2 Sides of the Same Coin: Startups Vs VC
Over the years I’ve felt a growing sense of concern for the climate crisis. 4 months ago I finally reached a point where I couldn’t take the discomfort anymore. I needed to do something more to contribute. I quit my job in management consulting and searched for a role in the startup ecosystem, where I felt innovation and technology were paving the way forward with the necessary pace. With an open mind, I started two roles at the same time (eeek!). I joined a climate tech VC fund (ReGen Ventures) and a food tech startup (Harvest B) in parallel.
And I learnt a lot.
Here are 4 of the lessons I learnt from sitting at both sides of the table…
#1 To gain momentum, pull the right lever
To build a successful business you need momentum. Momentum carries you through the setbacks once you are in motion. But to gain momentum you need to pull hard on one of two levers — speed or mass. A startup must have the need for speed because resources are tight, disruption happens quickly and technology moves fast.
For a new venture fund, speed is less critical. Capital (mass) is needed to move forward and make investments. Capital is built through trust which develops through relationships and reputations. Safe to say this takes (a lot) longer to build than technology does to disrupt.
#2 Cognitive flexibility trumps rigid thinking
Cognitive flexibility is defined as the skill that enables us to effectively switch between different concepts or adapt our behaviour to achieve goals in a changing environment. This skill is a hard one to test for when recruiting but one of the key leading indicators of someone who will thrive in the startup ecosystem.
In a venture fund you need to apply this mindset across multiple industries to have the foresight for trends, patterns and next gen disruptions. In a startup that is fundamentally changing and evolving everyday — cognitive flexibility is key to growing at pace with the business. You must be willing to change your mind…regularly!
#3 Develop a lens for Founder-Problem-Market-Fit
You hear a lot about problem-market fit in startups but I loved the additional lens ReGen applied to this: founder-problem-market-fit. It’s a filter that prevents you from getting caught up in the hype of charismatic founders, alluring marketing and speculative valuations. When making an investment decision, considering startups to join or even recruiting for your own startup — it’s good to test this by asking yourself the following questions:
- Does the founder have an earned insight to solve this problem?
- Do they have an unparalleled passion for this problem?
- Does this problem need solving now? Why?
- How will they differentiate in the market?
If you pass this test not only have you found a problem-market fit, you’ve also likely found yourself a backable team that you want to be a part of.
#4 No decision is made with certainty but that’s life
In both startups and venture, it’s hard (no, impossible) to make a decision with certainty that it will deliver good returns or be the right move for your business. But you’ve got to move forward, so you make a decision the best you can, with the information available.
For whatever framework that enables you to do this comfortably, you must maintain a healthy degree of skepticism that the decision was the right one. Getting too attached to choices, people or visions can lead you to ignore early warning signs that things aren’t going well. As a result you fail to acknowledge and adapt decisions that went bad before they become wildfires.
No matter the size of the decision, adopting this mindset will enable you to develop greater cognitive flexibility and your business or fund will be better off for it.
So where does this leave me?
I’m continually inspired and energised by all the people working hard to rebuild back a better world. One that is better for our planet and its people. What I’ve learnt in essence is VC and start-ups are different expressions of the same goal — harness innovation to build a different future. Startups build and operate the vehicle that actually moves us towards that future. Venture provides the fuel and maintenance (capital & mentorship) to drive the vehicle forward. They are two sides of the same coin and cannot exist without each other.
Having loved my time working with both ReGen Ventures and Harvest B, I’ve learnt that to contribute to this goal — I want to build and operate. This is the type of work that fuels me and I’m excited to join Harvest B full time to help build the plant-based food ecosystem.
Onwards and Upwards!
