To be or not to be…a junior VC. I’m going to open by saying that this is not meant to read as ingratitude for the position I’m in. The point of this writing is to touch on the industry as a whole, rather than my personal experience.
Phewf, now that the disclaimer is out of the way, we can get into the good stuff.
To be or not to be…a junior VC. HOT TAKE: I can argue why being a junior VC is the coolest job on the market while simultaneously planting my flag in the camp that a junior VC role does not always reflect the hype it elicits.
They say you should save the best for last, but I’m going to go through the best parts first. In a very strange way, junior VCs are the gatekeepers to a lot of General Partners (GPs). The first day on the job, we may not know what the phrase “2 on 20” means, but we sure do know that the GP’s time is way more valuable than our own. A GP wants to be flagged with the good stuff, and a baby VC is typically their screener. Now, whether we actually know where to look is a whole other rabbit hole, but the point is that we get to meet a lot of really interesting and intelligent people. Plus, the GPs bestow a small ounce of trust upon us that we’ll know when there is lightning in a bottle.
I think that’s pretty cool. I also think that we are less susceptible to venture pattern-matching as naive, dow-eyed VCs. Most of us haven’t been around long enough to see our investments succeed or to recognize when someone is on the cusp of success, and there is opportunity in a fresh perspective. Intrinsically, we want to prove our worth, and we don’t know what we don’t know (yet).
So we take calls, go to events, talk to people on the street. We morph our whole lives into venture – seeking that coveted deal that will ascend through the firm and eventually make its way to the only part of the CRM the GP knows how to operate. More eyeballs in front of deals, and more deals to bring up in everyday conversation; “What would you like to drink?” a friend asks, “Well, I met this founder who is building something really cool in the liquid protein space.” It's an inevitable cringe, but one that keeps deals flowing. Getting to meet and work with founders, even if you don’t ultimately invest, is one of my favorite things.
Want more “Thought Haver“?
Cringe aside, this all doesn’t sound so bad, yet most people don’t stay. The open operating role for the company fresh off their Series A whispers in an investor’s ear, or the thought of not attending another founder/funder happy hour drives people to a different industry altogether. As we’ve been anticipating, this is where we touch on the not-so-fun times in the life of a junior VC:
It’s hard to tell sometimes if we are the gatekeepers or the gatekept in the structure of a fund.
Is it possible to learn how to become a savvy investor when there are often no formal teachers, especially when starting from scratch? GPs have founders to fund and Hampton’s houses to buy, and there is simply not enough time in the day. So where does that leave a junior VC? As the lowest on the totem pole, you may always be sourcing and forming transactional relationships as opposed to career connections. Alternatively, you might live in the back office of the diligence team, grinding away, never to get a whiff of a newly marked-up term sheet.
Most fall somewhere in between those two roles. A lack of structure and constant ambiguity keep the industry thriving, but it remains brutal for someone navigating it at the beginning of their career. It takes time to refine your evaluation of a deal or a founder, and to learn from those around you. Like many founder & VC relationships, the incentives are not always aligned. Success in venture is measured by deals. Bring in a perceived good deal? Promotion. Structure a deal in the firm's favor? Big applause for you. Manage a junior VC to think critically throughout the diligence process, from sourcing to signing? Zilch. So when should you enter the venture realm, and is there an argument to be made that bypassing the junior role altogether is more beneficial? Maybe.
Many people within venture – because who else would write about this? – would suggest that the best route to becoming a reputable investor is to have successful angel investments or become an operator before arriving at the VC seat. For those of us who have entered on an earlier timeline, though, it's a tricky one to navigate. You feel like you know a lot when you really know nothing, and you’re recommending or not recommending things as though you were buying Apple stock back in the 90’s.
It’s a weird state to be in. You’re seemingly an expert at many things, which can be misleading when deciphering what you actually know, and what you need to learn next.
To be or not to be a junior VC…that is the question.
Until next week,
Thought Haver
