Always Doing Due Diligence

One week down, one more to go – at VC Unlocked.

I have been doing due diligence all my career (22+ years!), but venture capital is another beast altogether. I am glad I took the leap to build a venture capital firm from scratch. I have learned and gained new skills (sales, marketing, hiring and firing, coaching, and leading) and am honing skills I already established earlier in my career in different roles (research, decision-making, prioritizing, and trusting my intuition). I am always doing due diligence, whether the other person knows it or not, and I assume people are doing due diligence on me. 

Here are some of the things I’ve observed and learned in the first week at VC Unlocked by 500 Startups at Stanford University.

ADDD – Always Do Due Diligence

1. Who does what they say they are going to do? Sometimes it’s subtle and people may not realize they have not done what they said they were going to do. Doing what you say you’re going to do – even early in a developing relationship – is important for building trust and demonstrating integrity. I look for it in the entrepreneurs I back and entrepreneurs look for it from me.
2. How do people coordinate and work together? There are so many people here from different countries and cultures. Some people are morning people, some are night owls, some are early arrivers, others are last-minute. But how people move slightly outside of their usual routine or culture to cooperate (or not) is interesting to observe. It is the difference between ease or struggle to get something done as a group. Getting things done is a mix of individual contribution and collective action. Although we tend to see individual contribution heralded (the star CEO, the lead singer of a band, the striker on a soccer team), we all know it is team effort that actually makes things happen and achieves impact.
3. JOMO – Joy of Missing Out. I’m going to approach venture capital (and life in general) with joy-driven decisions. I have been fortunate to have so many rich experiences. I’ve had to make choices – like moving to London (instead of the US or Asia) or starting my own firm (instead of sticking with a corporate path) or having two children (instead of one or none). I’ve turned down investing in some companies and I know that they will go on to be successful in their own way, but I also know I’m not part of their story and journey – at least not as a direct investor. I’ve learned how to make choices based on joy, not fear. Joy lasts longer when I make joy-driven decisions. The outcomes from fear-based decision-making are not enduring.

It’s Not You, It’s Me

I am getting validation about how I’ve been investing and my approach to venture capital. Aside from hearing about the ins and outs of venture capital and meeting well-known investors, participating in VC Unlocked has been a journey of personal discovery. It’s been about figuring out:

1. What is MY superpower that I can use and leverage to help the most people? 
2. And if I don’t have an operator superpower, then what is it?
3. What are my assets and strengths? Having spent two decades of my career life experimenting, exploring, and adjusting my path, what are the connections between my skills, experiences, assets, and strengths such that I can benefit from a compounding effect?

Top Insights

1. Venture capital is about risk reduction.
2. Talent recycling is critical. The cost of a startup failing is less steep when what you learned in your failed startup is valued and you can get another job elsewhere.
3. Meet founders over time and get to know them. Be specific about what milestones you’re looking for, however meeting those milestones doesn’t mean you’ll automatically invest later. In other words, milestones are thresholds for meeting again not conditions precedent to investment.
4. Entrepreneurs value investors who are experts in specific domains.
5. Time management is a challenge and an opportunity. Investors need time to think to be original, which brings to mind Jason Voss’ The Intuitive Investor. Investor edge comes from our creativity and intuition and to cultivate that we need time when we are not analyzing, but rather thinking freely. Mindfulness and meditation makes room for new ideas and connections between ideas that we didn’t see previously.
6. Figure out what traction means to you as an investor.
7. Venture capital is a “hits” business (hits being a unicorn with an IPO ideally or at least an acquisition). The power law in venture capital is strong. Raising a fund becomes easier if: you were the CEO of a “hit”, you were a key employee and had an exit from a “hit”, or if you invested previously in a “hit”. 
8. Show, don’t tell. I learned this when I wrote Integrated Investing. This is true whenever you’re trying to persuade someone to take action.
9. Tell a good story – but you’re not the hero. The audience is.

Surprising Connections

As a cohort, we attended the 500 Startups Demo Day in San Francisco. 

1. The highlight was meeting Elisa Chiu, CEO Anchor Taiwan. Elisa and I were introduced by a mutual friend 3 years ago. We’ve only ever connected online – LinkedIn and Facebook groups. But at demo day, she spotted me and enthusiastically introduced herself. It was a delightful surprise to meet her – like running into an old friend.
2. Mathieu Guerville, VP Business Development Tradespace (500 Startups Batch 25)  also came over to say hello. I recognized him when his cofounder pitched their venture during the demo day presentations. I had met Mathieu when we were both panel speakers at family office conference in Chicago in March. What’s an even stranger coincidence is that I also met Elvina Kamalova at that Chicago family office conference and spotted her at the VC Unlocked alumni lunch earlier in the day. Turns out she’s an alumna of this program. Meeting two people at an unrelated family office event and then seeing them again at 500 Startups Demo Day? What are the chances?

But I think it goes to show that having a community organizer and convener is valuable for connecting people – 500 Startups is a gathering place. Becoming part of the 500 Startups network and meeting people who are a part of or are connected to this network is one of the primary reasons why I applied to this program. What I haven’t mentioned above is the great people I’ve met and the conversations I’ve had. I hope we can find a way of working together, investing together, and support each other in our respective endeavours as we continue to evolve and develop the world of venture capital.