Many startup founders are celebrated for their innovation and perseverance in building new businesses, while Venture Capitalists (VCs) are often viewed simply as investors. However, many VCs are themselves entrepreneurs, facing similar challenges to those founding startups. With 20 years of experience in the VC industry, having founded two venture firms and launched six funds, it is clear that VCs are more than just investors, they are also founders.
Founders and VCs share more similarities than differences, which can provide both parties with valuable insights into each other’s motivations and challenges. Successfully navigating the complex cycle of fundraising, sourcing deals, investing, managing portfolio companies, and securing exits requires agility, flexibility, and resilience. Like startup founders, VCs must be curious, adaptive, and patient, embracing constant change, innovation, and long-term thinking to deliver the returns expected by their Limited Partners (LPs).
Understanding the key differences between VC founders and startup founders can help both parties work together more effectively. While startup founders typically have a focused roadmap and clear targets in place, VCs deal with constant unpredictability in terms of new deal flow, issues, challenges, and successes across multiple companies. VCs must juggle various tasks and priorities, while founders must excel at solving a big, focused problem with intellectual stimulation and difficulty.
The growth pains for early-stage businesses can be significant, with challenges in hiring the right people, maintaining the right culture, and facing higher stakes. VCs diversify their portfolio to mitigate risk, but for founders, failure can mean years of work lost. The transfer of knowledge and experience from VCs who have been entrepreneurs can be invaluable in helping founders navigate these challenges, providing insights, connections, and support to aid in their success.
The understanding gained from starting and building a VC business allows for a deeper understanding of what founders go through, including the pressure, balancing work and home life, and the constant requirement to sell and manage various responsibilities. This mutual understanding between VCs and founders can lead to a powerful and mutually rewarding relationship, where both parties can benefit and grow together, leveraging each other’s strengths and experiences to achieve success in the competitive world of startups and venture capital.
