From new grad to Partner: Learnings from my first 5 years in Venture (for founders and young VCs)
When my family fled Colombia and we were granted a chance to build a life in this country, I knew I would spend the rest of my life living up to this opportunity. I didn’t always know what this meant but I always wanted to continue growing and refining. Silicon Valley seemed like one of the few places where someone from my background had the best odds of being judged for my work above all else. With not a lot of context on tech or venture capital, I focused my college years on figuring out what environment was most conducive to solving tough problems.
My first opportunity came when Mark Zuckerberg and his network of tech CEOs and VCs founded FWD.us, an organization focused on immigrant entrepreneurs and workers. I emailed the youngest person on the team (Emanuel Yekutiel, founder at Manny’s) at the time and pitched him working for him during my last year at Berkeley. Fortunately, he accepted the offer and had me help him with donor engagement projects and fundraising. I continue to be grateful for so much more he has taught me since then.
Part of my role was understanding the various Silicon Valley personalities, what they cared about, what they built, and many of their own immigrant stories (i.e. willingness to support the cause). Through many meetings and months of research, it became clear the massive contribution immigrant entrepreneurs had in what Silicon Valley was becoming (and continues to be). I also noticed how many overlapping connections and networks existed between the most powerful players in the industry. Most of them having a couple of individuals that had supported them and would continue to do so. Immigrant or not, it was this early bet on people that really made this world of tech operate. The reason I chose the Bay Area for college (to my FL based immigrant parents’ dismay) has been reaffirmed many times. I also learned the opportunity of someone with power taking that early bet on you is not equally accessible to all with such tight networks based on trust.
I was fortunate to be connected to Manan and Nitin in the early days of them starting Unshackled Ventures. The fund was focused on supporting immigrant entrepreneurs from day 0. They wanted to be that first bet on these founders. In them, I saw a deep understanding of the unique challenges these entrepreneurs faced: access to capital, access to networks, and immigration support (that can take countless hours away from anyone but is uniquely costly for founders in the form of time and mind space). It was clear to me that what they were building was not just necessary but a huge opportunity. My bet on the fund was a lot easier than their decision to hire a nobody right out of college. The two of them were brave enough to take a bet on me and trusted me to sit alongside them as we defined our own approach to sourcing, investment, and portfolio support. Since then I have felt fortunate every day to be among the lucky few that gets to combine my passion and my desire to solve really tough problems every day (be it with portfolio companies or building a fund).
Some words of wisdom (take it with a grain of salt, it’s still only 5 years)
This past June was my 5+ year anniversary in venture. My team encouraged me to take this as an opportunity to reflect and document my learnings thus far. Since starting at Unshackled, I have evaluated over 6,000 deals (literally, I reviewed every single deck). As a fund, we constantly challenge ourselves in how we best support our founder’s success and how we best support the ecosystem of immigrant founders.
- What many misses have in common: I won’t claim to have deciphered the “who are the best founders?” question. Successful founders can come from all walks of life and have varied approaches. But some observed common traits for founders with good ideas/markets that still fail tend to have are: indecision, slow to iterate, and stubborn on small details.
- Build smart: Investors fall on different sides of the capital efficiency debate. As a fund, we’ve continued to see one of the many superpowers immigrants have is their ability to build smart. The main thing capital buys you is time so we spend a lot of our conversation with founders understanding how they will use time not money. We look for speed of execution, relentless prioritization, and the ability to define the toughest problems that must be solved to de-risk and unlock the next phase of the company. Many companies fail when they have a lot of capital. As Josh Wolfe at Lux Capital once said, the very best entrepreneurs are risk-killers, not takers.
- Before raising: spend time defining two areas 1) does what you’re building have the potential to be category-defining? How is it at least a 10x improvement from what the current customers have? 2) what is your earned secret/unique insight/contrarian truth you uniquely have the conviction to prove wrong?
For aspiring venture capitalists and those early in their VC careers:
- It’s not for everyone: Venture capital is a very humbling job with failure built-in. Companies you have full conviction in will fail for many different reasons. You have to be comfortable with ambiguity and failure. It is also a career that benefits those with an insatiable appetite for learning since your wins don’t come quick or easy. Venture camouflages easily as an industry with easy wins while being the complete opposite.
