5 Years in Venture Capital: 10 Key Lessons Learned

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A lot of wrinkles and gray hair was the first I joined Slingshot Ventures. And even if I could count them, I wouldn’t – it would be too much of a struggle.

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Fortunately, counting the number of years is very easy: five to be exact. As a VC, you’re always looking forward, but I think it’s a good moment to really look back and reflect. I haven’t yet jumped on the “VC writing blogposts” bandwagon in the past five years. And I don’t plan on doing this consistently. But like everything in life, sometimes there is a time to push yourself out of your comfort zone.

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Thus, I thought of 10 key lessons I learned during my years at VC and took the liberty of presenting them to you (in random order by the way) in this blogpost, in the hope that you at least find it enjoyable to read. In addition to them for the next five minutes, they will hopefully enlighten you as you progress through your startup journey.

The founders are selling. throughout. Whether it’s selling your product or service to a potential customer, selling your business to an investor or selling your company to a stellar candidate: To me, a founder’s ability to sell makes a difference. Especially in the early stages of venture building, people are buying into a vision and need to be inspired by the way the founders are selling it.

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After all, and more and more, there aren’t many concrete results yet to prove that a founder is worth partnering with. I would prefer to invest in a founder who can inspire and sell a great product than a guy or girl who can’t.

Whether it’s the way you explain your product or service or structuring the terms of a deal: simpler is always better.

The best ideas are simple and easy to explain, you immediately see its value and quickly become comfortable that the market will adopt it.

Simple deals with less complexity (e.g. goal-based valuation, installments, safety nets, etc.) are done faster and when implemented, are more effective to achieve and manage better business results – both short and long in term.

While many VCs focus on assessing execution plans, aligning on how founders view their companies and whether you are aligned is much more fundamental.

It’s like politics: You can vote for the party that has – in your opinion – the best election manifesto, but in reality you already know that it will compromise from day one. Voting for a party that aligns with your values ​​will likely increase the likelihood that the politicians you support will deal with unforeseen situations in a way that fits yours.

Investing in early-stage companies is often the same. I’ll spend time talking with the company’s founders about their approach and how they make decisions to make them feel instead of creating a false sense of security because the project’s timeline and financial models look too sophisticated.

We all know that dreaming big can change the world. But unfortunately, we also know that many dreams never turn into reality. I have lost count of the billions of euro market opportunities and hockey sticks during the past five years, many of them presented to me by companies that have not been able to make it.

Unrealistic expectations scare off investors and the same goes for founders chasing valuations.

Yes, you might think that with the advent of VCs it is easier to say that obviously the lower entry valuation benefits. But it is also true. The world is more unpredictable than ever and raising a solid round based on a realistic plan may prove to be the best decision during the lifetime of your company. Especially in the current market, when being well funded is a major competitive advantage.

Venture capital and venture building are playing the long game.

While the typical holding period for private equity is between 3-5 years, while the tenure for venture capital is between 6-10 years. In comparison: the average length of American marriage is 8.2 years.

As founders and VCs, you may have to deal with each other longer than you would treat your life partner(s). So, the VC/Founder relationship is akin to a marriage: you give and you take and you encourage each other to get the best out of your relationship. And when you do fight or even fight, apologizing and correcting it is the only way to move the partnership forward.

Is there no refreshing sound coming from VC? Luckily, we hear this more often lately, but we at Slingshot Ventures are letting the founders know that we’re back from day one. Growth, or even overgrowth – or any other fancy word you want to give it – is what VCs chase.

But unfortunately, I’ve seen cases where (hyper)growth turned out to be the worst thing to focus on at all costs. If you’re not ready to scale yet, don’t because there’s a big chance you could escalate problems. And a problem that becomes increasingly large becomes impossible to solve. The best founding teams know when to strengthen their new foundation before setting themselves up for the next phase of growth.

There is no point here that investing in the initial stage should be done only on a gut feeling. Yes, an analytical approach helps, crunching the numbers, estimating market potential and unit economics: that’s all that matters. But the best VCs combine it with their instinct and follow it. The worst case you can end up with is making a bad decision when your gut already thought something wasn’t right.

As a VC you know you will miss out on good deals. Sometimes you just can’t build up the conviction you need to move on and then realize you’re wrong many years later. Unfortunately this also comes with territory. Moving on with a deal that didn’t feel right to you.

Alice DJ Asks Herself the Question: “Do You Think You’re Better Off Alone” was a hit several times in the late ’90s (it’s the only line in the song, by the way).

In VC, the undoubted answer is: no. You are definitely not better off alone. Surround yourself with the right people, the right investors, and assess very carefully what you can expect from everyone involved. The best founders know who they want to share their success with when it comes to important work. The best VCs know when to work closely with other VCs, bringing additional expertise and/or complementary networks to the table. And when times get tough, the adage “a problem is halved a problem shared” can be a real “lifesaver.”

I like electronic music. especially technical. There’s nothing better than oldschool, ’90s rave techno (I know, it’s a matter of taste). And when it comes to investing, oldschool economic theory (or at least, its important building blocks) never dies. Certain markets, the companies they operate in, and their business models are not suitable for venture capital. Perhaps to ride out the hype and feel a return along the way. But not for building scalable business models that are defensible and highly profitable.

For example, while there is a place for Q-commerce in the current consumer space, the hype throughout and the huge amount of capital flowing into it – in my opinion – was never justified given the limited security of the business model. We’ll definitely see more of this in the future – let’s see if the VC learns its lesson.

An intuitive way to end this short article, because sharing these lessons is basically the same as talking to me.

However, it impressed me over the years—and during my time in business in general—that the people I judge highly and see as successful are curious (and humble). They don’t talk much, keep talking about themselves, but they listen and ask questions.

The best VCs I know ask me why we invested in a certain company, without telling me – do they think it’s a bad or a good investment. The best founders are amazing at selling their business while at the same time having amazing listeners and asking the right questions, which help them determine if they want Slingshot Ventures as their partner.

To me it’s very simple: if you say anything, time becomes something you already know. If you ask and/or listen, there’s a chance you might learn something new.

Thanks to my Slingshot Ventures team members for their contributions to this article.

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