Does being a founder make you a better VC?
GOINGVC · VC CAREERS
Does being a founder
make you a better VC?
Hey John,
In a study of founders who later became venture capitalists, nearly 7% of the VCs had previously founded a venture backed company.
How they performed as investors depended heavily on whether they had achieved a successful exit as founders.
Did their networks bring them better deals?
Did their operating experience help after the check was written?
Does building a company prepare someone to pick companies?
Former founders with a successful exit recorded investment success rates 6.5 percentage points higher than professional VCs. Former founders without one were 4 points lower.
Founder experience brings operating context, founder relationships and networks.
Investing adds a separate set of disciplines: sourcing, selection, valuation, deal structure, portfolio support and LP relationships.
FIVE QUESTIONS BEFORE MAKING THE MOVE
01
Evaluation
Do you enjoy evaluating companies as much as building them?
02
Deal flow
Can you think of how to turn your founder network into consistent, differentiated deal flow?
03
Thesis
Can you develop an investment thesis that extends beyond your own operating experience?
04
Fund mechanics
Are you willing to learn portfolio construction and fund economics as deeply as you learned your startup’s economics?
05
Support
Can you help balance how to help a founder make a better decision without becoming the operator again?
The focus of our latest article,
Does Being a Founder Make You a Better VC? Looked at what the research says, which parts of founder experience transfer to investing and which have to be learned.
If you have built a company, which part of the investor job would feel most unfamiliar?
That's it for this week. Thanks for reading.
-GoingVC Team
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