Successful venture capitalists have intuitive and analytical skills. They must be able to assemble and digest large amounts of data – some precise but some pretty vague and incomplete – and integrate all that information in order to make seriously consequential decisions.
. . . The venture capitalist must often be a skeptic, as he is likely to reject a hundred deal opportunities for every one in which he invests funds. He also must temper the optimistic fervor of the entrepreneur. That’s important at the start in order to negotiate a good deal and then later to foster the entrepreneur’s management discipline and ensure the entrepreneur recognizes key risks and addresses them thoughtfully.
. . . Importantly, the venture capitalist must be highly knowledgeable about business development. That means sometimes being a patient nurturer of growth, but at other times being the impatient, sharp prod pushing the entrepreneur. Most people involved in business creation create just one business in a lifetime; the venture capitalist is involved in building many.
The venture capitalist must be an astute strategist. The ventures in which he invests are inevitably on the cutting edge of markets and technologies, so often those ventures need to make sharp strategic turns as more is learned. The successful venture capitalist must be able to participate in driving the venture’s strategic path.
Perhaps surprisingly, the successful venture capitalist must sometimes display exceptional operating acumen as well. While in most cases the venture capitalist will not get heavily involved in portfolio companies’ day-to-day operations, there are times when the VC must step in, right an errant venture ship, and spearhead the turnaround of a venture that still has valuable potential but has lost its way.
There aren’t many individuals who have all these tendencies and skills.
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