Student Resource Guide: Uncovering Venture Capital
The crazy thing about the startup world is that we’ve basically written the playbook on making dreams become reality. We have tactics and guides for achieving almost anything quickly, but it’s largely up to founders to internalize and execute on them — and what isn’t covered in these manuals basically comes down to luck. However, this know-how is restricted to closed networks, and because the norms of the startup world are not taught in higher education, most students don’t know where to start.
We’re working to change this at Dorm Room Fund by bridging the gap between the startup subculture and students with an incredible drive to create change. We believe that this effort starts by de-risking the idea of entrepreneurship, and by making venture more accessible. This involves explaining insider language in approachable terms by outlining the rules of the subculture’s game, sharing these playbooks, and by creating a support network for new founders to lean on.
We’ve all felt incredibly lost at some point while trying to navigate this space as students. With limited work experience, many of us struggled with how to best be a supportive resource for students in our community. So, we’ve outlined some of our favorite resources that have accelerated our learning. We are cognizant that not everybody has access to the same networks and have tried to provide options that anybody can access.
Stay On Top of Market Knowledge
— As a VC, you need to keep up with the investments being made in the rest of the market. And as a student, you need to ask why specific companies are venture backable, while others are not. Talk to anyone you know in the industry to gain their thoughts about why funds invested or passed on different companies. It’s incredibly insightful to hear how decisions are made.
— Keep up with newsletters. Some, like TermSheet, Axios, StrictlyVC, do the heavy-lifting for you, and keep you up to speed about daily funding.
— Keep track of which firms cover specific types of investments. This will be very helpful for a founder who is putting together lists of investors they’d like to be introduced to. It will also help determine who the subject matter experts are for an industry.
Develop a Thesis
As a VC, you will often need to develop an investment thesis — which summarizes your motivation for making an investment. Not all funds are thesis-driven, but theses often help in shaping a vision for the industry, and can give you a benchmark for what products and business models will succeed. It helps you form a narrative about the incentives that drive markets, and establish a view on why things will — or won’t — work today, tomorrow, or two years from now. Having your own thesis can also help you evaluate if a founder is able to think through bigger market forces, which help them create non-linear momentum for their startup. Below are helpful resources in understanding how macro theses on industries are structured:
— VentureStories by VillageGlobal is a podcast in which founders and VCs are interviewed specifically about their theses. (Note: VCs publish often, but It's rarer to hear founder theses and how they translate to clear product and business model choices on this podcast.)
— 20MinVC podcast will often highlight individual theses by different venture capitalists, sometimes focusing on founding teams, and sometimes on specific markets. a16Z podcasts also outline theses occasionally.
— John Gannon has great resources and examples of investment theses developed by aspiring VCs as part of the recruiting process.
Listen To and Spend Time with Founders
Listen to founders’ stories in detail — especially stories about good execution. This will help you form ideas to advise other founders on how to iterate faster and think about longer term strategy, among other things. Ask the best founders you know about how they’re thinking about iterating on their product, what they’re learning about their customers, things they have been surprised about, what tactics they’re using to sell, etc. Hearing from other people will help you learn what good looks like — especially if you don’t have a lot of operational work experience at a startup yourself!
— How I Built This (NPR) is a good podcast for founder stories across industries - it's always good to see examples of leadership and creativity in non-startup contexts.
— For startups, Masters of Scale by Reid Hoffman. Each episode is a hypothesis about “startup success” factors - and he interviews 50-50 women/men!
— First Round Review articles provide incredibly tactical operational advice about every type of startup function, from sales to product to recruiting. This is especially helpful for context and best practices for building a team.
— Send things that might jog new ideas, or relevant information to founders you know! Let them know about new products or companies in their space, especially if they’re heads down and not as active in tracking trends
Maximize The Value of Your Network
— Have a group of friends you can discuss any of these things with even when you have “dumb” questions — you’ll learn so much faster together. I constantly discuss funding news and what makes certain teams and ideas work with Dorm Room Fund partners and alums.
A network like this becomes your go-tos for tactical questions like “Should a founder be running a 1 or 2 week fundraise?” or “What’s XYZ’s fund’s size?” Even if your immediate network doesn’t have an answer — it’s likely that someone in their network will! There is a high degree of leverage in VC, start developing your network now.
— When you meet VCs, ask them about their investing framework and how they make decisions. Every VC weighs different components differently, and it’s helpful to hear the reasoning behind their guidelines. Investment frameworks are incredibly personal, so knowledge of the frameworks that top investors will be very helpful when you set out to develop your own.
Understand Follow-on Funding Dynamics
You need to know how fundraising and term sheets work beyond the pre-seed stage, or the stage at which you are directly investing. It’s incredibly important to understand what the incentives look like for downstream VCs. This insight will help you understand whether or not a company will be able to raise follow-on funding and/or what subsequent obstacles might be. This is the information that is incredibly opaque for founders, especially students without direct startup experience.
— Venture Deals is a great place to start learning.
— “Why We Invested” posts from other VCs, like CRV and Lerer Hippeau, are another good source. An easy way to keep up with posts like these ones are to follow funds directly on Medium or Twitter. Finally, if you have access to speak with founders, ask them about their fundraising stories to find out what they learned about VC incentives from a first-hand perspective.
Establish an Online Presence
As a VC, it is important to be visible. You need to make your views known to other VCs and founders, because it encourages conversation that will challenge your assumptions! A prominent online presence can serve as a channel for job offers, deal flows, and thought leadership.
Get on Twitter
There are so many subject matter experts who tweet short thoughts on market dynamics or alerts when founders are raising. Follow VCs, founders and operators. The more perspectives you get on decision-making and market dynamics, the better. Over time, you’ll begin to develop a list of VCs you respect, and founders who are working on cool things. You’ll also hear VC gossip, random stories from the “old times” at companies, shreds of company ideas, and other things that probably won’t come up in your normal media diet, but that are enormously helpful for understanding VC language and culture.
By keeping up with social media chatter, you’ll be much better prepared to hold a conversation with people in the industry. You’ll end up finding many different pockets of people and experts who hold specific industry knowledge — they become news aggregators and often share interesting points of analysis you’d never learn fast enough on your own. Because there is a culture of sharing what you learn, you will learn from everyone else's learnings!
To get started, follow @bywomenvcs and follow all the people they re-tweet!
A word of warning about Twitter. The danger is that a lot of this content is opinion, not fact. You should look at everything on Twitter with a critical eye, and use it as another perspective to inform your opinion.
Additionally, be cognizant that the words you share online are very public, and can be perceived in different ways. Your tweets carry weight — especially if you aim to create a strong online persona, or are affiliated with an organization. It pays to make it a habit to take a pause before you hit publish.
Twitter might not come naturally, and that’s okay. It can be helpful to start each morning by following five people, retweeting five posts with comments, and tweeting your own comment at least once per day. However, Twitter might not be your preferred source.
Some people might prefer posting long-form content on Medium, some may prefer to create their own podcast, or to host Meet-ups. Just establish a presence and get it out there!
Pay It Forward
Finally, go out of your way to help and find founders who aren’t your prototypical bunch. Expose other students to the industry information that will allow them to break into the VC world and make an impact.
Get more Dorm Room Fund news and updates on Twitter and learn more on our website. Want more DRF content? Subscribe to our newsletter and podcast. Ready to take your startup to the next level? Apply here to be considered for an investment from Dorm Room Fund. Until next time! 🚀