The most important skill

I’ve been wondering lately what is the most important skill or trait that a venture capitalist must have in order to be successful.

We spend our days hearing pitches, analyzing business models, crunching numbers, helping portfolio companies, networking, and talking to people in the industries in which we’re thinking of investing.

You can slice a market 16 ways from Sunday and project 5 years of revenues for a startup company but ultimately you are trying to find the best people building businesses around the best ideas.  And then you are doing everything you can to help these people and businesses succeed once you invest.

If that’s the case, what’s the most important skill or trait for a VC?

I’m going to go out on a limb here and suggest two:

– operating experience:  If you’ve been there and done that (that being started a company) before, you’re apt to have seen similar challenges to those that your portfolio companies are facing.  And consequently, you may be able to provide some relevant thoughts on how to overcome those challenges.

– personal network: If you believe venture capital is all about backing the best entrepreneurs with the best ideas then you need to make sure you know those entrepreneurs and are a part of their personal network.  This is a cliche in the VC business but its a good time to mention it: “An A team with a B idea is better than a B team with an A idea.”  I think that says it all (but I’m going to keep blogging anyways…)

Second, as a VC you often have to dive into new markets and sectors and get up to speed very quickly.  Certainly you can read blogs and websites to learn about new areas but in my opinion nothing beats talking to experts working in the sectors in which you’re interested.  The problem is that you need to find those people, and in some sectors its not easy to identify them and its even harder to get some of their time once you find them.

The other way personal network comes into play is when you’re able to help line up sales or partnership prospects for your portfolio companies.  If you do not have the relevant connectivity into certain sectors, your effectiveness is going to be limited.

What do you think?

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