners should be very thankful for that.

By performing much of the detailed financial modeling and forensic deep-dive into both current and potential portfolio companies, Jesse and Amy allow me to focus on the stuff I do best: coaching founders; helping with C and VP-level recruiting; assisting with strategic business development; working to shape an optimal Board; troubleshooting when required; and helping drive fund raising. While some people are great at everything, I am not. But with Brad’s deep technical skills, mentoring of tech-driven founders and helping build their organizations and Jesse and Amy’s vast of vertical-specific knowledge and quantitative know-how, we’ve got the bases covered. This is what team is really all about.  

Finally, I am not from the “two years and out” school of thought. I treat junior hires as partners from the perspective of their having a voice and an opportunity to interact directly with founders and senior management of our companies (not to mention receiving carry in the funds). I don’t do this because I’m awesome but because it is just good business. We are painstaking about recruiting precisely because we take the long view, that an analyst hire could, in fact, grow into being a full Partner and take the Firm forward after I leave (and even after Brad leaves someday). Conventional thinking is that junior staff should go out and get operating experience, go to Business school, grow a bunch and have a range of life experiences before returning to venture investing. While I understand this logic, I’ve worked with enough unicorns in my life to know that one-size-does-not-fit-all and that some people don’t need to run the usual gauntlet to add unique value to a founder or a company. And if the associate wants to leave and start their own company, they would find a friend, a supporter and very likely a backer in me. And if they are enjoying the world of venture investing and continuing learning, growing and becoming valued and sought-after by the entrepreneurial community in their own right, then all I can say is: Welcome home.