How (+Why) I Broke into VC
Anyone trying to get into venture capital knows: there’s no set path. This isn’t undergrad bio major -> MCAT -> medical school -> match -> residency -> career as a doctor. Which is good, because I’d hate that.
There ARE common steps: founding/operating startup(s), investment banking, investing as an LP, getting an MBA, etc. But these don’t guarantee placement either.
Really, it’s luck. Serendipity. I don’t think that’s 100% right either. I believe it’s creating serendipity. You must do the things that increase your odds of luck presenting itself (and then you have to take it).
First: Why?
I love entrepreneurship. I love the excitement of creating something from nothing — of taking an idea and running with it — everything about it. I was the kid who built little businesses growing up (mobile lemonade stands, locker store, computer repair co, whatever). Then I (co)-founded a couple in college, including Welzoo: a homepage that generated ad revenue for user-selected nonprofits.
Welzoo was my first experience pitching venture capitalists and angel investors. Since VC feedback was “too early,” we raised our initial $1M from angels. I handled most of the capital raising efforts, which I really enjoyed. I don’t know why I did; a lot of founders dread that part. The first venture capitalist we met was Jonathon Triest at Ludlow Ventures. And though I’ve caught up with Jonathon over the years and he’s ALWAYS been helpful, that first meeting was no doubt routine for him, while monumental for us.
Jonathon listened to our pitch and gave real feedback. Not the bullshit feedback our parents and friends gave us. He told us what to improve — in our deck and in our company. In a kind, genuine, helpful way. I remember thinking, “this guy has an awesome job. Maybe I’ll do this one day.”
I went on to help grow a few early stage startups including Charidy, Gigameet, and MeVee. In some cases, I was involved with capital raising. Still loved it. Got to know a few VCs.
One of those startups ran out of funding…right around the time of my wedding. Seemed like the right time to do something “more stable.” I tried, quickly, to find a job in venture. Took a couple meetings. Realized it wouldn’t happen that fast. Instead, I jumped into real estate (finance/investment sales); that business was on my bucket list and the right opportunity fell in my lap.
Real estate is cool. It’s a good business. It’s lucrative. It’s not as cool to me as startups. I did it for > 3 years and, for a little while, forgot how unsexy I found it. Until early 2019.
Enter: PropTech. The marriage of my experiences. Here I was, working in a space mind-blowingly behind the times in its operations. The largest asset class in the world…totally analog. One morning, emerged from my cave and noticed the BILLIONS of dollars being poured into this hot new sector of tech. The lightbulb shot above my head: Oh yeah — that’s the stuff I love! And: it’s how I’ll finally get into venture capital.
Pause. Why venture capital? I’ve mentioned my love for startups but ignored the other side of the table. Here’s the thing: I love both. And I do hope to build another company in the future — only when I have the right idea and I’m the right person. I think many VCs can relate; it’s really two sides of the same coin.
But I love venture just as much (if not more). Remember that I, weirdly, enjoyed raising $ from investors at my startups? I can’t put my finger on it, but that process — that hybrid of finance & entrepreneurship — is thrilling to me. That, plus:
- Venture capital is a bird’s eye view approach. It’s great for people like me who get excited by a lot of things. I’ve realized I’m not such an “in-the-weeds” kind of guy. My wife thinks I’m ADD. I think I get excited by a lot of things (at the same time). VC lets you get involved with multiple great entrepreneurs and multiple great companies, jumping between them each day.
- Networking! VC is (in many ways) about networking, talking to people, and keeping your ear to the ground. If I have one skill in life, it’s building relationships. In VC, those relationships = deal flow, diligence calls, LP introductions, and so much more. It’s also collaborative (unlike real estate), which I really enjoy.
- Helping and enabling entrepreneurs is addicting. As a VC, you get to jump in and help (when asked!).
- Fundamentally, this is a job about predicting the future. It’s a space for infinitely curious people who can never learn enough. You find yourself regularly falling into rabbit holes of knowledge about sectors you never dreamed of.
- Diversification. Founders make 1 bet at a time. VCs make tens or more. We spread the risk over a number of great companies, increasing our odds of success. Note, however, that each personal success is smaller. A unicorn founder will (and should!) make a lot more money on that company than his/her investors.
- I love believing in teams and concepts from the earliest days.
Back to the story.
I went out and networked like an animal. I reached out to, and met with, founders/investors/operators/everyone involved with PropTech. I couldn’t learn the space quickly enough. (Incidentally, I was sort of doing the VC gig without realizing it.) Because my wife is the youngest of five from Long Island, I knew I wasn’t leaving New York. That actually made the search easier / more focused.
As I was meeting with *every* early stage [my preference — for another post] VC with a New York office that looked at PropTech (logged in a Google Sheet), I got to work on a deck. In spring 2019, I pitched the executive team at my real estate firm on launching a PropTech focused venture arm. My logic: 1. We’ll get into the best deals 2. Our CEO already angel invests — why not with focus? 3. We can pilot our portfolio companies and enjoy step-ups in valuation. The process took several months (like everything else at a RE firm).
