Behind the Scenes at a VC Fund, Part 2: Helping Founders and Time Allocation

VCs have 3 principal jobs: picking startups to invest in, helping startups after investing, and raising capital for investing. Each of these jobs will be covered in its own post. This post, the second in the series, focuses on how VCs spend their time (charts and graphs included!), and how they help the companies they invest in.

Table of Contents

Part 1: Deals, Deals, Deals

A post on how VC funds source, analyze, and choose companies to invest in.

Part 2: Helping Founders and Time Allocation [this post]

Part 3: Fund Structure, Fundraising, Investor Relations, and FAQs

A post on the basic mechanics of how VC funds are structured and raised, how VCs interact with their own investors, and venture capital FAQs.

Basic Terms

Portfolio Company -- a company that the fund has already invested in.

Limited Partners (or LPs) -- a fund's financial backers. These are the people whose capital is being invested. LPs can range from university endowments to pension funds to wealthy individuals.

Why do VCs Help Portfolio Companies?

Most good VCs try to help their portfolio companies for several reasons:

How Much do VCs Help Portfolio Companies?

Motivations aside, the level and frequency of engagement vary greatly from investor to investor. Here are the levels that I've observed:

While the level of involvement varies across investors, generally the more capital a VC is investing, the more involved they will be. That said, there are large funds that are very passive and small angel investors that are very active.

Ways that VCs Can Help

As I wrote ~3 years ago, good investors can help in many ways. In practice, the most common areas where VCs help are:

As a meta-observation, founders have knowledge that's deep but narrow while investors have knowledge that's shallow but wide. Investors understand common patterns of success and failure across many types of businesses, but chances are they know very little about a specific business or industry. Founders on the other hand know a ton about their specific business, but haven't had a chance to see what does and doesn't work across many companies. As a result, VC advice is often most valuable when it's applicable across many companies, but founders are probably wasting they're time if they're asking a VC for specific SEO tips or how to sell to plant managers in the Oil and Gas industry.

VC Time Allocation

As a VC, I spend most of my time on meetings, email, and research. I analyzed data from Google Calendar and Gmail on where my time went over the last few months, and the results are described in the remainder of this post.

Meetings

VCs meet with founders, service providers, LPs, other VCs, job candidates for portfolio companies, and many other parties. To give a sense of how those meetings break down, I categorized and logged all of my meetings for May, June, and July of this year.

Here's how most of the days feel:

Here's the average number of hours of meetings I had by weekday:

My office is in San Francisco, but I live 25 miles south in Redwood City. If you're wondering about why Tuesdays and Fridays seem so much busier than others days, it's because those are the days I usually spend in SF. Somewhere in here is an observation about how most Silicon Valley startups are moving out of the peninsula and into SF.

Here's the distribution of hours of meetings per day:

Most days had 3-6 hours of meetings, although there were outliers on both sides.

Here are the types of meetings I had:

Clockwise from the top right, the categories are:

The chart shows that about 33% of my meeting time is spent on diligence, 22% is spent on networking with VCs and founders who are not fundraising, 19% is spent helping portfolio companies, 19% is spent on internal fund work (partner meetings, hiring, LP updates), and 7% is left over for special events. On average, I have about 23 hours of meetings every week.

Email

According to Gmail Meter, I receive 2,000 emails and send 1,000 emails in a typical month. If you assume it takes 1 minute to read a typical email and 2 minutes to write one, this represents about 15 hours of email time every week.

Research

Many of the meeting categories above require doing some work before and/or after each meeting. For example, I spend about 15 minutes preparing before every 1:1 diligence meeting. If the meeting goes well, I'll spend 30-60 minutes doing research and typing up notes for the other partners in my fund. If the meeting doesn't go well, I'll spend 10-20 minutes writing a nice email to the founder that explains why I'm passing on the investment opportunity.

Events

The last part of my job revolves around occasional special events. These include things like Y Combinator's biannual Demo Days, which are 3-day events where 100+ founders pitch their companies to investors. My schedule fills up for 1-2 weeks before and after each of these demo days.

My fund also puts together an annual LP day for our own investors, and an annual founder/investor retreat. Both of these take weeks of planning and preparation. These types of events only happen a few times a year, but when one is coming up it doubles my workload.

Conclusion

This post talked about how investors engage with portfolio companies and how VCs† spend their time. The next and final post in this series will talk about how venture funds are structured and how VCs work with their own investors.

† By "VCs" I mean "me," because that's the only VC that I have lots of data for.

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