Entrepreneur to Fund Manager

One of the things college students ask me is how to get into venture.  They see it as a sexy business.  By the way, it’s not.

Over the course of the last year, I have had conversations with some very very successful entrepreneurs.  They sold their companies and made a lot of money.  They easily could make the jump to a venture fund (or start their own) and become a partner similar to what Andreesen and Horowitz did.

Instead, they started a new startup.

If startups are super risky and painful, why go through it again?  Why not take the glamorous road of being a financier?

Each of them made investments in seed stage companies.  They hated it.  It’s not to say it cannot be done because clearly, it’s been done.  It’s just that many entrepreneurs detest all the stuff that comes with being an investor.

Entrepreneurs are a special breed of person.  We need lots and lots of them because they make our lives better.  Their internal compasses are designed differently than a lot of other people.  I find they have a positive outlook on life.  But, I also find that they like to control situations.

The truth is, venture capitalists have very little control over outcomes.  As investors, we can do what Fred Wilson calls “the heavy lifting” and good venture capitalists do that.  However, a VC will only own a minority stake on the cap table.  There is no command and control that comes with investing.

Command and control are vested all in the entrepreneur.

This is why teams are so important.  Bet on the jockey, not the horse.  It is also why knowing the corporate culture and helping them develop a good corporate culture is so important.  Great corporate cultures help develop and sustain great teams.

I am always happy when I hear a successful entrepreneur is building a new startup instead of going the venture route.  That means the world is going to become a better place and people are going to get opportunities.