How to make a smooth transition from Head of Platform to full-time VC
As the head of platform in a VC firm, you have a unique perspective on the startup ecosystem. You work closely with portfolio companies, understand their challenges, and have access to valuable insights into emerging trends and technologies.
As such, transitioning to a full-time venture capitalist job could be a natural next step in your career. Not only does it provide the opportunity to make direct investments in startups, but it also allows you to bring a wealth of experience and knowledge.
We know many platform leaders who aspire to run their funds someday. And while building a solid track record as an emerging manager is far from easy, we believe a head of platform strategy and operations has an extra edge that could prove valuable in the venture capital game.
To stack the deck in your favor, start planning now and slowly build leverage. In this post, we're breaking down the nuances that will help you smoothly transition into a full-time VC as and when you're ready. We'll cover:
the #1 secret ingredient you have that already paves the way for your successful career as a VC
the essential skills and experiences required for the new role,
how to develop your roadmap,
and some valuable tips to ensure you successfully make the shift.
Whether you're looking to make a career change or simply expand your skills, stick around because we provide valuable insights into the world of the venture capital industry and help you confidently navigate the transition.
The #1 secret ingredient you have that already paves the way for your successful career as a VC
Experience is your greatest secret ingredient and the key to being a successful venture capitalist. The more time you spend gaining experience, the higher your chances of success once you switch.
Because as the head of platform in a venture capital firm, you have a unique perspective on the challenges and opportunities facing startups and the skills and knowledge required to support them.
That experience will be invaluable in making investment decisions, evaluating potential investments, and providing strategic guidance and support to portfolio companies.
What exactly would you do as a full-time VC?
As a full-time venture capitalist, your primary responsibility would be to identify and invest in promising startups that have the potential to grow and generate significant returns.
That means you'd need to conduct due diligence on potential investments, negotiate terms with founders, and provide strategic guidance and support to portfolio companies.
In addition, you would be responsible for managing a portfolio of investments, monitoring their progress, and making decisions about follow-on funding. It's a lot of pressure and, as many established VC fund managers would attest to, requires a lot of persistence and resilience. So let's mention a few skills you need to develop as you map your future role.
Developing a roadmap for your future role begins with cultivating these skills:
Analytical skills: The ability to evaluate the potential of a startup, assess market opportunities, and analyze financial statements and projections.
Due diligence: The ability to conduct thorough due diligence on potential investments, including evaluating the founding team, the product or service, and the market opportunity.
Deal-making experience: The ability to negotiate and structure investment terms favorable to the investor and the startup.
Mental resilience: The ability to face adversity, overcome obstacles, and remain calm under the most challenging situations.
Relationship building: The ability to build strong relationships with founders, co-investors, and other stakeholders in the startup ecosystem.
Many of these skills, e.g., relationship building, are already part of the head of platform role, so you only need to continually advance and build on these traits.
Differences between the platform role and the VC fund manager:
Being in charge of the formalized post investment support isn't quite the same as running the entire fund.
As platform manager you spend a huge chunk of your time concerned with talent business development content networking events and more. This is well and good but as you're about to find out, things will shift dramatically once you take on the full role of VC.
Some of the main changes that come with a career switch include (but aren't limited to) the following:
Investment decision-making: As a head of platform, you may provide input and recommendations on investment decisions, but ultimately, the VC fund manager makes the final call. As a full-time VC fund manager, you will have more direct responsibility for investment decision-making.
Portfolio management: As a head of platform, you may help manage the portfolio of investments, but you will likely have less direct involvement in the day-to-day management of individual investments. As a full-time VC fund manager, you will have more direct involvement in managing the portfolio, including making decisions about follow-on investments and exits.
Investor relations: As a head of platform, you may be involved in investor relations, but your primary focus is supporting portfolio companies. As a full-time VC fund manager, you will focus more on investor relations, including fundraising, communicating with limited partners, and reporting on the fund's performance.
Deal sourcing: As a head of platform, you may be involved in deal sourcing, but your primary focus is supporting portfolio companies. As a full-time VC fund manager, you will focus more on deal sourcing, including identifying potential investment opportunities, building relationships with founders, and evaluating potential investments.
Compensation structure: As a head of platform, your compensation may be tied to the portfolio companies' performance or the fund's overall performance. As a full-time VC fund manager, your compensation will be tied to the fund's performance and may include a management fee and carried interest in the fund's profits.
Okay. Now that you have a little more clarity on how your role will shift and what you need to start prepping for, let's go over our best tips for a smooth career transition.
Tips that can help you make a successful transition
Expand your investment knowledge:
As a VC fund manager, you will be responsible for making investment decisions and managing a portfolio of companies. Therefore, expanding your knowledge of different investment strategies, market trends, and industry sectors is important.
Build your investment track record:
To build credibility as a VC fund manager, you must have a strong track record of successful investments. Consider taking on side investments, angel investing, or co-investing alongside your current fund to gain experience and build a track record.
Develop your fundraising skills:
As a VC fund manager, you will be responsible for raising capital from investors. Developing strong fundraising skills and building investor relationships are crucial for a successful fundraising campaign.
Network within the industry:
Building strong relationships within the VC industry can provide you with valuable insights, potential co-investment opportunities, and access to top entrepreneurs.
Create a strong team:
Building a solid team with complementary skills and expertise is critical for the success of your fund. Consider recruiting team members with relevant experience and diverse skills and backgrounds.
Have a clear investment thesis:
A clear investment thesis will help you define your investment focus and communicate your investment strategy to investors.
Stay up-to-date with regulatory changes:
As a fund manager, you will be subject to various regulatory requirements. Staying up-to-date with the latest regulatory changes and compliance requirements is essential to avoid legal and financial liabilities.
The career move from VC Head of Network to full-time VC fund manager can be exciting and scary. That's okay. You need to develop a clear roadmap that enables you to prepare in advance, develop the necessary skills, and implement the tips shared in this article.
If you can begin consciously expanding your investment knowledge, developing fundraising skills, networking, building a strong team, having a clear investment thesis, and staying up-to-date with regulatory changes, you'll be fully equipped to step out independently.
Following these tips, you can position yourself for a successful transition and build a successful VC career.