VC Industry, Part 2: Enduring the Seven-Year Cycle Before You Can Break Through

#VCIndustry2 — continuing the previous post VC has a distinctive time cycle. In some industries, two to four years of work may produce initial results. In VC, the period from your first investment to its complete exit can easily span more than seven years. If the anxiety, confusion, and powerlessness described earlier make you impatient enough to retreat into another industry, you may never advance to the next stage without experiencing several investments’ full cycles. You might back a unicorn and make your name—the odds approach zero—exit very successfully, take a small loss, or recognize a large loss. More often, companies linger half-alive with no exit; sometimes you are lucky if they die completely sooner. These are all different experiences. But across every project evaluated and every investment made, you can reassess your current investment logic and develop judgment that is distinctly your own. This is an upward spiral of growth. You may need continual feedback and reflection with experienced supervisors, excellent colleagues or peers, and energetic entrepreneurs. VC has stories of overnight fame and prominent veterans. Most investors who achieve results, however, have endured a long time. People simply choose to notice successes and overlook failures. Everyone has difficult periods. What matters is lasting long enough, experiencing enough cycles and challenges, and growing through multiple economic and technological cycles. Only then do you have a chance to break through. Many managers who are excellent at research and investing discover upon entering VC that socializing and relationship-building matter even more. They can feel out of place for quite some time. I am not good at socializing either; in fact, my social activity outside work is now close to zero. Even so, I still need to find a niche in which I can survive between the cracks.