How to be a VC without any Capital

http://techcrunch.com/2015/09/19/how-to-be-a-vc-without-any-capital/

by replicatorblog • 11 years ago

41 29 11 years ago

arbuge2• 11 years ago

You would not, by definition, be much of a venture capitalist without any capital to command. Perhaps a better title might be "How to raise your chances of some day being a professional VC, slim as they might be."

replicatorblog5• 11 years ago

Some LBO guys would beg to differ ;-)

charlesdm6• 11 years ago

Money flows to opportunities, not the other way around. If I can put X + Y together for $z, and I can sell it for $z*3, then it will be easy to find someone to give me $z.

arbuge2• 11 years ago

Quite true but this kind of wheeling and dealing is not something that VCs typically do, in my experience at least.

w1ntermute2• 11 years ago

Social capital is just as important in the venture world as financial capital.

cpach• 11 years ago

Why not just start your own company?

replicatorblog5• 11 years ago

A few reasons:

+ Different skill sets: VC is very much a relationship/network/finance job, founding an operating company requires execution against many more functions, especially product.

+ Diversification: Often people who want to be VCs have had some success in founding companies, but modest. If you look at most entrepreneurs turned VCs, they sold their companies for relatively small amounts (with some notable exceptions e.g. Rich Barton, Reid Hoffman, Vinod Khosla). They know how hard it is to build an amazing company. Being a VC allows you to use those hard won skills while diversifying your portfolio.

+ Lifestyle: Being a founder is great, but it's a roller coaster. Being a VC is hard work, but a bit more steady state.

dovereconomics• 11 years ago

there will be plenty of angels or firms willing to cut a check or, at least, take a meeting.

What would keep them from ditching you and getting the deal without commission/bonus? 'Niceness'/'Decency' doesn't really work in this industry.

supster• 11 years ago

You wouldn't take another deal to them ever again.

charlesdm6• 11 years ago

And you'd let the company you sourced know, of course, what kind of person they're dealing with.

Do you really want to take an investment from an angel or firm who just screwed someone over for a 2% commission? The answer is nearly always no. People who screw others over generally don't last that long, and they tend to do it everywhere (i.e. it could happen to you in your next investment round)

joshu• 11 years ago

I think most better funds will not engage in this. It is a bad sign for the startup.

I often introduce companies to funds, but I just want the chance to invest alongside, which almost always happens. I am sometimes offered advisory shares for making a conndction which I have always declined.

replicatorblog5• 11 years ago

That was the author's point—this isn't something you do to make money, it's a way to show good firms that you have the skills needed to be a solid associate/analyst.

hippich• 11 years ago

how do you find these companies? (or, to put it clearly, what I need to achieve first and how to get attention second?) :)

mmastrac• 11 years ago

There is no clear mechanism for getting cut in on the deal in this model.

So, volunteer work?

logicallee• 11 years ago

as far as I can tell, the author of this blog post would like to increase his deal flow by arguing that volunteers should do his work for him, and send vetted deals his way (after doing due diligence).

I only gave it a cursory reading though! Thoughts on my take?

replicatorblog5• 11 years ago

Not the point of the post at all. The author wrote this as advice to people who want to break into VC, which is a common question he receives, per the article.

replicatorblog5• 11 years ago

Spec work in an attempt to get a job in venture capital.

rmason• 11 years ago

The article is click bait. These days if you've sold your company and have a small amount of money to invest you might as well start your own fund, but do it as an AngelList Syndicate.

https://angel.co/syndicates/start

If you're going to become an angel investor then why not let other people invest alongside you? So instead of putting just $25,000 into a deal you can put $250,000 - 500,000 into a startup. Course if you're a flop you will lose your investors but then again that is how it works in the real VC world ;<).

Roadgazer• 11 years ago

Helping startups and investors to get connected and close the deal is very valuable by itself. Though it should be real help to matter to both. And it's not highlighted well in the article.

How to be a VC without any Capital

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