Company building is a long-term game, not a sprint. A single early success in an investor's career can easily be attributed to luck. True investing prowess is demonstrated through consistent, patient backing of companies over the long haul, understanding that there are no overnight successes in venture capital.
While new investors might gain proprietary access to a handful of deals, this is not a scalable strategy for an entire fund. To succeed long-term, emerging managers must build a system for getting access at scale, as relying on a few unique connections is insufficient to build a top-performing venture fund.
Conventional wisdom tells new VCs to write big checks into a concentrated portfolio. However, this is a flawed strategy because emerging managers often face adverse selection, lacking the access to top-tier deals that established firms have. This makes a concentrated approach dangerously risky for a new fund.
Venture capital returns follow a power law distribution, meaning a fund's entire performance is often determined by one or two massive outliers. New investors should prioritize finding companies with grand-slam potential over building a portfolio of modest, base-hit successes, as it's the big wins that drive everything.