Reflections on Venture Capital

To build a long lasting partnership is probably one of the most difficult thing to do in business. It’s mostly true in entrepreneurship where founders often start as equals without foreseeing that their paths of learning and execution will inevitably differ from each others, potentially creating tensions and inequalities.

It’s difficult to overcome differences and dysfunctions when the foundation of a relationship isn’t based on truthful, transparent and honest communication. This obviously applies the VC-Founders relationship as well. We often tend to rely on implicit rather than explicit values and principles, a recipe for disaster when things get serious.

In Venture Capital itself, it’s surprising to see how misplaced egos and untold truths are too often packaged into poorly managed and inefficient organisations. It’s shiny from the outside, but even some of the best firms in Europe and the US suffer from those intricate dynamics.

I have always been wondering what it would take to build a new Venture Capital firm, with a different model, more committed and accountable. I believe it’s especially true for large funds where the economics are indecently profitable, regardless the final outcome. A misalignment among the stakeholders.

After a few years in the making as a Venture Capitalist, it’s a good time to reflect on the mission.

Everyone has her own process of learning, reflection, and expression. For me, writing is the one through which I have structured more developed (robust thought process), intelligible (right choice of explicit words) and complete (covering all aspects of a subject) arguments over the past few years. It is an initiative that started in 2013 and that has helped me a lot since then to put things into perspective.

It’s most certainly the result of my introverted early nature which makes me more comfortable in controlled environments (here my notepad…) and uncomfortable in situations where the search for dominance is prevailing on honest communication. Therefore, I have always tried to create an environment of trust where discussions were fostered in benevolence, understanding and ownership:

  • Benevolence as having good intentions towards others and the greater good.

  • Understanding as being aware of other people’s feelings, opinions and positions to act accordingly with empathy.

  • Ownership as making an effort to find the best possible output regardless our perceived responsibility.

Introversion has also enabled me to observe, listen and therefore develop a better intuition towards people and foster the right relationships with the individuals I deeply care about. This is probably where lies the foundation of my passion for venture capital.

I also think that my discomfort all over the years at school and university also fostered my attraction to everything singular, contrarian and forward thinking. As opposed to fixed mindsets, strict rules, and conformism.

I truly love outliers.

Of course, no one can predict the future events of a story at play. Yet, the decision making process of venture capital investments is very much based on the amplification of the faintest of positive signals that we perceive early on in stellar teams, huge market opportunities, and the matching between the two through beautifully processed and developed products.

We put all our faith in a team, knowing that success is only one third achievements, two thirds the consistent process of greatly overcoming dysfunctions or issues, fighting battles and winning against the odds.

Our mission is to build along the way the most honest, genuine and supportive relationship with entrepreneurs in a truthful and meritocratic way, our success being based on the compounded effects/results of our reputation and performance.

Venture Capital is about taking non-consensual decisions with strong convictions under high uncertainty, a dual/paradoxal trick to perform as a team/partnership. It requires cohesion by aligning a common set of purpose, values, and principles on top of the singularity, talent and merit of each one of its members. Only from there the investment team can be committed and accountable towards delivering performance.

Performance is the result of aligning focus with excellence, which is only possible with clear Objectives and constantly monitored decisions, actions and Key Results.

I believe this is the giant missing piece of most Venture Capital firms. This obvious fact only hit me very recently thanks to the football team analogy of John Doerr in Measure What Matters.

I realized then that cherry picking entrepreneurs and companies was only 20% of the job. Our true mission is to support them effectively into writing the best possible stories. And without our own set of OKRs, I think that most of us are just doing a decent job if not failing those entrepreneurs.

Writing checks, attending board meetings, making sound arguments, providing a couple of introductions… This is clearly not enough. Only a couple of successful stories as much as a handful of mistakes and failures help you understand that valuable efforts only come through consistent care and actions.

The rest is superficial.