Investing 101 2.0

Investors To Know

The Investing Library

Types of Investing

Investing Curriculum

Getting a Job

What is this?

[Explain, include history of the asset class and how it's evolved] include things like barbarians at the gate, and history of VC]

Introduction & stat about how 80%+ of VC dollars goes into technology. There are other kinds of investing.

• Overview of other markets
• Examples of companies in the space
• Important things that investors look for in this space
• Typical exits / acquirers in the space

The required skill sets can be wildly different depending on the stage of a company, whether you're investing at seed, early stage, or later stages.

How venture capital requires different skills from PE because the work is fundamentally different. PE deals more with numbers, where VC has fewer numbers that make sense.

Importance of being up to speed on a market and current trends

• Newsletters
• We should definitely have some sort of resource in here about being on Twitter

What is venture capital?

Easily build and share beautiful presentations with Pitch.

app.pitch.com

Stages of Investing

Growth Stage

Early Stage

[Description]

Resources

Breaking into early-stage VC

Seed Stage

[Description]

The Investing Vehicle

Limited and General Partners

A fund is a collection of other people's money that is pooled together to invest in companies. These "other people" are called Limited Partners (LP's) and they are typically (1) wealthy individuals, (2) family offices, which are just the organized efforts of wealthy individuals, and (3) institutional LPs (e.g. pensions, endowments, etc.)

These people commit money to a fund that is run by General Partners (GPs). These are the VCs running the fund. Their arrangement looks like this:

• LP's give their GP's $10M
• The GP's take 2% of that money each year to pay their salaries, rent office space, travel to meet companies, market their firm, etc.
• The GP's invest that $10M into a group of companies
• Over the course of 8-10 years those companies go on to make the VC's ownership in them be worth, collectively, $100M.
• The VC's return the original $10M back to their LPs
• Of the $90M left over the LP's get 80% ($72M)
• The VC's get the remaining 20% ($18M) as their reward for being successful investors

Investing in Companies

As VC's evaluate companies they're determining a Pre-Money Valuation and a Post-Money Valuation. They met a startup and they say "based on the work you've done to come up with an idea, validate it, maybe build a product (depending on the stage of the company) I believe your company that you've built through your blood, sweat, and tears is worth $9M."

$9M is the Pre-Money Valuation.

Then they offer to invest $1M in the company. The $9M company + their $1M in cash is worth $10M.

$10M is the Post-Money Valuation.

Of the now $10M company the founders own 90% ($9M) and the VC owns 10% ($1M).

If the company goes on to become worth $100M and sells to a bigger company (assuming the company doesn't raise any more money) then the VC will own 10% of the outcome ($10M).

The VC has been successful because they invested $1M and generated $10M of returns (e.g. 10x their money).

Summary Learning: The Investment Memo

Overview

In venture an investment memo can extend from a multi-page written document, a 20+ page slide deck, or a 1-page summary. The goal of the memo is to communicate everything you've learned about a particular investment including:

1. What does the company do?
2. Who is their customer?
3. How big is their market?
4. How does the company make money?
5. Who are their competitors?
6. How does their product / service differ from their competitors?

There is no limit to the sections you can have in an investment memo because the focus is on understanding the questions you have about a particular business and then setting out to answer those questions. The key here is not only to understand it yourself but to communicate it to other people.

The Investment Memo | NextView Ventures

A one to two page summary which provides an overview of the company and our thesis about investing. It's something that perhaps especially most of our peer seed venture firms don't (always) do, but writing an investment memo has been a key component for NextView since the very beginnings of our firm.

nextviewventures.com

Examples

YouTube - Sequoia Capital

A Day In The Life

Overview

Common Activities

How to Network

Opportunity Canvasing

Using Twitter

Other Resources

Breaking Into & Thriving in VC

By Jomayra Herrera & Amanda Robson At Cowboy Ventures, we believe everyone should have access to knowledge on how to get into venture capital and be successful. This information should not be limited to a privileged few.

medium.com

Venture Capital Careers: Work, Salary, Bonuses and Exits

If you go by the news, movies, and TV shows, venture capital careers seem glamorous. You meet with amazing entrepreneurs all day... dig into their businesses... and then decide who will receive a 7, 8, or 9-figure check from your firm.

www.mergersandinquisitions.com

How do you get a job in VC?

