Moving Forward Full Speed
As mentioned in my previous post in this series, now that I have told the story of the wind down of our investment fund, I'm now moving forward by going back to my earlier background in an operating role. My investment career spanned almost 11 years, and I learned an awful lot during that time. But, I think it's time to go back to an operating role. Here's why.
First of all, the investment world, particularly things related to venture capital, is a shrinking one. It's well documented that the number of venture funds in the US is dropping, and the funds that are surviving are raising significantly less money than before. So, like a game of musical chairs, there are just fewer possible jobs in venture capital. Since I don't have a firm hold on an existing VC job, it's not likely that one will be available for me somewhere else.
Second, I've joined two existing venture firms in the past. No matter how good the firm is, it's always different on the inside. Partnership dynamics are much different than corporate politics. In a company, you clearly know who your boss is. And, it's easier to move around the company, or even leave if you choose to. In a partnership, you have a dynamic of shared management and, often, unclear hierarchy. That can be part of the attraction as you can join and be a partner. But, some partners are more equal than others. And, large partnerships are more difficult to manage than large companies. More importantly, it's not clear that the best investors, who tend to rise in venture capital firms, make the best managers.
For all these reasons, I'm not interested in joining an existing investment firm. And, I just spent 2+ years trying to start my own. So, even if I wanted to remain an investor, it may not be possible.
More importantly, I'm not interested. It is attractive to be an investor for many reasons: 1) potentially high current compensation, 2) spreading your risk across multiple opportunities, 3) challenging and broad work, etc. But, it's been very tough to be a successful investor in the past decade. Even many of the best venture capital firms have had few distributions to their partners due to their few successes being diluted by the larger number of meager returns. There hasn't been as much money made in this business over the past decade as your friendly VC may lead you to believe. If you've been an investor in a VC fund, you've probably seen this first hand.
I'm much more excited about taking on an operating role and getting something done. I'm being highly selective about opportunities I consider, but I have seen quite a few very interesting projects in a short amount of time. I think that right now the best entrepreneurial opportunities are better bets than the best VC jobs. And, three VC friends of mine agree, telling me that it's better to be an entrepreneur right now than to be a VC. We'll see, but it sure is energizing.
I've committed to one opportunity with a business partner. The details are still being kept under wraps, but we've received fantastic customer feedback and some strong investor interest. When we're ready, I'll talk about that opportunity here. Until then, I'm sure I'll find some inspiration from my travel through the fund raising process as we get the company off the ground.