The Business of Venture Capital, 3rd Edition

3Attributes of Successful VCs

Success in the world of investing boils down to the ability to pick “good” investments. “You have to become a great buyer,” says Mike Maples of Floodgate Fund. Yet the ability to pick the good investments sounds deceptively easy, as any fool can write a check. And we typically realize our folly after making a lot of bad investments. Or as they say, good judgment comes from experience, and experience comes from bad judgment.

The primary goal for any venture capitalist is to create value —for their entrepreneurs and their fund investors. “We are in the business of helping a company achieve critical path milestones. Being able to determine what is critical path is a matter of survival — our job is to be insanely rigorous about what the critical path is.” A definitive characteristic about a venture capitalist is being analytical about these milestones, says James Bryer, former chairman, National Venture Capital Association.

Successful venture capitalists have an entrepreneurial mindset, the ability to understand the basics of value creation. Yet, the background of some of the leading venture capitalists demonstrates no clear pattern. You could have operational expertise. Or not. To become better at the art of investing, here are a few attributes.

STRONG AWARENESS OF TECH TRENDS

As any candidate who aspires to be a VC someday, new entrants can bring new insights in an ever-evolving technology world. Where are the new hidden opportunities? How best ...