An Interview With a Successful Venture Capitalist

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Have you ever thought about becoming a venture capitalist? Perhaps you have a natural ability to weigh up risks and rewards. Maybe you want to control substantial amounts of money and enjoy a job with a high degree of autonomy.

The question most venture capitalists get asked is how to get started on the road to this career. Eager young entrepreneurs are just as fascinated to get familiar with the mindset of a venture capitalist, in order to understand how they should pitch and what behaviours to avoid.

To help us understand what a venture capitalist does, what they look for in a startup and how best to reach out to a venture capitalist, Will Jiang of N5Capital has agreed to take part in an interview. Will is one of the founders of a thriving venture capital firm in China that specialises in mobile technology and big data.

  1. What does the average day in the life of a venture capitalist look like?

As a Chinese venture capitalist, at 8am I’m more often than not stuck in the morning Beijing traffic. In that respect, I have a lot in common with millions of other Chinese locals! Once I’m at work at 9am, I’ll get started on checking and replying to emails. At 10am, I attend scheduled meetings with startup entrepreneurs. These meetings will usually last for about 2 hours, or as long as is necessary to weigh up their proposals and to get the information I require to make my decisions.

At 12pm, I’ll head to lunch, which is quickly followed by a game of King’s Legend with my colleagues! Everyone needs some wind-down time, especially when you are aware of how what you do can so significantly impact someone’s life. The rest of the day is filled with portfolio board meetings and more startup proposals. At the end of the day, I meet with my team and have a daily ‘sync-up’ on potential investment ideas and analytics. I finish my workday at 7:30pm, as I start each and every one, stuck in the busy Beijing traffic.

  1. What is your career highlight as a venture capitalist?

My biggest career highlight is actually the first ever investment I made as a venture capitalist. I invested in Talking Data, in which my company was the only seed investor. It’s currently the largest independent mobile big data company in China and I’m so glad I took the risk.

  1. What areas does your venture capital firm specialise in and why?

My firm specialises on mobile internet, the cloud and big data, and how these infrastructures disrupt traditional industries. We’re fascinated with mobile internet, how it has grown and how it has taken over desktop internet in a lot of ways. Think about how much we use mobile internet and the various uses it has. We depend on it for entertainment, banking, education and work. For these reasons and much more, mobile technology and mobile internet are fantastic areas to invest in, We’re excited to see what entrepreneurs bring to us in the future.

  1. You deal with them every day, so what do you look for in a new tech startup?

The sector that the startup deals in should be a large addressable market, with a high gross margin within the value chain. I look for teams that can build a high-entry barrier business (not a business that can simply be built by investing tons of money) and which are able to compete with higher gross margin when compared to their peers.

  1. As someone who invests in mobile technology, what future innovations are you excited about?

I’m keeping an eye out for breakthroughs in battery capacity. This will seriously and significantly change how mobility will evolve in the future.

  1. To what extent do you rely on facts and figures when it comes to making an investment? Does gut feeling factor in at all?

Facts and figures matter significantly in terms of sector study. For early-stage investment, however, reading into an entrepreneur’s mindset in order to see their domain expertise and future potential is much more important than figures. Gut feeling certainly factors in, but saying that, gut feeling shouldn’t be regarded as fickle or capricious; gut feeling is developed. It’s a reflection of your understanding of a given market, and your past experience in dealing with a vast variety of entrepreneurs. In that respect, you should certainly pay attention to your gut instincts.

  1. What advice would you give startups when it comes to pitching to Venture Capitalists?

The most important thing is to know all the answers, as far as is possible. Do your research and anticipate what you are going to be asked. Learn what your market looks like, what position you will have in the market and who your competitors are. Try to establish trust quickly and try to connect with your investors. We all know that investment is serious business, but you need to let your personality shine through. Finally, make sure you create a unique, engaging presentation that is impossible to say no to.

  1. What are the biggest and most common red flags you see that make you pass on an investment?

There are quite a few! It’s a bad sign if a founder is relying on the venture capitalist in order to provide strategy. You should have a strategy in place; without this, we’re not going to have much faith in you. If the founder has a lavish lifestyle or an inflated ego, this can be a real warning sign that we shouldn’t trust them with our money. Finally, a big red flag is an obsessive focus on the valuation of the company.

  1. What advice would you have for someone eager to become a venture capitalist in the future?

Venture investing should be a person’s last job. I’d suggest getting more experience in bigger companies or startups. This will help you to develop your people-reading skills and it will give you valuable domain expertise in specific sectors. Try to experience different roles including product, marketing, sales and business development. I would say that most great venture capitalists are good networkers, they are great listeners, they can read people and they have fantastic negotiation skills.

  1. Chinese investment in American startups is booming. What’s the best way for eager startups to reach Chinese venture capitalists?

Reaching out to investors can feel daunting, but remember: we love to network. LinkedIn always works. Once you are confident in your startup and you’re certain you’re at the stage where you need the help of a venture capitalist, reach out on LinkedIn and you’ll likely get a response.

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