The VC Field Guide (eBook)

WILLIAM LIN has spent his career close to creation and creators, as an entrepreneur, founder, innovator, and investor. Over a decade as a venture capitalist, Will started as an entry level investor and eventually became Managing Director and member of the founding team at Forgepoint Capital, a $1 billion AUM venture capital firm with roots in cybersecurity. He co-founded and is Chairman of the Security Tinkerers, a nonprofit organization that gathers information for security professionals seeking opportunities in the security community. He is now pursuing the next stage of his career as a founder of a cybersecurity startup. Will graduated from UC Berkeley and lives in the Bay Area with his life partner, dog, and cats.

Foreword xi

Preface xiii

Acknowledgments xv

Part I Introduction 1

Introduction 3

My Background 3

Who Is This Book For? 9

The Framework's Origin 10

Endnote 14

Part II The Venture Capital Investment Framework 15

Chapter 1 The Venture Capital Investment Framework 17

Startup Investing 17

Chapter 2 Who = Team 23

Different Paths to Success 26

Curiosity Is a Must- Have for Founding Teams 27

Individual or Company Growth? 30

The CEO and Team Challenges 31

Curiosity and ? 33

Failure Is a Valued Asset 37

In- Person Data 38

Team Dynamics that Work 40

Chapter 3 What = Problem 47

Deep Questions, First Principles 49

Common Sense and Bias 52

You Don't Have to Solve Your Own Problem 53

Finding a Problem 55

Chapter 4 When = Timing 59

Timing = Environment 61

Specialization Leads to Success, Leading to Optionality 62

Generational Timing 64

Timing and Disruption 66

The Rise and Fall of Companies 68

Chapter 5 Where = Market 73

How VCs Look at TAM 74

Strategy for VCs Based on the Size of the Firm 79

Calculating TAM and What Does It Imply? 81

Chapter 6 Why = Solution 83

Solving One Problem Really Well 85

Building the Right Solution 87

Building a Sustainable Business 90

Chapter 7 How = Scale 91

The Sales Organization 93

Sales Organization and Customer Alignment 96

The Technology Organization 98

Chapter 8 How to Use the VCIF 101

The VCIF in Action: An Investment We Made 102

An Investment We Didn't Make 107

Stages 112

Part III Notes to Stakeholders 115

Chapter 9 The Venture Capital Role 117

The Basics of a Venture Capital Firm 118

Winners Lose a Lot 123

Metrics 126

My First Trial by Fire 128

Chapter 10 Notes for Students 135

Three Entry- Level Career Paths in Venture 135

Chapter 11 Notes for Current VCs 141

VC Career Paths 141

VC Career Myths 147

Chapter 12 Notes for Entrepreneurs: Some Thoughts 151

Chapter 13 Notes for Startup Customers 155

Chapter 14 Notes for LPs: Characteristics of Some of the Best VCs 159

Sector Knowledge 161

Chapter 15 Long- Term Planning: Venture Capital Cycles, Optionality, Starting a VC Firm 165

Venture Capital Cycles 167

Optionality 168

Could You Start Your Own VC Firm? 172

Conclusion 175

Afterword 179

Glossary 181

Index 185