What VCs Do With Their Time. Hint: Most of It Isn’t New Investments

Q:  What are the main responsibilities of an average venture capitalist?

Let’s break it down a bit.

General Partners at VC firms have to:

  • Raise capital. Yes, VCs themselves have to raise the money they invest. If you are top tier firm, with a long track record, this often can be done easily. If you aren’t though, it can take years. And so this can consume anywhere from 5%-50% of your time.
  • Manage their LPs. This doesn’t take a massive amount of time, but it does take time. VCs have to manage their own investors, the “LPs” or Limited Partners. This includes an Annual Meeting (which can take a lot of prep), quarterly reporting, audits, and more. This is probably 5% of your time.
  • Manage existing investments. This can take a lot of time, especially if you are on a lot of boards. Many VCs end up spending 40%-50% on 15+ boards, and sort of become professional board members. In addition, in some cases VCs spend a material amount of time interviewing executives and others for portfolio companies. And startups that fail often take a fair amount of time and drama to wind down. And then there are founder issues.  All together, this can take 50% of your time or more.
  • Networking (sourcing) and marketing.  One way or another you have to source deals.   This can be by meeting with earlier-stage investors.  Or frequent co-investors.  Or talking with top angels and CEOs they know.  Or attending demo days.  Or doing marketing — blog posts, digital events, etc. etc.  One way or another, it’s sales.  So you have to find a way to soruce the best deals.
  • Internal management and related internal management overhead. All of Monday is often taken up with partner meetings and pitches. Add other internal work, and internal work can take up 15%-20% of your time.

You can see already this can add up to 100% of your time — and that’s without finding, sourcing and winning even 1 new deal.

So best case, most established general partners with a full plate of existing investments spend < 50% of their time on their own new deals.

Often < 30%.

Published on December 1, 2020

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