Also, while this was happening: I reached out to Alex Ferber, a partner at Green Egg Ventures, and told him what I was up to (he, too, critiqued Welzoo’s deck in the early days + we have an overlapping network). As it turned out, GEV was interested in seeing PropTech deals (+ I had an interest in hearing feedback). Long story short: we set up an apprenticeship of sorts, which helped a lot with getting in the door at other firms. More on that soon. (I’ll add that Alex has been one of the greatest mentors throughout my journey.)
So here I am: working in real estate finance, spending my free time with Green Egg Ventures, and trying to convince a CEO to expand into venture capital. I’m also doing a part time MBA, sending deal flow to PropTech Angels, and finding any other excuse to get experience. And, as I’m continuing to network, I hear rumors that another large real estate firm has just hired a VC to open a strategic investment arm. I call someone I know in the firm to ask about it, but he has no idea. A week or two later, I bump into him at a park on a Saturday — with excitement, he tells me he’s learned of the initiative. He’ll make the intro! A few days later, I was in their office to meet this new hire (fake name: Dan).
Dan shares the exciting plans with me and mentions that they’ll need an Associate! He suggests interning for a few hours a week (much like I’d been doing @ GEV) and, assuming we like each other, we could move forward within 4–8 weeks with the full time position. I was thrilled — of course, I accepted. But I also let him know what I was trying to build at my RE firm. We brainstormed and wondered whether our firms could work together.
So, you guessed it: several weeks later, my CEO + his CEO + a few others met in one of our board rooms to discuss a joint VC fund. It was exciting. It looked like it was going to happen!
And then it didn’t. Somehow, both sides lost interest. Our CEO decided we’re a real estate firm, not a VC. I don’t know what their CEO decided, but he killed the entire platform.
That was it for me — the key moment. I made the decision to get into venture capital regardless of the process. I realized it could take months, but committed to pounding the pavement and doing it. I was fortunate to have my job during the process.
I met *hundreds* of new people from spring-fall 2019. Coffee, lunch, drinks, late night calls, whatever. It was a roller coaster. Doors opened and doors closed. Random example: I got a drink (from a cold email) with Cory Moelis who invited me (that night!) to dinner with a partner from an international VC who was looking to hire. That partner is awesome — we hit it off — and he moved me forward in their process. When the head of the firm was in town from Germany that month, he asked to meet at 7am in SoHo. I did, and then never heard from him again. Roller coaster.
I’ll skip the details (I know). Fall 2019. Six months into my search.
I cross paths on LinkedIn with a man named KP Reddy, managing partner at Shadow Ventures. [This is not the end of the story.] I see that KP is in Built World Tech (real estate / AEC) — perfect! But he’s in Atlanta (oy). OK — maybe he knows some people, can offer advice, whatever. Always worth meeting. So I reach out and he’s kind enough to schedule a time. (I later learn it was an Analyst who responded to my message.) But the day we’re supposed to meet, my daughter is born; I ask to reschedule. I never reschedule. Because he’s in Atlanta. And I’m in New York. And I forget about it.
OCTOBER 2019, I’m at CREtech’s event in Brooklyn. At this point, I’m in the interview process with two firms but unsure what’s to come. As I’m walking around the venue, I look up to see KP Reddy giving a keynote. That guy! The smartest guy in the room, by the way. Hands down.
So, I did the obvious thing: rushed the stage. Long line of people waiting to talk to this man and I’m first. No time to shmooze. Right to the point: KP, you’re not looking to open an east coast office, are you?
Uh — yes. I was thinking Philly, but New York works, too. You interested? Talk to my Senior Associate, Nick Durham, over there. So I did. Over the following month, I had individual calls with each member of the team. They had me complete an exercise, which was educational. I stayed on top of them, demonstrating my hustle — ultimately, I was extremely lucky to receive an offer.
I joined Shadow Ventures as the “New York office” = a one person private WeWork space. Now we all live on Zoom anyhow. Since we’re a young firm, I’ve gotten to do a bit of everything: LP fundraising, sourcing, working with entrepreneurs in our incubator, co-leading an accelerator program, and so much more. I truly learn something new every day — from my team, from the entrepreneurs, from other investors in my ever-expanding network.
Like I said, it comes down to creating serendipity. Yes — I was in the right place at the right time. But I put myself there. I laid the groundwork and took the steps that led to my being there. I recognized KP Reddy on that stage because of our chance LinkedIn encounter, and I was walking around that conference because it made sense given my goal. This doesn’t make me smart and it doesn’t make me special. It makes me very lucky, and lucky that I jumped on that luck.
I’m beyond grateful to the hundreds of people who have helped me along the way. If I can pay it forward to anyone reading this, please reach out.
I often ask VCs if they still love what they do. The answer is always Yes. Mine is too.
Originally published at http://zfirestone.com on November 10, 2020.
