From operator to investor: lessons from the other side
After years of working in product roles at startups, I recently made the switch to investing. I had talked to ~60 VCs before making the move, but here are all the raw truths I wished someone had told me before I made the move:
Embrace solitude: The life of an investor, even at a larger fund, involves a significant amount of solo work - sourcing deals, researching markets, and analyzing opportunities. While collaboration happens, be prepared for lots and lots of independent work. This was painfully hard for me, having spent time collaborating extensively.
Mastering the "why you" pitch: Let's be honest - most VCs are selling a commodity product (aka capital). Even in this "downturn" where capital is not cheap, the best founders need to be sold on why they should take money from you. You'll first need to sell founders on taking your money by articulating what makes you and your fund different. Additionally, if you are not a solo GP, you'll have to sell your partners on the deals that you are really excited about.
Extreme uncertainty: Both the inputs (your efforts) and outputs (successful investments) are highly unpredictable in the VC world. You could hustle tirelessly yet miss incredible opportunities due to factors beyond your control (e.g., a sick kid at home or being gone on vacation when a company is raising).
Higher bar: While promising for angel investors, many startups just don't meet the lofty criteria of venture funds aiming for billion-dollar outcomes. I learned this the hard way - I shared a few investments with folks internally only to be (rightfully) met with, "This is not a $xB company."
Saying "No" takes a toll: As a PM, I was very accustomed to saying no to distracting opportunities. However, the sheer volume of "no" on investor pitches is very emotionally taxing. I also try to provide constructive feedback consistently, which can be really time-consuming. When I used to hear founders gripe about VCs "ghosting" them, I would never understand why. Now I get it; you just don't have enough time to source, convince, pass, and help at the same time.
Align with fund strategy: Every firm's leaders will have specific biases influencing the deals you can pursue. You'll need to balance your own unique perspectives (which is why they hired you) with the fund's overall strategy.
Operating experience overlooked: Despite years of hard-earned operating experience, many founders may initially overlook those skills, viewing you solely through an "investor" lens. You will definitely need to re-establish your operational credentials. It's quite absurd how quickly this flips - personal story here.
Guide, not build: As an operator, you're the one executing, building products, and leading teams. However, as an investor, your role shifts to guiding and advising the founders you back. While I don't have a portfolio of companies (yet), I have had to bite my lip many times to avoid being the operator of those companies.
Finally, the million-dollar question that every operator asks me: Do you miss operating? I'd be lying if I said no, but I'm countering that by building some projects on the side. I'm really enjoying going wide, researching areas, talking to incredible founders, and getting the privilege to partner with them. All the things I simply would not have time for if I was operating full-time.
Regardless, it might be early days, but I firmly believe inventing the future > investing in the future. I'm just glad I get to see the future before most people do!