If you ever want to make a college student cringe, usually all you have to do is ask, “Have you found a summer internship yet?” Luckily, after developing mild carpal tunnel syndrome from scrolling through our respective college career sites for countless hours, we were both given the opportunity to enter the venture capital world as summer interns at Laconia Capital Group. Just completing our sophomore years at Penn and NYU, we began our internships at Laconia unsure of what our summers had in store for us. On each of our first days, we walked into the office uncertain but excited to gain experience in an industry that would give us exposure to a variety of businesses and accomplished people. However, ten weeks later, we now find ourselves participating in office discussions with confidence and an eagerness to absorb all of the information thrown our way. As our internships come to an end, we reflect on our experiences and the invaluable lessons we have learned this summer. We’ve outlined the top five takeaways from this summer that are relevant to those working in the VC industry, as well as those thinking about their own business.
Keep Your Friends Close:
One of the key lessons we both gained from our internship this summer is the importance of cultivating relationships. After attending multiple networking events, it is evident that one of the ingredients crucial to becoming successful in the VC world is to maintain strong connections with entrepreneurs as well as other VC firms and personal networks. Establishing strong ties with other venture capitalists has the potential to increase exposure to high quality deals, while also nourishing relationships with possible co-investors for future investments. Even if a VC firm decides to pass on an entrepreneur for the time being, forming valuable connections with founders allows investors to keep communication ongoing and open new doors for business.
Keep Your Eyes on the Prize:
“Your capital strategy is just as important as your operating strategy.”
This is a message we have had drilled into our heads almost daily over the past ten weeks. Far too many times, entrepreneurs overlook the importance of a well organized cap table or capital structure. It is rare that a CEO would say that they love fundraising; however, having a detailed plan going into your capital raise is crucial to the success of your business. Ensuring that your company will always have enough money in the bank to meet your KPIs allows founders to go into negotiations in a position of strength rather than weakness. Companies run into trouble when leaders fail to raise the appropriate amount of money needed to reach their milestones. Additionally, building strong relationships with VCs prior to needing to raise capital can be advantageous to the entrepreneur down the road.
Perfect Your Pitch
After going through dozens of pitch decks and sitting in on presentations, we can now properly identify the good, the bad, and the ugly. What makes a pitch stand out to us is the founder’s ability to develop an easy-to-follow storyline that the audience can relate to. Oftentimes, founders get too tied up in jargon and struggle to simplify complex concepts. Even though you may know each and every detail of your business, remember that outsiders need to be walked through each step to fully understand the problem you’re trying to solve. Keep in mind that although you might be the smartest person in the room, you still need to illustrate your business as if you were speaking to a five year old (with an MBA).
Be Ready for Anything:
One lesson learned as an intern is to come prepared. You are not expected to know how to write an investment memo on day one. However, it is helpful to familiarize yourself with the language used on a daily basis. One book that expedited the learning process for us in our first few weeks was Venture Deals by Brad Feld and Jason Mendelson. We highly recommend this read to anyone interested in venture capital or starting their own business, as it will help you understand not only the financial aspects of a venture deal but also the legal and technical sides.
On the entrepreneur side, VCs appreciate those who come prepared to meetings and have materials ready to go once the due diligence process begins. These documents oftentimes include financial statements, customer referrals, a well-thought out pitch deck, and team bios. Each VC firm varies on their level of due diligence; however, it is helpful to have these resources on hand for whatever might be thrown your way.
Back to the Future:
It’s hard to imagine what the world will look like in 5-10 years; however, as an entrepreneur or investor it’s important to evaluate a marketspace and try to imagine how it will evolve over time. VCs are interested in understanding the vision of your company and how you would adapt to a change in the competitive landscape. We have learned at Laconia that it is not about finding the “unicorns” of the industry but rather seeking out scalable, reliable businesses that will be able to stand the test of time.
We’d like to finish this post by telling you about the best parts of the job. For starters, what normal twenty-year-old gets to sit in on meetings with the founders of some of the most innovative companies in the world? In VC, this is the norm, and we were lucky enough to get to sit in on at least two each week. In addition, interning at a micro-VC firm allowed us to work side-by-side with Laconia’s two partners, exposing us to the minds of investors and the way in which they think about potential investment opportunities. Finally, we were able to gain access to accelerators, incubators, and pitch events, introducing us to the larger VC community. We hope these tips come in handy as you attempt to enter the daunting world of VC or take on a new business venture.