My first chapter in VC — my observations, mistakes and learnings

I can’t believe how quickly time flies! It’s been over a year since I joined Vertex Ventures SEA as a fresh grad. I thought it’s timely to look back on how I started in this space and share some of my memorable learning points.

Introduction — A little bit about myself

I vividly recalled that in my final year of university, whenever I spoke about my ambition of joining the venture capitalist (VC) space, many of my friends were skeptical and couldn’t comprehend my “risky” choice.

Here’s how the conversation usually went: “What’s VC? What do they do? Aren’t VCs quite lean? Won’t that make job progression hard? Do you really see yourself staying as a VC in the next five years? If not, what are your exit options?”

Naturally, these worries weighed heavily on my mind as I considered my options. To them, the career path of a VC had always been low visibility and unorthodox choice, compared to the more well-trodden paths of investment banking, PE, or consulting for which the exit paths and job descriptions are clearly documented and defined.

It was tough to ignore the naysayers. But I knew early on that I definitely wanted to be a part of the start-up ecosystem in one way or another. Those who know me would know that I’ve always had a strong interest in entrepreneurship and an unquenchable thirst for learning about new business models, paradigms, and industries. I know one day I would like to start my own venture. And what better way to get familiar with the space than from a VC?

I never looked back. One year on, it’s been as rewarding and challenging as I’d hoped (and more!). Here are some of my key takeaways and observations from the first chapter of my VC career.

Business is business. But founders are key.

Before joining the VC scene, I’d often read about the importance of the founders in venture books, forums, and interviews, but never fully appreciated this insight until I was in the VC business myself.

One of my biggest mistakes as a fresh analyst was pinning my focus on evaluating the business model, unit economics, and go-to-market strategy of a startup while neglecting to properly assess the founder’s aptitude. It took me some time to grasp that the founder and their management team are most crucial to any startup — they are often the critical difference between competitors and must be evaluated first.

As a saying goes, a good founder is like a captain of the ship who must be able to navigate through the ebb and flow, and peak and trough, of the sea. And while the business model might pivot along the way, a good founder will be able to navigate through business uncertainties and breathe new life into the startup once again. Talents are truly the crux of a successful business! And while a founder’s individual characteristics are important, another often overlooked fact is the founder’s ability to bring a bigger and more experienced team with them.

One of the many outstanding examples in our portfolio is Pace, which is one of SEA’s (excluding Indonesia) top buy-now, pay-later (BNPL) providers just within a year of operation. For context, the BNPL concept is not new — it was first introduced to SEA in 2016 and the BNPL space has been littered with competitors since. So, what made Pace stand apart, even as a late entrant to the market?

Pace is a perfect example of how a founder-first mentality is much more valuable compared to a business-first lens. The company is helmed by Turochas (“T”) Fuad, a fourth-time serial entrepreneur who is amazing at growing companies. But what amazed me the most is that Pace’s current management team is the same team that has been working with T for over 8 years — together, they have executed, scaled, and sold the last two ventures, Travelmob and Spacemob. They are indeed the epitome of assembling an all-star Avengers team!

But this begs the question — how can we objectively evaluate founders? You see, our investment into Pace was no accident — our team knew T for nearly a decade and was confident in his team’s stellar track record (he sold his last venture Spacemob to WeWork where Vertex was one of the first investors). So even when he came to us with nothing more than a PowerPoint deck, we were ready to talk. I believe that the aptitude for evaluating founders comes of age with personal experience (or what some would say ‘instinct’) and accumulated trust over the years through the founders’ proven execution capabilities.

This brings me to my next point: VC is a long-term game — the more time you spend on track, the better the odds would be. From deepening your expertise in a market to learning to work with different management teams, you’ll find that everything we do in VC is a marathon and not a sprint. And as with any relationship, building relationships takes time. It takes years to get to know the founder, and understand their aptitude, leadership style, and execution capabilities before investors can build enough conviction to back the founder.

We often strive to speak to founders as early as possible to get a head start on cultivating a long-term relationship. It may or may not end favorably with an investment but just building that connection and trust alone can go a long way. To me, it’s not just about clinching the deal, but about growing the startup ecosystem as a whole. Some of the most memorable calls I’ve gotten have been from these founders, now friends, who seek out our advice, regardless of whether we made an investment or not. And we try to help where we can — who knows, many years down the line they in turn could be the ones to bring in a winning business idea.

Another key trait of the VC industry is its long learning curve and iterative feedback loop — only time will tell whether our investment theses will crystallize. For Vertex Ventures SEA and India, we are known for being an active hands-on investor; our real journey only really begins after our capital injection. We have a saying in Vertex that our investments are like marriages — they must last through the test of time, through the good, bad and ugly.

Once invested in a startup, we become quite fully involved in the business and founders’ lives. We live through their highs and lows, celebrate their wins, and comfort their losses. Some of our portfolios have gone on to describe us as a silent co-founder, which is an apt description of our investment philosophy. Only through participating and getting our hands dirty can we truly reinforce our learnings and thesis, and this in turn helps us become more astute investment managers in the long run.

Suffice to say, VC is a people-centric business — be it with ecosystem players, founders, or your co-investors. To do well, you have to put yourself out there, establish who you are, and create that layer of trust. And this takes time. My favorite reminder is that your time in VC has a compounding-like effect that would triple itself in value.

VCs are at a unique and interesting forefront between the next-generation tech, shifting business model paradigms, and ever-evolving ecosystems. One of the biggest lessons I have learned in VC is to have an open mind and humility. As investors, we may not know everything about the startup’s market, local nuances, or competitors. The chances of missteps when we evaluate the company are boundless (we can be wrong about anything!), so the only way forward is to keep an open mind and continuously relearn the definition of what’s right. Venturing onto the unbeaten path in the start-up ecosystem is never easy, be it as an investor or as a founder. But I can assure you that this experience is extremely humbling and rewarding like no other.

If you’ve made it this far, thank you for taking the time! As always, I love meeting new people who are passionate about their ventures or keen to share their journey, so please do reach out to connect.

P.S. I want to say thank you to the entire Vertex family who have embraced me for the past year and generously shared their valuable lessons along the way. There could have been no better way to kickstart my VC journey. To more years ahead!

Benedict Tan is an Investment Associate at Vertex Ventures.

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