How to start your VC journey
There have been many articles about “breaking into VC” and I’m a firm believer that the non-traditional path to VC is the new norm. Halle Tecco recently published an article on how healthcare investors broke into VC. I wanted to explain a little more beyond that article about the vast opportunities that exist today.
First, understand why you want to work in VC. What is the future you want to build? What are the types of companies you want to invest in?
The best first step you can take is define what your thesis is. For example, if you have a passion and good understanding of digital health, you can develop a thesis on this sector and have a perspective on what makes a successful digital health company, what their financial projections / partnerships / products should look like, what stage you would invest in, and how you would help founders. As you develop this thesis, you can write about it, and potentially find ways to help founders. If you have access to invest in a funding round and the capital to do so (as well as being an accredited investor), you can start angel investing. Some investors build a portfolio this way, and if they have access to other angel investors they can form special purpose vehicles (SPVs) to invest in a portfolio of different companies working with a variety of investors.
A less-known fact is that there are now many funds you may be able to invest in as an LP (limited partner), and you may be surprised to learn that some LP investments start at a very accessible pricepoint. You can also invest out of your IRA. This is again for accredited investors only.
If you don’t have the funds or are not accredited, there are lighter ways to start investing. You can participate in crowdfunding through platforms such as Republic. If you are able to add any value to the founders, you can consult for them for compensation or advisory shares. Note founders should only grant advisory shares to folks who are adding a lot of value. If you don’t have access to the deal, you could start by writing a memo about the company, why you think it will be successful, and track it over time. This can be a form of a synthetic track record.
Your thesis and how your background contributes you to have a unique perspective, good deal flow, as well as ability to help companies is what sets you apart. Generally, funds do want to hire someone who can contribute this to the fund in a way that plugs in with their strategy, team, and helps them to expand their reach (you may either fill a gap in their team / thesis or be already aligned and help with the team’s bandwidth).
If you are looking for more experience with VCs before getting hired full time, consider looking into Venture Fellow programs. Many funds including Coyote Ventures retain venture fellows for a short period of time, and this provides a significant amount of learning, experience, and access to deals you may not have reached alone as an individual. For Coyote specifically, all fellows have completed undergraduate (most are obtaining or have obtained an MBA, PhD, or MD), and have at least a few years of work experience. I love working with the fellows and I’m proud to see many of them go on to get roles with other funds. Please subscribe to the Coyote Ventures newsletter or connect with me on Linkedin to follow our updates!
