So You Want to Be an Early Stage Investor?
I absolutely love what I do—running a seed-stage venture fund (Founders’ Co-op) and startup accelerator (Techstars Seattle)—but neither is a job with a well-defined career path. Unlike later-stage or public market investing, where finance and quantitative analysis is a big part of the job, effective early-stage investing requires a combination of human, strategic, and operational skills that’s hard to come by if you haven’t been a founder yourself.
My best advice to anyone who wants to be an early stage investor is to begin your journey as a founder or early hire at a high-growth startup, and preferably more than one. The more aspects of company-building you understand—from hiring and product development to fundraising and sales—the more effective you’ll be at evaluating potential investments and adding real value to the teams you choose to back. And the more empathy you have for the founder experience, the more you’ll appreciate that success is more often built from good luck, hard work, and perseverance than clever ideas or well-constructed financial models.
[Editor’s note: To tap the wisdom of our distinguished group of Xconomists, we asked a few of them to answer this question heading into 2015: “What advice would you give students who are interested in your field?” You can see other questions and answers here.]