5 min read

PM to VC

When I first started thinking about a career in venture capital, I had a few misconceptions about the role, especially as it pertained to early-stage VC.

Now, as I near the 1-year marker in my role at Underscore VC, I wanted to dispel a number of myths and share some insights from the perspective of a product manager turned early-stage investor:

(PM)isconceptions about VC

You need a “finance” or “MBA” background

Though helpful, most companies at the earliest stage often don’t have meaningful metrics to truly grok or assess. A background in building and launching products can be immensely helpful — particularly when it comes to assessing a team’s ability to build a product and how they would approach the challenging product-market fit challenges in the early stages of a business.

Only longtime operators (e.g., VP+) can be meaningfully helpful to startups

As an associate in venture capital, the ways we can add value to a portfolio company expands well beyond taking a board seat. For early-stage founders, having a friendly product enthusiast give feedback on an MVP, offer a second opinion on an early product roadmap, or serve as a thought partner in product hypotheses — can be just as helpful in the day-to-day sense as the strategic oversight at the board level.

You need to start a company to have “skin in the game” that’s relevant for startups

Entrepreneurial empathy can be built in a variety of ways outside of actually starting a company. PMs have plenty of innate entrepreneurial instincts, especially if they’ve had been through the full lifecycle of launching a product at their company. Though there are certainly differences in operating vs investing, many of the muscles that PMs exercise are relevant to assessing the same critical elements that investors are looking for at the earliest stages: “product agility, market opportunity, early indicators of product-market fit, etc….”

What PMs are uniquely qualified to do:

Generalist > specialist

PMs are natural pattern recognizers and conduits of data/information across their org in a similar way to how VCs connect insights across different industries. By not over-specializing in any one thing, the cross-functional breadth that PMs build over time allows us the ability to pull in functional experts in timely and synergistic ways (i.e., in the case of Underscore, it’s through collaborative due diligence with our Underscore Core community). Our interdisciplinary perspective allows us to predict and realize trends across industries and customer segments.

As the old adage goes, “you can’t lose sight of the forest for the trees” — being a multidisciplinary generalist as a PM and VC trains our eyes to look for stimuli across a much wider canvas. It’s in combination with our strength in breadth which we can then use our other muscles to dive much deeper into interesting opportunities.

Context switching

The amount of context switching in both a PM and VC’s day-to-day means we’re naturally bred to zoom in and out. In the same way that PMs have to think about their team and product’s quarterly and yearly goals while zooming into the weekly and daily priorities, VCs exercise similar muscles in evaluating ventures from a long-term and short-term lens. Being able to see problems from a strategic and execution-oriented perspective, PMs have a unique leg up in evaluating the necessary bifocal lens that founding teams also need to have.

Though the timeframe for “success” is certainly longer, the day-to-day job requires constant reprioritization which PMs are certainly no strangers to doing. Being able to gracefully transition between tasks and juggle many timelines as a VC will be a familiar feeling to many PMs.

Natural team/community builders

PMs are natural connectors of people as cross-functional hubs within an organization — connecting people and building relationships across groups of people is at the core of what a VC does.

Especially when the modus operandi of early-stage investors is to build strong enough relationships to know founders as they’re actively starting companies. This means the seeds of these relationships are planted years before they start a company. The communities PMs are instinctively drawn to build inside our companies can naturally extend the ways we expand and build a community outside of our companies.

What doesn’t translate well:

Collaboration in the VC world certainly doesn’t happen at the same level of intimacy as one has as a product manager. It doesn’t make as much sense in the VC world to all be focused on the same opportunity as an investing team. In our proactive efforts to maintain broad visibility across our investing theses, we have to develop ways to divide-and-conquer across our team members. Instead, collaboration, especially in deal-sourcing, happens much more with folks outside of your immediate (investing) team. At Underscore VC, this is formalized and amplified by our Core — a unique vehicle that allows us to practice community-driven and thesis-driven sourcing in parallel. This being said, a VC no longer has the same regular cadences of backlog grooming, daily stand-ups, etc… that breed the sense of collaborative closeness that a PM is used to — you have to be much more proactive as a VC in building that intimacy with connectors and collaborators that you lean on outside the firm.

“Success” is even harder to measure as a VC than as a PM. Though you’ll still work with founders on OKRs, engagement/retention metrics, your measure of success as a VC is hard to quantify. As VCs, we’re ultimately measured by the success and returns of our portfolio (see Rob Go’s post on “How VCs are Measured”). It becomes hard to map an individual’s contribution to this, especially as an associate — where our proactive deal-sourcing and diligence efforts only rarely lead to investments. Even when we do successfully source a deal on behalf of our firm, it’s impossible to predict how well that investment will perform at the earliest stages. Our best proxies come down to how well we’re able to support our founders in articulating and ultimately achieving their milestones, but our indirect role in these exercises can breed feelings of un-fulfillment especially for PMs that come from a metrics-oriented environment.

Though there’s certainly not one path to venture, we’d love to meet you if you’re a PM interested in joining our investing team (or a PM interested in starting a company*). Reach out to sherman@underscore.vc if we can be helpful to you!

*much more on the natural intersection of PMs and product-oriented founders to come 🙂