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We’re kicking off this new series with one of the most sought-after jobs in the startup world: Venture Capital Investor. Find out what exactly Marius Oesterschlink does as a VC at DN Capital and what you need to do in order to break into this industry.
Tell me about your background and how you ended up in your current role as a Venture Capital Investor?
I was very fortunate to have found my passion quite early – even before my Bachelors, I knew I wanted to go into entrepreneurship, or at least the startup ecosystem, because I was drawn to the thought of building something from scratch. So I started doing internships in startups, and with Rocket Internet in Berlin. After seeing the operational side of things, I worked for two VCs in Germany and fell in love with the industry. Eventually, my search for international exposure at a VC brought me to an internship with DN Capital here in London, where I’ve now stayed on in a full-time position. As a former Berlin Talent Summit participant, I also want to say that the event was definitely a career-changing experience for me; I not only met the company from my first VC internship at one of the summits, but also the person who ended up referring me to DN Capital.
Could you walk me through what your role is as a Venture Capital Investor at DN Capital; how does your typical day/week look like?
There really is no such thing as a typical day as the environment and the daily tasks change so fast and often. But you could put it into three different buckets:
1) The first bucket (and that's where you spend 50% of your time) is on new deals. That’s sourcing or the initial review of deals that have come in through our network. It might be an initial 30-minute introduction call, diving deeper into the financials and KPIs a company sent, or doing expert calls for more advanced deals later in the due diligence process.
2) The next is portfolio work (around 25%), where we help portfolio companies in strategic tasks; hiring situations or preparing for the next fundraising round. These portfolio-related tasks obviously increase the more mature a person becomes within the fund.
3) Lastly, the final bucket would be for anything else besides new deals and portfolio; i.e. preparing internal market studies to form our next investment thesis, representing the company at events or increasing the network during 1-on-1s with other VCs.
What qualities does someone need to succeed in this role?
There are actually two parts to this answer. We need to first assess the requirements to succeed in VC. We could have a standalone chat on this topic alone, but in a nutshell, it comes down to:
1) Access to best deals: See all/most relevant deals in your focus industry/geography.
2) Selection/investment framework: Correctly assess opportunities and decide which one to focus on.
3) Ability to win those deals: Convince and show founders that your VC is their best available choice as an investor.
4) Scalable portfolio value-add: Provide meaningful value to portfolio companies which then automatically drives all of the above.
On the Analyst/Associate level, the main responsibilities revolve around the first three requirements, thus, the qualities that are most helpful would be:
a) General curiosity and an ability to grasp new concepts quickly: We look at many different industries and stages of companies at the same time, i.e. a B2B marketplace for heavy machinery, a neobank fintech or a D2C consumer brand for plants – all in the same day. This means you need to have an analytical mindset to dive into these different industries quickly and form an initial opinion.
b) Humbleness towards entrepreneurs: They’ve sacrificed endless hours on their ideas and are building great companies which we have the privilege to accompany and support. Any question that arises on the investor side is probably something the founders have already thought about. So instead of trying to tell the entrepreneur what to do or judge decisions, it’s about understanding their point of view first.
c) Forming connections quickly: Getting along with people you barely know is essential. This could be with an entrepreneur you would like to work with, when talking to seed funds to be on top of their minds when their hottest portfolio company raises or when speaking with growth investors for our own portfolio companies.
What’s the most fascinating thing about your job?
For me, the most fascinating thing is meeting entrepreneurs on a daily basis. These are people who, by definition, are challenging the status quo, who are inspiring, who don't accept the world as it is, and who admit that the odds are stacked against them and still try to build great companies in spite of that. They give us investors a glimpse into what the future could look like, and I really appreciate the opportunity to get to know many different people working on impressive ideas. Coming out of a meeting with a great entrepreneur really gives you an energy boost and makes this job so much fun. The best entrepreneurs also challenge me personally, widening my horizon and creating valuable learning points.
What are the challenges you face in your position?
There are three main challenges I'd touch on:
1) Saying “no” – you will say no much more often than yes. We only invest in a very small percentage of companies that we've had an interaction with, let alone companies we've looked at. Even though you get along on a personal level and see huge potential in the business, it might not be the right fit for the fund. So it’s tough, especially when you know that they're great founders working on important problems but we just couldn’t quite get there.
2) As an investor, you're never in the driver's seat, but more of a passenger on the journey. You can try to help founders spot the dangers that might await them around the next corner and provide advice on strategic topics but you're not supposed to make decisions on a daily basis or grab the steering wheel (even if you might feel the itch). Thus, you’re never as connected nor can you identify as much with a company as the founders do.
3) There’s no real “off” button as a VC. It’s a power law business where a few outliers are responsible for the majority of returns, which means that any company has the potential to completely change the fate of the fund's performance (and in turn, your own career: imagine the regret of having passed on Uber’s seed round). As an investor, you're always switched “on” – there’s always the next company to review, another call to take or the next market to analyze.
What’s the one misconception people have about VCs?
Actually, I often hear 2 main misconceptions when talking to my friends in consulting/large tech/banking:
Firstly, that investors (especially juniors) are travelling all the time, running around meeting companies at events, going on coffee dates and sipping cocktails at parties. The reality is that there’s a lot of office work involved. It's more analytical than one would assume – so it's less gut feeling, shooting from the hip, and more about doing thorough analysis - at least for our fund. ;)
Secondly, that startups are constantly chasing investors for an ‘audience’ during their fundraising round. The best entrepreneurs chose their investors and have multiple offers, which means that the tables have turned long ago and that VC has eventually become a sales job to prove value to founders.
What advice would you give someone trying to break into your industry?
I can only suggest doing your research and speaking to as many VCs (in junior or entry positions) as possible. The job definitely isn't for everyone, especially when the industry is somewhat overhyped in comparison to how many actual open positions there are. So the odds are stacked against you. Most people who ended up in VC positions will tell you that they got lucky and were in the right place at the right time.
If you’re still set on the industry, you need to decide what kind of VC you’d like to be: A seed investor’s tasks will be very different from a Series B VC. At seed VCs, you need to have early access to the smartest teams starting their ventures; it’s more about the founders, vision, and execution likelihood. As a Series B investor, there's much more data analysis involved (because historic financials and engagement data is available). While both are technically VCs, the daily tasks are very different.
Besides that, you can increase your luck by informing yourself about the industry, developing your own investment thoughts, following VCs or entrepreneurs on social media, reading blogs, and listening to podcasts. All the information is out there (and it’s limitless), so it's really up for grabs. To sum it up into one sentence: At best, you bring something to the table that the fund doesn’t have yet (whether it’s specialized domain expertise, network in certain geography, etc.).
If anyone is interested and wants to get some feedback, please feel free to reach out to me – either for ways into VC or with hints towards interesting early stage companies. :)