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Thinking About Investing

I’m drawn to the idea of becoming an investor for startups and small businesses.

Part of the appeal likely stems from my startup days. There’s a sort of coolness factor among the VC world. But this is probably the wrong reason to get into it.

From what I understand about venture capital, it’s about building a fund, making smart investments (diversifying risk), and earning a return 10-20 years down the road. However after finding and reading reflective blogs by current fund managers, it appears there’s another story to consider.

It seems the pattern follow this: someone becomes a venture capitalist because of their past experience with entrepreneurship. They started a business, were acquired, and now have play money. They like the idea that other people are pursuing the same mission they once set out on. As a result, they position themselves as an early-stage investor who can help the business break through barriers of growth.

But in practice something else is happening.

People often just want the money. They don’t want help. They don’t want mentorship. They just want to continue working on their business the way they see fit. Brad Feld even mentions this happening with David Cohen and Techstars (a very strong business accelerator program). Part of the idea in building Techstars was to place investment AND contribute to the company’s success.

So should I get started on the process of becoming an investor? I don’t have millions of dollars. I also don’t know any startups I’d want to invest in right now. If any, I’d probably place a bet on Matt Stewart from Click2Order, but is Matt even open to investment right now?

In my late-night Googling I searched for realistic insight into what it’s like being an investor. Sources say it can take 5-10 years for a worthy opportunity to pop up. If that’s true, then it’s probably a wiser decision to start sooner than later and position myself for the day that big opportunity appears.

In the meantime, I could get a healthy head start on a few managerial items:

  • Grow my network and develop meaningful relationships with expansion-agents abroad; helping the founders I work with.
  • Build my fund through either personal funds, consulting, or by recruiting investors with more money than I.
  • Define the criteria for businesses and founders I desire to work with, helping me focus who to watch,  engage with, and build a relationship with.
  • Refine my craft in sales and marketing through this, my blog and journey, Marketing Qualified.

This decision to start investing might not be received well by peers in my community. It’s possible some people will gossip that I’m stepping out my lane. Either way, I have enough self-awareness to know what I’m capable of and which opinions I should dismiss. There’s going to be a learning curve, but I’d rather face that challenge now than tackle it later.