- You’re always selling: While VC is an apprenticeship business, it’s a service business above all else. We are here to provide a service to both LPs and founders and a lot of our time is selling this service. We constantly sell: to LPs, entrepreneurs we want to invest in, follow-on investors for our founders, and portfolio company potential hires. Make sure the reason you want to be in this career path is less about the potential glamour of it all and more aligned with your enjoyment for building, learning, and selling.
- Reputation is everything and often the preferred form of currency in this industry. Even in these short five years, I have seen many personalities come and go with the latest fad. Be okay with leaning into what is less exciting at the moment. Aim to do hard things well and understand that doing hard things well takes time. There are not a lot of shortcuts that don’t overly rely on luck. I personally don’t ever like to depend on this.
- It’s hard and requires commitment: With feedback loops being so delayed (8+ years out), clarity of thought and focus is a competitive advantage in venture. Define what are the hardest problems worth solving (I don’t see VC as a zero-sum game because this is a deeply personal question that benefits from having a diversity of experiences to answer it), what are the best channels for solving them, and who is thinking uniquely about these problems. Those are the people and ideas you want to surround yourself with.
- Understanding the past and future is not enough. The best investors I have met spend time understanding the past and have a thesis on the future but what really stands out is their ability to see the present clearly. This clarity provides them unique insights into current inflection points they can bet on in the form of companies.
Why I continue to be excited about tech and VC
2020 was a difficult year for all (and for some communities much more than others). I have never been in the camp that the tech leaders we vilify are ‘evil’ but do believe as an industry we will benefit tremendously from having more walks of life in the rooms where decisions are made. The number one way I see privilege in our industry is in our inability to foresee the outcomes of these decisions because of the lack of paranoia in the ways the technology we build will be used. But there are also many reasons why I continue to be optimistic about tech and venture.
- Increased transparency: As funds and investors create more content I see more transparency in the industry than there was when I started. It’s much easier for founders to learn about the investors they are talking to, the funds they prioritize, and the “unwritten rules” that are being written by people that have less tolerance for the information asymmetry embedded in this industry. The best talent will be at a serious advantage from being effective learners.
- Founders expect better: I am seeing more and more founders that have a choice of investors go out of their way during fundraising to ensure their cap table represents the values of their company. This approach will give funds and LPs an appreciation for the importance of having investment teams that reflect the world we live in. It will take time but organizations such as AllRaise, LatinxVC, BLCKVC, and HBCUvc have made serious progress in the industry.
- There is new blood: In my opinion, the rise of micro-funds and “solo capitalists” has been good for entrepreneurs. These individuals have high helpfulness to check ratio and provide entrepreneurs with support in the early stages of company building. Just like YC, First Round Capital, Benchmark, and A16Z proved there were various models for venture funds to operate, this new generation of investors will inject the industry with novel approaches. Those who fail to innovate and stick to the old ways are unlikely to survive. I don’t think that’s a bad thing.
- Times are changing: I personally love consumer social as a sector to invest in and I am so excited to see power users reflect generational and demographic shifts. The new groups of tweens and teens don’t have a connection with prior social companies and are actively looking for new platforms to make their own. The new generation of social media will be much better for the world. The Zs have given me a lot of hope.
- Pre-seed stage: Consistently in these past 5 years I have witnessed funds from all stages experiment with what it takes to bet on founders pre-revenue and pre-product. While picking the potential winners at this stage is difficult the real challenge is in supporting them on the company building journey. I am confident that pre-seed funds will be uniquely positioned to support founders in this specific part of the journey compared to later-stage funds that work best when the numbers start coming in.
- Immigrant founders: It is difficult to find years in US history that have been more antagonistic and hostile towards immigrants than the past 4 years have been. Immigrants (skilled or not) we’re reminded every day to use their resilience to survive the times. Few are as hungry as immigrants to prove that they are here to stay and build.
I am optimistic that this past year offered us a chance to rethink the doomsday machine we built for ourselves. We shouldn’t hope for a return to normality if normality means a world full of prejudice and economic nonsense. If the deal flow I am seeing is a reflection of what is to come, I see more entrepreneurs excited to imagine our world anew. I am optimistic by the upcoming generations of builders, who continue to redefine what an entrepreneur is and looks like. I am also excited to be part of a new generation of investors that carries their jobs with a deep sense of responsibility for the world we live in. I am excited about the future of venture in which a queer refugee Latina can make Partner. Above all, I am looking forward to paying it forward to future generations the way those before me continue to do.