About a year ago, I developed an interest in attending VC Unlocked, an investor training program focused on venture capital, delivered by 500 Startups and Stanford University. I tried to get the tuition cost funded through a grant, I asked a friend to refer me when the application process became referral-based, I submitted an application, was invited to an interview, was accepted, and crowdfunded a fraction of the cost.
I applied whilst I was in the middle of fundraising for Pique Fund 2 and in the time between applying and attending the program, my strategy (and my life) changed significantly. There is a lot going on beneath the surface and I felt a bit uncertain about attending, but for two weeks I found myself a bit closer to the future I envisaged. I was determined to get as much out of the program as I could. I know that investor edge and competitive advantages often come from polishing the rough edges of the last 10-20% of a strategy.
VC Unlocked was an unusual opportunity and it reflected a recurring theme in my life. There is a small voice inside my head that says, “this is not something “people like me” do.” Fortunately that voice gets quieter and quieter as I get older. But having grown up in a working-class family where my parents set aside their own wants and goals to pay for me and my sister to attend university, I felt guilty about spending the money on the program (or rather investing in myself). There are so many other things I could have spent that money on. Time and time again, I’ve chipped away at the self-limiting thoughts I have in my head and when I do that, possibilities emerge from the doubt and uncertainty.
I wrote earlier about my experience of the first week of the program. The second week blew me away and it’s only after completing the program that I’ve had a chance to reflect and start to stitch together what I’ve learned, what was meant by some feedback people shared, and understand the remarkable journey of self-discovery that I’ve been on.
After hearing from guest speakers from successful VC firms that were founded by someone who worked for a unicorn or led and exited a unicorn or had invested in a unicorn early on, I started to question my strategy and my ability to succeed in VC. Many successful firms are multiples times larger than the second fund I was contemplating. Mind you, where I am now is comparable to where they were 12-15 years ago. Some speakers candidly spoke about how hard it is now to get started in venture capital and if they were us, they wouldn’t enter VC now (others, of course, believed now was a great time to enter if we had a truly differentiated strategy).
Before I left for Stanford, I read Boris Wertz’s candid post about the returns profile of Version One’s Fund I (2012 vintage). The power law distribution that Boris describes in his post was reiterated several times during the program. Trevor Loy, Stanford University faculty and managing partner and founder of Flywheel Ventures, stated early on in the program that he’s never seen any VC succeed at a strategy of investing only in “singles and doubles”.
It was on the penultimate day of the 10-day program, that I received the most valuable insight when I had the opportunity to have a 1-to-1 conversation with Trevor. I can’t remember the specifics of our conversation or how we got to this insight. Maybe it was after I said something about how hard it’s been building and scaling Pique and that I fret constantly about paying the bills and making sure I don’t make my family homeless (I’m the sole income earner in my household, I’m dependent upon generating income from my labour and do not have a lot of income from capital). What I do remember is the candour and the simplest, yet most powerful of messages: you do you.
Trevor delivered the closing presentation on the last day and ended with this quote by Albert Schweitzer: “The only ones among you who will be truly happy are those who will have sought and found how to serve.” The next morning I watched Bohemian Rhapsody on the flight home, which recounts the story of how Freddie Mercury and Queen stayed tirelessly focused on what their fans wanted and how they constantly took risks and tried new things (no wonder I could never understand Queen’s “style”. They were always experimenting and changing things up.) In the film, someone says, “fortune favours the bold.”
I think I now understand what was meant by Trevor’s feedback on my investment thesis presentation at the end of the first week. After six months of hitting walls with my impact investing-oriented strategy, I toned down my presentation for VC Unlocked and made “impact investing” a sidebar. But I’m reminded of one of my favourite sayings: “If you don’t believe in something, you’ll fall for anything.” By the end of VC Unlocked, the dots connected in my mind like scenes in a movie as we flashback to foreshadowing events or messages from earlier on in the film.
So where does this leave me? Stay tuned to find out. In the meantime, here are some further insights which you may find of use as you innovate, build or invest:
Private and public capital markets
- There are concentrations of private capital going into private ventures and such ventures are staying private longer.
- Retail investors are not able to participate directly in the economic outcomes of high growth companies through public stock exchanges. They are not able to choose to participate indirectly through mutual funds. Instead they participate indirectly through their pension savings – decisions about allocations and investments are in the hands of large pension fund managers like CPPIB and CalPERS.
- Key to success in VC (and all other) investing is to be right when no one else believes you (non-consensus).
- Some people think it’s a horrible time to enter VC, some people think it’s a great time. Food for thought: some of today’s well-respected firms emerged at a time when they filled a seed investing gap because the established firms of their day were not serving that space.
- Some think it’s a horrible idea to invest using a non-equity convertible instrument, some think non-equity convertible instruments are great for seed stage investing.
Memorable quotes and stories
- “When a measure becomes a target, it ceases to be a good measure.” – Goodhart’s Law via Mike Lepech
- Most significant innovation comes from business model shifts. – Pedram Mokrian
- Before raising her fund, Lan Xuezhao, founder of Basis Set Ventures, spent her time wisely meeting with potential investors to find product-market fit. She met with one investor 5 times before ever presenting a deck and fund marketing materials.
The personal stories from investors were very interesting, probably THE MOST interesting – we love a good story. It’s not morsels of information from their personal experiences that provide answers to our burning questions about what to do next or how to do it. Instead it’s the broader lessons that reveal a way of being, that when applied to our own personal circumstances leads to actionable change. As Trevor said in conversation, “You do you.” The investor’s edge comes from optimizing you doing do.
About Pique Ventures
Pique Ventures is an impact investment and management company. Pique Ventures enables a diverse community of investors to pursue integrated investing. Integrated Investing is a proprietary investment decision-making methodology that we use to help create a better world and was developed specifically to evaluate impact and early-stage ventures.