TLDR: A venture capitalist’s job is perpetually going around “interviewing” with the most capable founders, “applying” for the chance to give them money and to be on their boards.
At a talk by Josh Elman (former product manager at Twitter, Facebook, LinkedIn. Current partner at Greylock) in Palo Alto last night (1/26/16), he delivered a lot of wisdom on how to be a great product manager, but there was one segment about what venture capitalists actually do.
Josh described the job of a good VC as one of constantly looking for the most capable founders and then engaging them as if applying for a job at those startups. In this case, the “job” is the opportunity to serve on the board and invest capital in the company.
The dynamics over the past decade has shifted most of the power to founders versus VCs as more entrepreneurs gain access to tools to build companies at lower costs. Alternative sources have also democratized access to capital so that VCs are no longer the gatekeepers to funding (translation: more innovation).
As my hero Bill Campbell says about marketing:
“When I work with startups, the last thing I work with them on is marketing. I don’t want to overestimate marketing. Apple’s marketing is having great products.”
I say about raising capital:
“The best fundraising is having great products. Once you demonstrate that you are creating or have created something customers love, you’ll have a hard time hiding from VCs trying to chase you down.”
And without founders, VCs would be unemployed 😉