It's All About the Hustle in Venture Capital
We spent some time getting to know Richard Kerby, a venture capitalist at Venrock who is very involved in the early-stage financing landscape. We really wanted to know how he spends his time as an investor, what it takes to successfully raise venture capital, and the differences between the venture markets in New York and San Francisco.
Name: Richard Kerby
Grew up in: New York City
Role: Vice President at Venrock
Favorite Book(s): Gang Leader for a Day
How did you get into the world of technology and/or finance?
Prior to working in VC, I was an investment banking analyst at Credit Suisse. One year into my analyst program, I realized that I didn’t want to continue being an investment banker and instead wanted to find a way to merge my passions for technology and investing, which led me to discover venture capital. Knowing what I wanted to do was easy, but getting into the industry was tough. After a lot of cold emailing (it definitely helped using my Credit Suisse email address), I was able to break in. When sending these emails, I always asked to discuss a specific recent investment made by the firm and never asked for a job or if they were hiring. Fortunately, some of those conversations led to job offers, and fortunately the folks over at Institutional Venture Partners (IVP) were willing to take a chance on me!
One of the hardest things I frequently have to do is to say to no to an entrepreneur.
Who has been your most important professional mentor and why?
I don’t prescribe to formal mentorship. Instead, I prefer informal mentoring. I have had a number of folks throughout my career provide me with great advice. In order of appearance in my career: Peter Were, Jules Maltz, Charles Hudson, Ty Ahmad-Taylor, and Brian Ascher. As current and former colleagues, Peter, Jules, and Brian have been very helpful in continuously pushing me to improve every aspect of my career and have had a unique insight into my career by working with me everyday. They saw my strengths and weaknesses first hand and have helped me become a more well rounded individual. Charles and Ty have been equally as important in my career development but from an outsider’s perspective. They have both been great at providing advice and answering questions, especially those that you can’t always ask a colleague. I bet if you asked any of them, they wouldn’t each consider themselves my mentor; but they have provided me with the mentorship I’ve needed to get to where I am and hopefully beyond!
What has been the most meaningful professional experience you’ve had and why?
My most meaningful professional experiences tend to be my interactions with founders. I always find that I learn so much about a variety of sectors and products when I’m with founders. Additionally, I learn a tremendous amount about the trials and tribulations of running a company by spending time with the founders that I have invested in.
What is the most difficult professional or personal challenge you’ve had to overcome?
One of the hardest things I frequently have to do is to say to no to an entrepreneur. Even after several years it can be difficult to explain to an entrepreneur who has devoted both time and emotional investment into their product, why you have decided not to invest in them. Although it is a necessary part of the job, I think it was initially very hard for me because I want to be helpful to everyone I meet. I have overcome it to a large extent by always trying to be upfront about what concerns me about making the investment and trying to find ways to be helpful in lieu of an investment.
If you can demonstrate early product-market fit, that is the best way to get an early stage investor excited by what you are building.
What advice do you have for young people of color who are looking to get into technology?
Young people of color who are interested in technology should first do a lot of research on their own. They should figure out which sectors and which kinds of companies they find interesting and then find roles and/or create a role that fits their skill set and what they want to learn. After narrowing down the scope of their interest in tech, they should reach out to folks in tech that they know or ask for introductions to those who they think might be helpful. For folks that you don’t have a connection to, don’t be afraid to reach out via Twitter. The previous research that you have done will make for a more fruitful conversation and the person you are speaking with will feel more compelled to help once they’ve seen all the work you’ve already put in.
What advice do you have for entrepreneurs who are looking to raise early stage capital?
Early stage capital tends to fall into two buckets: pre-launch and post-launch. If you are looking to raise capital for a pre-launch startup, you should be going to folks who you have worked with in the past and think highly of you, as these are the folks who are most likely to say yes. A second segment of folks will come from research that you should already be doing – documenting which angel investors have a shared interest in what you are working on. Once you are post-launch, your traction (engagement and growth) will determine if you are approaching product-market fit. If you can demonstrate early product-market fit, that is the best way to get an early stage investor excited by what you are building.
You spend time in both San Francisco and New York. How would you compare the two startup ecosystems?
As a native New Yorker, I always want New York to be the center of every thriving sector. However, the Bay Area has more entrepreneurs, engineers, and investors and is by far the largest and most vibrant technological ecosystem. With that said, the New York tech ecosystem has made great strides recently, and at Venrock we foresee the continued expansion and success of the NYC tech ecosystem.
It requires hustle, hard work, and a lot of luck to be successful.
What’s a typical day like for a VC? How do you spend your time?
Every day in VC is different, but they generally fall into 3 buckets: Sourcing new potential investments, performing diligence for potential investments, and helping our portfolio companies.
Sourcing usually entails meetings with entrepreneurs, other investors, and a variety of folks within the tech world as well as tons of reading. Performing diligence on a potential investment can entail a variety of things, including meetings with various members of the team, customer calls, and creating competitive landscapes, to name a few. Lastly, on a day dedicated to portfolio company assistance, I help with hiring, sales, and business development among many other things. There is always a lot to do and I am always learning, which makes each day a lot of fun!
You were recently promoted to Vice President at Venrock. What are some of the key things you’ve learned about being a good investor as you’ve progressed in your career?
After being in venture capital for a few years now, I have realized that it is a young person’s game. It requires a lot of hustle to get in front of entrepreneurs. After getting in front of an entrepreneur and doing the work to come to the conclusion of the deal, the tables turn, and you now have to work hard to sell yourself to the entrepreneur, although the selling really occurs throughout your interaction with the founder. If the entrepreneur decides that s/he wants to partner with you, you have to do whatever you can to give your founder as many unfair advantages as possible. I guess, in summary I’ve learned that it requires hustle, hard work, and a lot of luck to be successful. Venture capital is an apprenticeship business, so you learn by doing and taking shots on a goal. As many people have already noted there is currently a lack of diversity in venture capital and I wrote an article on TechCrunch this week with my thoughts on the topic.