How do VCs spend their time?

How do VCs spend their time?

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Everyone thinks VCs just get to run around and invest in tons of companies and have the greatest job of all time, but they only get to do that for a small, actually, a pretty small percent of their time, maybe 20, 30%. There's a lot of other stuff they have to do. And the first thing is they have to fundraise for their own funds. And so a lot of times entrepreneurs don't realize that VCs have a similar relationship that they have to their VCs. The venture capitalists are kind of beholden or need to make their limited partners happy.

Another thing you need to do which is probably maybe the bulk of the time is working with your portfolio companies. This is really what the best VC funds do, and the best partners. So of course you've got your board meetings every four to six weeks, sometimes every two months, but plan on doing a sizeable amount of board meetings with the company that you invested in. And there was a lot of prep before that board meeting. You're going to get the board packet a couple of days early. You're going to read through that and think about the questions. Sometimes there's like sub-committees like compensation committees, audit committees, things like that.

Another thing you're gonna need to do is review the financial plan and do approvals. That's super, super important especially in December and January, that's usually when most companies are getting their plan approved. It's a pretty hefty board meeting. It usually takes a while because everyone wants to talk through revenue projections, expense projections and really layer on the milestones where the company's going qualitatively with the quantitative financial plan. Of course, another thing that this segues into is financing plan. Basically, when are you gonna raise money? Are you gonna raise another round next year? Are you gonna do venture debt? Are you cash flow positive? Are there other alternative fundraising options you can do? So there's a lot going on there, but fundraising and making sure the financial plan is fully baked and incredible is super, super important.

Another thing that venture capitalists do is they do a lot of diligence calls on your company's behalf. When other VCs are gonna invest in your company, they wanna talk to the venture capitalists on the board. They wanna know the inside scoop. They wanna know what's going on. They wanna know how great is the entrepreneur. Are they really... Is the CEO really smart? Is she a great salesperson? Is she great quantitatively? Is she a great engineer? What makes that CEO special and their founders special? So there's a lot of diligence calls. They also do a lot of diligence calls the venture lenders as well.

And then one of the final things kind of operationally they do for their portfolio companies is doing a lot of recruiting. Obviously, if you're gonna bring in like a VP level person or maybe a director level person, the venture capitalist is part of kind of wooing that person oftentimes, and also VC funds. A lot of them now have recruiting arms. So they'll actually do a lot of recruiting work for your company. Not necessarily the partner that's on the deal. They will do those diligence calls with potential hires that are especially big time people. But you can also leverage the VC firm's in-house recruiting team. That's actually a really great tool. So that's all the stuff they do for their portfolio companies.

The final bucket that venture capitalist do, spend their time on is a lot of networking, writing, press, videos, whatever is their kind of shtick. I think probably 10 years ago, venture capitalists figured out that content marketing worked for them, too. And so they would do Fred Wilson's blog or Bill Gurley's blog or Mark Suster would do Snapchat all the time when Snapchat first came out. But there's just a lot of information and content that venture capitalists put out to help communicate with the market, help teach entrepreneurs.

They also do a lot of press because they wanna... it's helpful to be in New York Times or CNBC. And so that's another aspect of their job. So we total all this up, you can see venture capitalists have a lot of responsibility. That's why they get the big bucks, but there's a lot of responsibility and a lot of time demands. And so, again, if you're an entrepreneur who's looking to talk to VCs and try to get in front of them and pitch them, a little bit of empathy will help because talking to you, potential entrepreneurs that they're gonna invest in is probably their favorite part of the whole job. And yet you can see they have all these responsibilities that make it a little bit difficult to allocate as much time as they want.

So be patient and have a little empathy for the VCs and it should get you somewhere. Hope that helps. Thanks.