Venture capital, by nature, involves placing a certain amount of capital into businesses, mainly high tech startups that do not have enough funds of their own with long-term growth perspective. In the best case scenario, these small startups succeed tremendously and venture capitalists gain a massive ROI. When a VC is investing in a company, it is taking a risk knowing that should the company fail, money will be lost. As an experienced venture capitalist investor, I want to share my background and the lessons I’ve learned from my years of investing.
Anyone with enough capital has the power to invest and become a venture capitalist, but a financial background is not necessary. Personally, I started out in journalism and from there, I moved on to advertising, followed by product marketing. I also established the sales and marketing office for a large company before starting a variety of businesses. When I eventually moved into Venture Capital in 2014, I brought with me a plethora of various experiences that gave me an edge. My experience in the various companies I helped establish, gave me the ability to assess and understand opportunities. It is not only my experience in establishing successful companies that I have gained valuable experience from; being a journalist taught me a great deal. Journalism teaches you to ask the proper questions, an important skill that has aided in my communication with ventures. Anyone looking to enter Venture Capital should take their own real life skills and experience into account and use them to advance their goals.
Once you have taken your experience into account and are prepared to enter the world of VC there are a few things to consider before making any investments.
Check out the team
When betting on a sport it is important to choose the right team, investing is similar. First and foremost, I always look at the characteristics of any team, the founding members and their characters, which can tell a lot about the venture. Seeing team members that are passionate about what they are putting out there is important. I was immediately drawn to Sprii when I first heard of their mission to make lives easier for moms, I knew I was ready to invest when I saw the passion of the founder. Sprii has been extremely successful and I even upped my investment.
On the flip side, dishonesty is a big red flag; I once considered investing in a company that misrepresented their relationship with certain contacts. I was immediately deterred from the investment.
Understand the project’s logistics
It is also important to look into the logistics of a project – is it viable? Do they have a legitimate business plan in place that will work? It is of course very important to look into the project statistics and numbers alongside their projected numbers. It is vital that the projected numbers are logical and credible.
Identify the right strategic opportunities
Lastly, it is important to look into the proper strategic opportunities. Identify what the opportunity is and what it holds, what funding the venture could bring and what the startup needs funding wise.
Don’t make investments out of emotion
No matter the rules you’re expected follow when investing, there is one specific thing that one should ever do, which is getting emotionally involved. It is important to be as neutral as possible when making investments so that you do not do anything rash or impulsive. Each business investment should be thought out clearly, in order to avoid throwing good money away. In the past, I did not follow my own advice and had been distracted by my own personal likes and dislikes. I can say with full confidence that I have learned from my mistakes and never involve emotions when evaluating a potential investment.
Getting into Venture Capital is risky, but can be a rewarding business. After years of experience and successful investments I can still say that my greatest investment so far has been my education. I greatly value the experiences I gained during my education, especially my MBA in Business and Administration from London Business School and Columbia University. Investing in yourself is one of the most important things you can do, not only when getting into Venture Capital, but in all of life’s ventures. Discovering the right tools comes with time and experience. You are your own greatest investment. Take the time to learn and success will come.
By: Alexander Tkachenko Founder and CEO of VNX Exchange.
Tkachenko is a Luxembourg serial entrepreneur and angel investor, he founded the early stage venture capital fund 2be.lu in Luxembourg, with successful investments in 12 companies focused on the sharing economy, artificial intelligence and blockchain technologies.
In 2017 he launched Venture Exchange (www.vnx.io). VNX is building the world’s leading blockchain marketplace for the $1tn+ venture capital assets. Business angel, member of E100 – LBS angel investor network. Tkachenko studied for his MBA at London Business School and Columbia University.