Chronicles from my journey at an early stage VC firm

It’s been an exhilarating last 2 years that I've spent at Matrix Partners India, and as I move on to Wharton for my MBA (which is delayed by a year now thanks to COVID-19), I can’t help but look back and reflect at the roller coaster ride it’s been. But before I get into that, here’s a little bit of the backstory to give you some context and background on my life pre-Matrix, what paved the way and led me to working at an early stage venture investment firm.

Back in 2012-13 when I was a student at IIT-Bombay, I witnessed the gold rush of consumer internet companies coming out of ‘Powai Valley’. The picturesque suburb started drawing parallels to the Silicon Valley thanks to young and fearless founders who inspired an entire cohort of peers around me to either join these startups over conventional jobs or to become entrepreneurs themselves. I witnessed first-hand the impact great products have in empowering customers and bringing industry-shifts. For instance, I distinctly remember the delight I experienced when I took my first Ola ride in 2014, and commuting forever changed for me ever since!

Like many others, I joined a ‘Day-1’ management consulting firm to get cross-industry insights into building a large business. Consulting is a great finishing school for a fresh graduate, but on the flip side - you end up working for established corporations with limited insight into what got them there. Observing the boom and bust cycles in the startup ecosystem from the sidelines (the nuclear winter of 2016, anyone?), I got more curious about business model choices of early stage companies that made them eventual household names including how venture capital plays an instrumental role in driving that success.

Over the past 2 years, as I’ve been at Matrix Partners India, a lot of my friends, juniors and peers have reached out to understand more about what a VC job entails. Through this post, I’ve tried to summarise my learnings through my transition from management consulting to venture capital, and what next.

After working at Matrix Partners India these past 2 years, I think I have some answers to “what makes a good VC analyst”, a question you probably also have (if you are considering the same career choice I was 1.5 years into consulting out of IIT). 1) Are you innately curious about the elements of success of an early-stage venture? 2) Does identifying and working with inspirational founders solving the most interesting challenges through tech excite you? 3) Would you like to understand the thesis building and decision-making process behind making these futuristic investments? If most or all of the above scenarios seem interesting to you, a career as a VC may be the answer for you.

A day in the life as an investment analyst can broadly be divided into three parts -

1) Building investment theses, 2) meeting promising entrepreneurs to find a company that transforms the user experience and an industry forever, aka, a career-changing investment, 3) partnering closely with portfolio companies. While the time-split in these activities may change based on tenure, the mix remains the same

**Building theses:**

To find a potential investment opportunity, you first need to know where to look (duh). Building a forward-looking thesis involves finding an emerging area/sub-sector and building a strong point-of-view on it. You try to answer questions around the market size and dynamics, ‘why now’ of the opportunity and right-to-win for a venture-funded start-up to win big in the space through a combination of talking to subject matter experts and secondary research. For instance, our thesis on digitally native consumer brands (DINVIBs) led to our investments in companies like Country Delight, AndNothingElse, Mosaic Wellness among others

**Sourcing and evaluation**

Sourcing and leading a competent diligence is one of the most crucial parts of the job. Sourcing a deal requires you to keep an eye on emerging companies through news reports, databases and effectively tapping into your network to identify and meet the smartest and brightest people starting-up first. Timing, like in every other business, is key and VC FOMO is a real thing! While this is outbound, there’s also a healthy mix of inbound leads from founders directly or friends of the firm that hit our collective email, WhatsApp and LinkedIn inboxes constantly.

Distilling through this set of companies requires one to analyze each opportunity in terms of the founder and team, product and it's edge, business and traction and the overall market size/growth. Each diligence is an endeavour to shrink the zone of 'known unknowns' (things we know that we don't have an answer to), and 'unknown unknowns' (things we don't even know that we should be cognizant of!)

**Portfolio management**

For companies that we have already invested in, this means spending time on a monthly/quarterly basis, depending on the stage of the company, to understand and help solve their problem areas. While capital is the most important offering a VC has for a startup, we try to add value in additional ways through strategic advice, helping hire strong operators, making connections to experts ranging from legal, PR, marketing, etc or just introducing new customers

Reflecting on these past 2 years has helped me identify the part I enjoy the most, which has been to work alongside some of the best founders in the business and to have a ringside seat to their growth journey.

**Exit options"**

Another question I always get is ‘But boss, what are the exit options if I join as a VC analyst?’. There are three broad tracks that make up the universe - operating (both starting up or joining a company as an operator), continuing within investing (early or late stage), and MBA. I believe the skill-sets around first principles thinking, communication and investing 101 makes you an attractive resource for each of these tracks. I have former colleagues who’ve started their own ventures, are in exciting roles in fast-growth companies like Bytedance, Swiggy, Zomato or headed to top global business schools like HBS, LBS, INSEAD right after their stint. While I decided to go the global MBA route as it fit with my long-term career aspirations, as you can see - it’s an open canvas.

If I had to crystallize my entire journey down to the single most exhilarating experience (as well as the most challenging one) it would be the time I closed my first deal - Oye! Rickshaw. An electric rickshaw mobility platform, that solves the woes of the daily commuters first and last mile problem - something I personally also resonate and identify with. Right from sourcing the deal to watching the company clock 2 million rides in the span of a year, it was without a doubt one of the highest points of my journey as an investor. Working with the founders taught me a lot about the ground realities of building a startup from scratch, and an equal amount of excitement as well as challenges that come with it.

Looking back at my last 2 years with Matrix, the breadth of work, a gamut of exposure, access to a network of high-quality peers and mentors, the sheer opportunity of being able to witness young companies grow from ground zero, and of course the fast-paced environment in which all of this takes place, has been invaluable. But most of all, it’s been the strong level of ownership, the need to work independently, and the entrepreneurial mindset/style of working even though it isn’t an entrepreneurial venture, is what will be my biggest takeaway from this experience.