Can you teach VC? Two guys with a board and some cards think you can

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Most VCs learn the ropes on the job. You can’t learn to spot the next Mark Zuckerberg or Herd of Whitney Wolfe at school, right?

Chris Rangen and Scott Newton respectfully disagree. The duo say they can teach the basics of raising and deploying a fund in as little as a day.

They are not the only ones. A few VC training programs have sprung up in recent years, primarily with the goal of helping traditionally underrepresented talent break into the industry. One — the Newton Venture Program, a joint venture between LocalGlobe, London Business School and Silicon Valley Bank UK plans to pilot Rangen’s materials with their network of fellow alumni.

At Sifted, we also spend a lot of time trying to get inside the brains of VCs. So when Rangen told me he could prep us to raise Sifted’s first fund, I signed the team.

The deal: a free VC bootcamp ticket in exchange for a Sifted review.

Enter the VC Matrix

The ‘training’ involved dice, a Monopoly-like board with different ‘outcomes’ and mismatched Playmobil figures to move around in place of top hats and Scottie dogs.

the Game The simulation guided us through the process of creating, raising and managing a venture capital fund. We had to find LPs while keeping an eye on the dealflow, close our fund, then grow our businesses and eventually exit them, returning millions to our LPs and scoring ourselves a very nice vacation home.

Sifted divided into four teams; My team and I decided to found a $50 million Africa-focused seed fund, affectionately named after a team member’s dog, Robin.

Managing Partner and Mascot of Robin Capital

We would invest in “people-oriented” businesses. I thought the hubbub of finances would make it easier to justify investments; Quick grocery is all about people, right?

I realize now that I should have worn my Allbirds and Patagonia vest for said simulation, but alas, I don’t own either – yet. But even after only a few hours in the VC jungle simulation, I learned a few things…

1/ Sponsors (LP) are hard to find

We found LPs (the investors who give VCs money to invest) by going through the board and pulling LP cards from a few different categories – from angel investors to mega-institutions ready to commit hundreds of millions of dollars .

We all spent A LOT of time in the beginning trying to find the right albums. Sometimes they were too big. Sometimes they were too small. Sometimes they had ridiculous requests – they wanted to be part of the investment committee, or only let us invest in Armenian edtech startups.

We found an LP to put $20 million into our fund early on, which helped us do a “first close” and start investing a bit while we rushed for others. Lesson learned: The search for LPs in 2022 could be meaner than even the London dating scene.

2/ Managing a venture capital fund actually costs money

My compatriots and I greedily decided on hefty salaries for ourselves when we started, only to find that we had to pay a lot of other stupid things. We couldn’t have our cake and eat it too – until we proved ourselves.

Legal fees, office rent, venture capital partners…they all gobble up cash fast. And if you haven’t closed the LPs yet to take management fees, you end up cutting your salary and paying out of pocket. Ouch. Obviously, things can be tough for emerging fund managers who aren’t already millionaires or billionaires.

3/ Other funds are your best enemies

While you compete with other funds for offers, you also need to stay friends with them to participate in exciting offers or participate in later rounds. It was super important to us as a seed fund; our fund was only $50 million, so we couldn’t keep putting huge checks in subsequent transactions raised by our wallet. We needed co-conspirators.

Our decision to partner with Dealing Chris (pseudonym) and Yellow Vests Capital helped us enter the superexceptional offer on shark fins. The rocket company was our first unicorn and the returns on investment allowed us to repay our LPs many times over.

4/ Focus not FOMO

Once everyone closed their funds and started deploying startup capital in earnest, frenzied FOMO set in. Who invested in what? Did we miss any deals? Should we open an office in Miami and be paid in NFT?

That’s when we started to forget about our original “people first” mission. Shiny AI startups with little detail but with very friendly investment conditions have started to look very, very attractive.

But we had to remember our obligations to LPs and the size of our funds and stay focused. This kept us from investing too quickly, but actually waiting to see the deals that worked for us. (In theory.)

5/ The power law is so real

After a few turns, it became very clear which companies in our portfolio would do well and which would not. We hitched our horse to Shark Fin and went straight to the top.

This meant pooling resources from other portfolio companies, such as not participating in follow-up rounds or providing advisory support to them. Of course, we promised them that when we invested, but that wasn’t in the contract, was it? We only needed one company to succeed and convince everyone that we were capable of raising a second fund.

Are you going to invest?

I still hurt that our editor Amy and our reporter Kai, managing partners of Ginger Capital – a venture capital fund, you guessed it, focused on investing in startups with at least one co-founder with hair redhead – blew us all away with a 54x return.

But I’m very proud of our 7.4x performance. If you need your next female partner, you know where to find me.

I always hurt when the redheads win. Selfie credit: Amy Lewin


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