6 min read

Venture Unexpected

7 insights uncovered moving from operating to investing


 

There’s a lot of hype and so much written about venture, you’d think that it would no longer be a blackbox for those considering it as a career. But in my experience moving from an operating role to investing, there were still many unexpected parts of the job.

At Underscore VC, we are a team of operators and founders who all made the leap to investing, and we are looking for another great teammate with startup experience (especially in Product), to join our team.

To help demystify the investing experience here at Underscore VC, I’m sharing a few thoughts on what I didn’t expect when I moved to the investing side of the table.

A little over a year ago, I left my job at Facebook, where I drove product strategy for international growth, moved across the country, and joined the investment team at Underscore VC in Boston. (I also happened to be 7 months expecting at the time). Here’s what I didn’t expect:

1. Early stage investing is mostly about the team.

I knew team was important, but underestimated how important it is in evaluating opportunities at such early stages (when there is little other data). It’s almost entirely about the team. Our primary criteria for early stage investments include: #1 = team; #2 = market; #3 = product value proposition.

We want to back the “A+ teams.” We know product value proposition will change over time; team (and a big market opportunity) will determine the ability to build a big business. Oversimplified, we invest in teams who can clearly articulate: What is a big problem we are uniquely positioned to solve?

How do we assess “A+” teams? At Underscore we look for the following attributes in founders: Ability (visionary, unique insight on the market, entrepreneurial), Attitude (whatever it takes, envision success, energize others), Aptitude (quick learner, agile, handle the unknown), Athletes (can they go the distance, train/learn, grit), Aware (self-awareness, know their strengths and weakness, do they listen, self-curious), Attractors (can they attract the best talent?); Authentic (are they true to themselves; dot connect with past and present motivations).

I’ve also learned that the process is the proof of the people. How a founder engages from first meeting throughout a fundraising process is very telling (e.g. how they follow up, answer tough questions, etc.). The process can illuminate if we can work together, which matters considering that the relationship between founders and early stage investors is often at least a 10-year relationship.

2) There are more elements to the role than I expected, they are dynamic, and it’s hard to be good at all of them all the time.

Simply summarized, the role of a VC entails:

Sourcing→ Selecting → Being Selected → Investing → Building → Exiting

At Underscore we recognize that we can’t be good at all of these (particularly across multiple domains), so we believe in leaning into our strengths (Investing), and working alongside the Underscore Core Community to excel at each other part of the process.

I’ve also learned that “Being Selected” starts from the first interaction and occurs every step along the way (including after investment). Just as we as investors learn about founders through the process, founders learn about us. In a competitive capital environment such as this, every interaction counts. That is why we adopt Hubspot’s mantra of “always be helping.”

3) Time management is hard, crucial, and has a long feedback loop.

This business is one of the most complex I’ve experienced when it comes to where to spend your time. It’s also challenging to carve out time to be proactive in your efforts. And the feedback loop may be long: a 30-minute meeting with someone could kick off a relationship that leads to an investment two years later, or a key hire that changes the course of a portfolio company. It could also be a waste of time. When it comes to taking meetings, great advice I was given is “Be generous with first meetings, discerning with second meetings.”

4) Venture can be collaborative.

I had previously perceived venture as a “lone wolf” business, and I think that is true in some firms and some ecosystems. But at Underscore, we very much operate as a team throughout the process and in how we’re building the firm. As a middle child in a big family and a team sport athlete, this team approach was a big reason why Underscore immediately felt like the right fit. And I’ve found the Boston ecosystem to be very collaborative and welcoming, which I’m hugely grateful for.

5) Boston is bustling.

As a native New Yorker with Boston roots and a dose of Silicon Valley, a year ago I wasn’t sure what to expect of the Boston tech ecosystem. But I’ve been energized to find a thriving, collaborative ecosystem driven by unparalleled talent, particularly in frontier technologies, homegrown successes stories, experienced entrepreneurs, strong ecosystem builders like accelerators and startup hubs, and increasing access to startup capital. We are very bullish on Boston.

6) Should you be thesis or people driven in investment approach? The answer is: Yes!

I asked a lot of smart venture capitalists about the tradeoffs in approach; different investors have different positions on this one. Where I’ve personally landed is to be first and foremost people driven. If we come across a truly exceptional founder who is uniquely qualified to take on a big problem or opportunity, why wouldn’t we back them? And yes, having a few areas or domains you spend time on helps because it allows you to:

  • have a prepared mind when meeting founders (so you can ask the right questions and more quickly understand the vision)
  • build a Core Community in a space to support and add value to founders (which helps you ‘be selected’)
  • create a beacon, so founders know if you’re interested in their space and members of your ecosystem know what you’re excited and informed to invest in.

For me, the areas I’m excited about right now and where I’ve written my first checks include:

  • Academic founders: founders coming out of academic institutions — researchers, students, professors. I’m building off my own experience as a student founder and investing in what makes Boston unique — our incredible talent pool. And it’s why we developed the UFirst Summer accelerator, a program specifically designed for this group.
  • Customer experience (CX) — it’s no longer optional for companies to compete on customer experience, and as a result, companies are changing the way they work across an organization, collect & share data to drive actionable insights, provide transparency and control of user data, and make experiences simple and personalized. If you’re working on a technology that is enabling this change, I’d love to meet.
  • Commerce — who are the people and what are the technologies, applications, and business models that will make commerce dynamic, anticipatory, mobile, and personalized? We are lucky to back companies paving the path in Commerce including SalsifyMoltinZaiusSystum, and look forward to supporting the next team transforming the future of commerce.
  • Intelligent work — Digital transformation within companies is ongoing, and we are increasingly experiencing the “intelligence transformation,” in which artificial intelligence is augmenting humans and changing the way we work. This transformation requires new tools, talent, business models, and technologies.

7) There’s no one path into venture, and no one style wins.

The entrepreneur turned investor. The Product Manager. The deep technologist. The domain expert. The business model guru. The intellectual generalist with high EQ. Introverts. Extroverts. Different styles can be successful in this role (and these personas are not mutually exclusive). Authenticity + curiosity makes for success.

Specifically for our team, we are looking for people with an innate people orientationempathy for entrepreneurs, love of building community, strong investment judgment, and intense curiosity in technology.

Did I mention we’re hiring for the investment team? If you think venture and Underscore may be a fit for you, please reach out lily@underscore.vc

Finally, this role is deeply humbling. Without bold founders, we’d be out of a job. Many thanks to those who have shared their time and wisdom with me over the past year.


Considering Underscore? Learn more about us in the video below!