The following list contains 15 things I’ve learned / observed in 15 months of venture. Some of these items aren’t novel, but it takes experiencing them firsthand to truly learn them. Others, like anything one learns, may be unlearned over time when presented with new evidence.
- At the seed stage, my goal is to optimize for serendipity and have as wide a funnel of investment opportunities as possible. I never know where our fund’s next investment is going to come from, so I’m always “on” and receptive to intros, referrals, and in-bound. Cultivating and nurturing relationships are the lifeblood of my approach to the venture business.
2. Chasing trends and what’s buzzy or hot (a company or a sector) is often a losing proposition. At the seed stage, particularly given the lean structure of Deep Fork, being too thesis driven can lead to myopia and deductive reasoning it comes to making investment decisions. While I have hypotheses about different sectors and trends, I’ll pursue those opportunities if they enter my field of vision. Being nimble is critical to our ability to get involved with great founders and companies.
3. Meetings when a founder fundamentally makes me re-think entrenched beliefs or ponder certain paradigm shifts enable me to be a better investor and usually lead me to other companies tackling similar macro problems / trends.
4. The earlier you invest in the lifecycle of a company (e.g. seed vs. Series A), the less the brand of a fund matters. Personal reputation, relationship with and ability to build a rapport with a founder, and speed to conviction on multiple fronts are what matters. Entrepreneurs at this stage are looking for early believers, champions, and evangelists of their cause.
5. I’d much rather meet a company, pass on investing, and be wrong than never see the company at all. Before I started in venture, it was tough for me to understand how one could handle this level of regret. However, I acknowledge now that I’m going to be wrong much more than I’m right, and there’s no substitute for being in the flow.
- Nearly every round closes much faster or much slower than an entrepreneur expects. Understanding how a round plays out is an art, but ultimately, we strive to come to a conclusion about investing without any artificial pressure due to timing.
2. Deciding to invest or not usually boils down to whether we share the same philosophical belief around consumer or individual behavior / psychology as the entrepreneur — not whether or not the product or service is technologically feasible / sound.
3. If I play out the hypothetical scenario in my mind of receiving an email from a founder letting me know that she wasn’t able to make room in her round for us, and I don’t viscerally feel sick and pissed off, then I likely don’t feel strongly enough about the company to push for us to invest. Receiving a note like this from a founder should make me feel absolutely gutted.
4. It’s still too early to draw conclusions from my track record of sourcing investments for the fund, so, in the meantime and in the long run, the most important transferable “asset” is what founders (in- and outside of our portfolio) say about their interactions with me. Getting introductions to entrepreneurs by entrepreneurs in whom we chose not to invest is the surest sign I’m doing right by them.
5. Founder-product fit continues to be the underlying trait that ties the dozen investments I’ve sourced for Deep Fork together. When I look at how these companies are performing, I feel confident in the decision because of this foundational thesis.
- While an entrepreneur likely crafted the syndicate of investors knowing who could be helpful in particular areas, I always do my best to figure out how I can most effectively help a portfolio company. I should know what my comparative advantage is within the syndicate, and let an entrepreneur know how she should lean on me for support…
2. …which leads into always being “on call” for founders. I want every entrepreneur we back to know that I’m virtually always accessible for any problem / help / intro / etc. no matter how big or small. Giving founders this outlet, whether it’s utilized or not, fosters an open / two-way relationship and dialogue early on.
3. As seed investors, our primary objective, whether we led the round or not, is to help in any way we can to shepherd portfolio companies to a successful Series A raise. A core part of this responsibility is developing and fostering relationships with larger funds, keeping counterparts apprised of companies in our portfolio that are about to raise, and back-channeling when necessary. We should be able to explain our rationale for continuing to support portfolio companies and be able to pitch these companies nearly as well as the founders themselves.
4. Some of our most compelling investments so far have been ones that many other investors didn’t “get” or came via intros from other investors who would later pass on that same round. If locked in a room with no external information about who is or isn’t investing, we should still be able to arrive at the same decision. Being successful in venture is as simple as believing when many others do not — relying on social proof is a surefire way to miss out on the most likely sector-defining, world-altering companies.
5. If an investment doesn’t work and the founders choose to wind the business down, support them and do everything you can to help them land on their feet and feel as good as possible about their next move. Then, immediately assess what worked, what didn’t, and what you can learn for future decisions in a post-mortem of sorts. For me, seeing this firsthand was a powerful lesson that the best in the business, who have been doing this much longer than I, are usually wrong.