What does it take to lead early-stage investments?

Venture investing in the early stage is not for the faint of heart. It takes a lot of strategic and operational work to achieve key business and financial milestones which are prerequisite for growth equity. No one can do all the work alone. In fact, it requires the right type of synchronization and trust between major investors and the management team to achieve these necessary milestones. It's continuously hard work. I often use the analogy that investing as an early-stage lead investor is like getting married. We are there for our companies in good and challenging times.

When things are good, everyone is happy and looking to invest or take credits. When time is challenging, many investors retreat and wait for others to help the company overcome challenges in practical and timely ways. I don't blame those investors. Challenging times require investors to guide startups to consider tradeoffs in various scenarios, evaluate capitalization and capital formation strategies, and implement often difficult but necessary business decisions for long-term value creation. As a side note, what I am saying here is independent of the power law concept. We invest because we have developed investment thesis and conviction in every company, and we do the hard work to help them to get to targets and goals. We will fuel companies to maximize success which is related to the power law concept.

When we do due diligence, one question we ask ourselves is whether we can "see" this "marriage." I advice startups to ask the same question. Each investor has a personality and unique background. Startup founding team should also assess which type of investors they want as major investors on the cap table and whether they are simply looking for capital or more than capital.

Subscribe to Joyce J. Shen

Don’t miss out on the latest issues. Sign up now to get access to the library of members-only issues.