Today we are presenting you with a spin on our “What makes a good VC?” profile series by talking with Esther Delignat who chose to leave the VC industry. Esther had a successful career at La Famiglia VC and Oxford Capital before deciding to change her path. She now works at incident.io. Read below to find out her reasons why.
A: I am really excited for this chat, as you are my first ex-VC guest! So, I would like to ask you both about your journey back then and your reasons for choosing a different path at the end. Could you tell us how and why you chose to enter the industry and exit it?
E: The reason why I joined VC is pretty standard. As a kid, I was interested in a lot of things and did not know what I wanted to do; my technique for finding my career path was crossing things out. In the French system, you have to choose a specialty at a very young age, so I tried staying as generalist as possible by doing Economics and Social Sciences at university. Then I did Business, which covered Marketing, Finance, Economics – all very broad once again. Afterwards, I did an internship at a very numerical financial consultancy, where I was looking at the same Excel spreadsheets for 3 months to make the smallest financial adjustments. Not for me. However, as part of it, I did get to build a business model for a startup, which was really interesting! I loved both how concrete the numbers were and the type of close relationship with the early-stage businesses this project provided. So, I then knew I wanted to do something in the startup world. I joined the industry in 2017 when not that many internships were going around in tech and, definitely, in VC… Luckily, I found an internship at Oxford Capital and joined VC that way.
A: And if we fast-forward your journey to when you were leaving La Famiglia… What made you say “this is not for me”?
E: I think I just tapped out the learning curve for a long time at that point. For those who don’t know, you have steps in VC. You will learn a tonne in the first two years and it will train your pattern recognition of what a good VC-investable company looks like, what the signals of a strong founding team are, and so on. For that you need a lot of quantity, so, at first, you pick up some bad stuff and then you go and refine it. Back then, the market conditions were different for early-stage, so you could really unpack a year and a half of data to do cohort analysis, calculate LTVs and CACs, etc.
After the initial two years, it can start to get a bit repetitive: you have your network, see some good deals, chat to new people. It is definitely a great job: you get to learn about different industries that you would never get exposure to otherwise. It’s very satisfying for curiosity, but, in terms of skillset, it can plateau after two years. That’s why I initially moved to a different fund. The first fund I worked for was very UK-centric, so I joined La Famiglia to see what it would be like to invest in Europe.
Then, after four years, I went back to feeling like I have reached the top of the learning curve again. The problem as well is that in VC you cannot move horizontally: there is no other department you could go and join, you are just an Investor. On top of that, if you progress vertically, the job title does not really change much. If you are a partner at a firm, perhaps you are closer to an entrepreneur with the fundraising element, but you are still doing the same job. You source companies, have investment committees, and sit on boards. Not to devalue that, but the next stage of growth is then very far away – at least 10 years to see the story of a company.
Bottom line is: the learning curve was flattening, plus the market conditions did not help. That was my reasoning.
A: That makes perfect sense. Thank you for explaining that! So, you spoke about your personal learning curve: which skills came in handy during that process and which did you not get to use back then?
E: A lot of the skills are unquantifiable. It is about relationship building, especially at pre-seed to Series A. Your hustle will count for 80%, as you will be evaluated as an analyst based on the deals you can source, and that is pretty much the only thing that counts. Such deals are most likely to come from a network. Everyone says that they do this data-powered and thesis-based sourcing, but 90% of dealflow still comes down to who you know. It is all about people, even in the companies that you invest in, as you have nothing else to look at in early stage. So, can you build relationships with VCs who will give you early access to deals and with founders who will want to take your money? It is all about building trust, plus people liking you and not being afraid of being judged by you. And you really do need to get out there and hustle for that. Don’t wait for stuff to come to you, because you will categorically fail. For example, if you think winning a deal will come down to meeting a founder in person, get on the plane and go – don’t ask, just buy the tickets!!
Also, don’t forget about the growth mindset. Have the humility to accept that you have no idea. If you are looking at, say, a quantum company, you will be out of your depth. And the next day you will be looking at another equally-challenging industry. So, you need to continuously learn and you cannot learn fast if you act like you know everything.
A: Awesome! So, now that you are no longer in that world, do the network and the knowledge you have gained come in handy?
E: Massively! When I was first joining incident.io, I was thinking about how I could fit into the company structure, because I could do so many things. I could have done a role that is business operations-related (you become a good generalist) or sales (in VC you sell money – the most undifferentiated product ever) or customer success (you handle so many relationships with founders) or even fundraising. So, you do pick up quantifiable skills and it becomes a matter of telling that story and evidencing it. Also, don’t forget the unquantifiable skills of curiosity and hustle that we touched upon. Am I happy that I started in VC? 100%. And one thing you will not shake off of me now is: I will always look at a business as a whole in any context. Unlike those who have always worked in a specific department, I may be more likely to sense-check the idea with a broader view in mind.
A: I love to see how you transfer the skills. So, when coming into the VC world as a student, are you supposed to have all these skills? Do you remember how you were when you were applying?
E: I don’t think you need to sell skills. Especially if you don’t have them. If I were to be recruiting, I wouldn’t be looking for specific skills, unless I was looking for specialists; rather, I need to see raw potential and willingness to learn. Then I can teach you and level you up. I would always take someone who has the raw material rather than one who has a skillset and thinks they know everything. Similarly, I wouldn’t try to convince my colleagues that I can easily do everything, but I can guarantee I will be in the office at 7 in the morning reading up about it and absorbing everything like a sponge. So, just have the energy, willingness and drive to learn. And then pick the person who is willing to put in the effort to teach you – not many people in the VC world are willing to coach.
A: So, do you tend to learn by yourself?
E: You just have to be hungry to pull in the knowledge, because nobody will feed it to you. I got lucky at Oxford Capital, because I was shown the Intern-Analyst-Associate path by my colleague who had to go through it alone. In general, though, it is a pretty lonely job: it is my network, my founders, my portfolio, my returns… If you are getting credit for your deals only, you have no incentives to train some kid that just joined.
A: Interesting. You mentioned the difficulty of the journey from intern to associate. I wonder if you have any advice for students thinking of embarking on this journey, and perhaps even thinking whether to embark or not?
E: I definitely think that people should question why they want to go into the industry. By the way, I really love VC, it is so rich. I used to speak to so many interesting people, everyone is generous with their time and thoughts. If you like thinking on a macro-scale and debating about it, it will be for you. However, many join for the wrong reasons, be it money or a stamp on your CV. No lunch is free though, and you are giving up other things. Asking yourself at the start about why you want to join will make you a happier VC. So, join for the right reasons, knowing the pros and cons and going in with intent.
Lastly, make sure to build thick skin and stay opinionated! It is totally okay to miss the mark, you have to become waterproof, as you are always learning and discovering your way.
A: Thank you! It was really insightful to learn about the good, the bad and the ugly of the VC world.
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