Deal Velocity

For your next career move, more investments means more chances for success.

In my last post I espoused the following framework as the preferred path of a venture career: break into the industry -> upgrade your platform -> find your forever home.  That second step of “an upgrade” is often necessary before landing in the culminating place to build your career over the long-term.  Unlike the first job when landing any gig in VC was likely the desired outcome, hopefully with your next career move there’s more time available to optimize the right (possibly interim) landing place.

Of course there are many factors which go into selecting the right role and firm, notably the firm’s brand’s prestige in addition to conventional wisdom factors like strategy and people/culture fit.  My partner Rob previously detailed this recommendation to “get in the room where it happens,” meaning that optimal career development happens when there’s as much great data to learn from as possible.  All the way from comparing potential new investments, evaluating them, and managing them in the portfolio - firm brand is a proxy for potential greatness, and the ability for you to acquire as much strong data as possible to learn the best.

That being said, there is one additional factor to consider in a venture capital career move which we haven’t mentioned in our Venture Upward writing to date: deal velocity.  Simply put, the number of investments that you’re involved with both helps build your acumen as an investor and increases your chances of being associated with success.  To some degree, it’s getting your reps in.

Joining a firm where the typical investor is only involved in one investment per year is very different from one where every year a professional is involved with a multitude of deals.  Not only does a higher deal velocity provide more experience to learn from in a shorter amount of time, but more volume also increases the likelihood of an upside outlier.  The benefits of increasing your chance of being associated with a hot company or even lucrative exit earlier during the lifecycle of your career shouldn’t be underestimated.

Following this advice doesn’t blindly mean that the ideal career stop is at a spray-and-pray seed shop which is making dozens & dozens of chip-in investments annually (though that’s certainly an interesting experience-set).  Rather, it means that given whatever strategy/stage in VC you personally gravitate towards, recognize how active a firm’s strategy is on the velocity spectrum.  More deals translate into more experience more quickly.

Applying this velocity lens also helps provide an additional criteria in evaluating if/when it’s time to jump ship from your current position.  I spoke with a non-partner VC a few months ago who loved many aspects of their firm and situation, but was (rightfully) quite frustrated with the experience gathering because they were only seeing one deal per year completed given the firm’s deliberate, concentrated portfolio construction approach.  That may be a sound investment strategy as a general partner, but the benefits don’t trickle down to the junior staff.

Along those lines of looking at your current situation, this velocity framework may also provide a nudge to move or augment which partner and how many you’re supporting within your existing situation.  Within firms, it’s often the case that some partners are more prolific than others.  Yes, shifting partner alignment carries political risks and the risk of additional work, but incrementally broadening your horizons given your current constraints may expand your own deal velocity in a positive way.

Regardless of how you approach it, more shots on goal means more opportunity to get better with practice – and of course more chances to score.