The Four S’s of VC

The only things that really matter are: Source, Select, Support, and Sustain

I like to think that there are really only a few critical functions which shape the trajectory of a career in venture capital. Recognizing these core elements will assist you in focusing on what matters, the Four S’s of VC: Source, Select, Support, and Sustain. Each plays a distinct role in not only driving the success of a VC firm but also in defining your career progression within it.

Source: The Lifeblood of Venture Capital

The journey in venture capital almost always starts with sourcing. This area is where you make your first mark by identifying and bringing new, exciting investment opportunities to your firm. Sourcing is often considered the most critical function because it fuels the pipeline for the entire VC firm machine, as well as it’s one of the most salient ways to get directly attributable credit for adding value. Becoming a successful sourcer requires an eye for innovation trends, a broad network, and the tenacity to connect with and charm promising entrepreneurs. Most often the reason that firms hire junior investment professionals is to provide leverage to the partners for this function. As a result, early in your career, your ability to source effectively is the cornerstone to influence your reputation and value within the firm.

Select: The Art of Choosing Wisely

Selection is the next critical step. In the early stages of your VC career, you might contribute to the selection process, but the final investment decisions almost always rest with more senior members of the team. As you gain experience and a deeper understanding, your influence in those selection meetings grows. And depending on how formal a process is, you can earn weight into the firm’s decision making model.

Like with sourcing, getting more reps in can build this skill over the course of a career. However, your investment acumen can be significantly improved by observing better and more senior investors to understand their own mental frameworks for decision-making so that you can use those as building blocks to build your own. My partner Rob talks about “getting in the room where it happens,” putting yourself in situations to see the best deals possible. That way, you’ll know what good looks like when it comes to comparing deals, evaluating, and managing them.

Your goal should be to earn a seat at the table where decisions are made. This comes from not just participating in discussions but also from demonstrating a nuanced understanding of what makes a venture potentially successful or a failure. At the beginning of a career, perhaps a bit cynically you’re just trying “to get a deal done,” pushing through whatever seems like is viable politically so that you get credit for sourcing or being a part of the investment team for a promising new deal. However, remember that with each investment you advocate for, you tie your reputation to its outcome, so becoming more discerning over time is crucial. Eventually, your tenure at a firm will last long enough that you have to live with the investment decisions which you were part of!

Support: Beyond the Investment

Once an investment is made, the focus shifts to support. This function involves everything from taking a board seat to providing ongoing advice & resources to help portfolio companies succeed. Initially, you might engage informally, offering insights and assistance as possible. One good piece of advice that I heard recently for non-partner investors is to initially specialize in one specific aspect of help and become known for that - networking with engineers so you can recruit them into portfolio companies, providing deep quantitative analysis on customers or other data sets, developing media contacts so you can help with coverage, etc.

However, as you grow in your role, formal responsibilities like board positions become milestones to aim for. True partnership with entrepreneurs means providing value beyond capital—it means offering strategic guidance borne from experience, which you will accumulate over many years and deals. It took me a long while to really feel comfortable in this position, but now with two decades of experience being a part of many situations good and bad, there is actually a lot to draw upon when counseling founders.

Sustain: Keeping the Firm Thriving

The final S revolves around the broader picture of firm sustainability over the long arc of time. This includes critical tasks like fundraising from Limited Partners, which ensures the firm has a steady flow of capital to invest, as well as managerial duties of the firm’s operations. As you climb the ranks within your firm, your responsibility in sustaining the firm’s legacy grows. Ultimately, your career may culminate in a leadership position where the sustainability of the firm rests on your shoulders (or you start your own where that’s certainly the case). In the meantime you can play offense in this function assuming “firm building” activities but realize that earlier in your career Sustain is not your full responsibility… yet.

Conclusion: The Integrated VC Career Path

Each of these four S roles is interconnected, and success in one area can bolster your performance in others. By the time you reach the upper echelons of your firm, you’ll find that your role encompasses all these functions simultaneously. Understanding this progression early on can help you navigate your career strategically, focusing on long-term growth and contributions. Remember, the path isn’t just about climbing; it’s about compounding your skills in a way that not only elevates your career but also fundamentally strengthens the firm you represent.