My advice is hard learned, and pretty contrary to what you’ll be told. YMMV.
My Top 5 suggestions / learnings:
Don’t Start Slowly — If You Have Great Deal Flow. The advice you’ll often be given is start slowly. Sometimes, don’t even do a deal your first year. If you are truly new to the industry that’s great advice. But … if you’ve been around, if you know great founders, if you have strong dealflow, if you can already get into great companies … then it’s terrible advice. Some of the best deals you’ll ever see as a founder-turned-VC will be in your first 90 days. In the early days, all you’ll care about is the best CEOs in the best spaces. Later, pattern matching and politics will cloud your judgment 🙂
Conversely, Don’t Feel Pressure to Invest and Deploy Capital. Or at least, don’t succumb to this pressure. You will feel this pressure. Not just when you are new — forever. One of the all-time best SaaS VCs just invested in one of my companies. He said it was his first investment of the year (in December), and the only thing he’d seen he got really excited about in the last 12 months. So we all feel this. The job is to deploy capital, after all. But don’t look at the calendar / clock. At least, not too closely. Because the thing is, there are 10,000+ “pretty good” start-ups out there. With good teams, good customers, good products, all that. Your job is not to invest in those ones. The merely good ones. Because you can’t make any / enough money from them. Your job is to try to only invest in the potentially amazing ones.
Less-Material Investments are OK (in the early years). It’s OK, as you are getting comfortable investing, to mitigate perceived risk by buying less. By putting $250k into the round instead of $500k, or whatever. Once your portfolio is firmly up in NAV, in value … you’ll see you didn’t really need to do this. If you are truly a top 10% VC, there’s no point in spreading your bets too widely. In fact, you want to do the opposite (to invest more in each deal, up to a point). See, e.g., WhatsApp. You’ll see that small checks consume too much of your time for not enough absolute returns (usually). But it’s OK — now. In the early years. To make a lot more, smaller bets. You can’t really grock this until your portfolio is up 2-3-5x on paper, at least. So it’s OK to write smaller checks at first. It gets your personal IRR up, without creating as much perceived initial stress.
It’s OK to Do More Deals at First. Related to the prior point. It’s also OK to invest at a faster pace than the others. You’re new, you aren’t stuck on 20 boards, you don’t have a bunch of dogs to manage. And if you are writing smaller checks … do more deals (per year). Later, most VCs will do fewer deals, with more ownership. But no need to start there. Plus, you’ll learn more this way.
Be Cool. Don’t be a Jerk. It’s an ego-filled industry, and often, the most middling performers have almost the biggest egos. Don’t copy them. Don’t act like them. Be cool. Or at least, be yourself. Try to actually care about founders, and not just see them as a product, as an investment vehicle. Try to act grateful that they even let you invest. If nothing else, this will build up your reputation. Remember, the founders are the “stars”, the talent. You are just a “producer”, a source of capital and some help, advice and mentoring. You aren’t that important. Later, when you are on the declining end of your career, you can ignore reputation, or skate on the past if you want. Be cool always. But at least in the beginning. And be careful how and whom you emulate. You haven’t been doing this for 20 years, with 5 Unicorns under your belt.
And my uber-learning is — don’t force it. If you can invest in great companies — then it’s really not that “hard” of a business. Don’t try to copy John Doerr or Jim Goetz or whomever. You’ll find your own way. That way is different for all of us, at least, a tiny bit different. It just may take time for you to find your unique groove. It’s OK.