People ask me this question about seven times a week. You know what? I'm a VC, and I have no idea. I never set out to do this. My partners who have been doing this for 20+ years have no idea. All I...

medium.com

How Demanding Is An Associate Position At A Venture Capital Firm?

This has been thoughtfully answered by the other posters, but I'll throw in my two cents because I get asked about my hours fairly often offline. The VC job is as demanding as you want it to be, and that can vary based on what you want out of the job as well as your own personality match with the role.

www.forbes.com

A Day in the Life of a Venture Capitalist - is this you?

A couple of weeks ago we started to look for a new Associate or Investment Manager to join us at Creandum's Stockholm office. So at the moment we are scanning the market for talent and taking meetings with potential candidates. Naturally, one of the most common questions we get is something along the lines of "What would I be doing?"

blog.creandum.com

Why being a VC sucks. Advice to anyone who wants to get into venture capital. - This is going to be BIG

I probably get around a dozen e-mails a week asking me how to get into venture capital.

www.thisisgoingtobebig.com

Investing Curriculum

Analytical

Understanding Broad Markets

Software: a Technology Primer

Consumer Internet: a Technology Primer

Understanding Specific Markets

Opportunity Canvasing

What is a deep dive?

Sourcing

Sourcing a Deal

How to Network

Technical Skills

Relevant Metrics to Understand

Understanding SaaS Metrics

🎧Understanding Consumer Internet Metrics

Financial Modeling

Simple Forecasting Exercise

Building an ARR Financial Model

Getting a Job

[Explanation]

The Why and How of Wanting To Be a VC: a Thread of Threads

What People Are Saying

Investors To Know

1️⃣List of Leaders

• Marc Andreessen
• Chamath Palihapitiya

2️⃣List of Up-and-Coming Investors

• Caitlin Bolnick
• Saanya Ojha
• Erik Popaja

Types of Firms

The Rise of the Solo Capitalists

A huge thank you for the kind messages many of you sent me last week. Unsurprisingly, I'm spending some of my fallow time thinking about the future of the venture capital industry. I plan to write about this topic for the next few weeks. First up is the fascinating rise of solo capitalists.

nbt.substack.com

Agglomerators vs. Specialists

On one side of the venture capital industry are the agglomerator firms. They invest at every stage, across every sector, and many are growing even larger. On the other side are the specialist firms, either by sector, or by stage, or both. The industry has bifurcated, and there are several implications for its future.

nbt.substack.com

Examples

Index Ventures

OpenView Partners

People to Follow

Twitter recommendations

Recommendations

Venture capital

Venture capital ( VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth (in terms of number of employees, annual revenue, scale of operations, etc).

en.wikipedia.org

Founder-Investor Fit

This is the third in a series about trends in the venture capital industry. My last two essays, on solo capitalists and agglomerators vs. specialists, touch on key aspects of the current ecosystem. But what will drive the evolution of the industry in the future?

nbt.substack.com

The Venture Capital Flowchart

This is the fourth and final part in a mini-series about the venture capital industry. The previous three essays discuss solo capitalists, agglomerators vs. specialists, and founder-investor fit. My hope is that this short piece, on the flowchart I think about daily, will help founders and aspiring venture capitalists better understand the profession.

nbt.substack.com

The Myth of $1M ARR: How To Know When You're Ready for Your Series A

The most common question I get from founders building B2B startups is what metrics they need to achieve in order to raise their Series A. Founders often tell me they are advised that they need to hit the magical $1M in ARR before they raise their Series A.

twosigmaventures.com

Let's Talk Series Bs

Now that we have covered the fundamentals of what you will be evaluated against at the B, let's turn our attention to how to run an effective process. Don't under-estimate the importance of running a tight and well-managed process. A successful raise is more likely to happen with careful planning.

medium.com

Venture Capital Jargon Buster

Primer on VC for Academic Entrepreneurs