All VCs, Regardless of Title, Have the Same Job
But not everyone receives partial credit just for showing up.
A venture capital firm has four main functions: sourcing new investment opportunities, evaluating and selecting the “right” ones, winning the deal & subsequently helping the company become successful, and lastly, raising capital for the firm. At NextView we refer to the first three of these as “Source, Select, and Win.”
Putting aside the finance and administration operations of a firm, what’s notable about the primary investing function of a venture capital firm is that everyone, regardless of their seniority, title, and experience, is essentially doing the same job. At a “regular company,” the entry-level contributor is in the weeds without purview into how their work integrates into the larger business, while their senior leadership orchestrates the strategic moves apart from day-to-day operations.
A VC firm is the opposite. Anyone with an investor role has the same five responsibilities, which maps into the Source-Select-Win schema:
Be a supportive colleague. In an industry known for ruthless inter- and intra- firm competition, being supportive and helpful is often overlooked. However, we believe it is critical to achieving long-term success in VC, especially if you’re focused on not losing your seat. If your goal is endurance at your firm (which it should be until you’re ready to jump ship), then supporting your colleagues is critical to maintaining tenure. Those activities can include proactively opening up your network for backchannel reference conversations, pitching into diligence calls for fast-moving deals, or even rearranging your calendar to accommodate a critical meeting.
Add new deal flow. This is the most salient and the easiest activity to get credit for, though it’s also where junior VCs sometimes over-optimize their time allocations. While junior investors are hired to augment deal-flow, even the most senior partner is always looking out for where her next deal is going to come from. After all, the old maxim is true: “You’re only as good as your last deal.” The currency of VC is new opportunities, and that never changes.
Contribute with differentiated POV. The challenge here is to navigate adding to the discussions with insight, instead of rehashing what’s already been said. The larger the partnership and more hierarchical the firm, the more difficult this is to do. However, contributing to discussions isn’t limited to specific deals. Internal memos and decks that really push firm thinking are quite valuable, for example. I believe that excelling in this category is one of the best ways to “level-up” from a sourcer to being seen as an investor-peer. It’s critical to be respected for what you think and how you communicate with the rest of the firm.
Help the portfolio. Whereas being a supportive colleague may seem thankless, it’s extremely noticeable to at least one person and sometimes many. Meanwhile, working with portfolio companies can feel like a black hole. It’s an outstanding debate whether VCs can actually add value, and the earlier someone is in their career, the more tactical but less critical their assistance typically is. So while help is appreciated, it is neither salient nor immediately demonstrable. That is not to say you should abandon helping portfolio companies, but prioritize accordingly.
Deal with LPs. While LPs are critical to a fund’s success, LP relationships are often intentionally opaque and shielded from much of the investment team, including partners in some circumstances. We’ll have a subsequent follow-up post about LPs and interacting with them as a junior VC.
The difference between everyone’s functioning role on a VC investment team is minimal. Rather, a VC title is merely a reflection of how much partial credit someone receives just showing up. A Managing Partner, even if he’s selfish with his time, is going to get credit for even the smallest of “firm building” activities. Natural deal-flow that attributes to the firm name and reputation is going to trickle to more senior people even if they don’t “deserve” it. The senior team is able to speak (the most obvious) points first in a deal discussion. You’re in a partnership even if you’re not a partner yet, so unfortunately as a non-partner VC you’re just not going to receive any partial credit.
The key takeaway for junior VCs is that you should perform for your firm across all of the above functions, even if you were only explicitly hired to do a subset. To be successful in a VC investor role is to contribute broadly. But because you’re not receiving any partial credit just for showing up, so you have to actually contribute well beyond what’s directly asked of your day-to-day.
Yes, the non-partner folks are expected to do the grunt work, are hired for their deal sourcing but not the “rewards,” and must speak last while navigating the risk of calling someone else’s baby ugly… basically starting the VC race behind the starting line. The good news is that some newer/nimble/smaller (like NextView) firms can often be flatter with less organizational tiers, offering more equitable access to the above functions. You’re just less likely to see flat organizational structures or cultures at more established funds — I can think of more than one instance in which partners at a fund sit around a physical conference table to make decisions, while their junior staff huddle in a row behind them as metaphorical second-class citizens!
Given that roles & responsibilities are quite similar as a VC career progresses, where should a junior investment professional be aiming then regardless of firm hierarchy profile? Title, board seats, cash compensation, carry? Of course. But more importantly since venture is an endurance game, the intangible goal is leverage. Understand that you’re not going to receive partial credit for contributing across colleague support, deal flow, discussion perspective, portfolio support, and LP matters; so you should be deliberate about spending your calories where the most credit is accumulated. In a subsequent post, we’ll explore what leverage means and how to build it.