Working in venture capital without a strong network is like trying to find gold with a blindfold on; it’s hard enough without the burden, but it’s impossible with it.
Elite networks not only provide access to quality deal flow (AKA the deals you actually want to be a part of), but it also opens up more doors for potential partnerships and co-investment possibilities. Additionally, those with advanced networks gain the benefit of better information from smarter people, and they also expand their own personal brand the more people they meet.
In this article, we’ll break down more context on the importance of a deep rolodex in venture capital.
We’ve said it before, and we’ll say it again: deal flow is the lifeblood of any good VC.
One of the most significant benefits of building a strong network within the venture capital community is the access it provides to quality deal flow and investment opportunities. Deal flow comes in many forms, but the more curated the better.
Good VCs develop their own networks by building an audience, acting as a resource for founders, acting as judges at undergraduate / MBA pitch competitions, becoming friends with other investors, browsing different places online.
If you talk to people that work in venture capital for a while, they’ll tell you the job gets easier. This should be true if you’re doing it right since more inbound should be coming your way through referrals.
Pro tip: Browse Commonapp.VC to search for hundreds of companies looking for funding.
On top of better deal flow, better networks can also lead to better partnership and co-investment possibilities.
Deeper rolodexes means that you can provide more value with other investors through sharing. This can mean sharing resources, skills, and expertise, helping others leverage some of knowledge you have gained.
Also, co-investment opportunities might come up when people in a network combine their resources to invest in a specific sector. Co-investing is the name of the game because you both have incentives to continue to work together in the future.
Another benefit of building a strong network within the venture capital community is the opportunity to learn from experienced professionals and industry peers.
Investors process millions of pieces of information. The more investors you talk to, the more you are able to learn from their collective insights. By talking to more of these people, investors can avoid common mistakes and make better investment decisions.
Networking also lets investors meet with others who are facing similar challenges. This was the original thesis when we started Confluence: collective knowledge outweighs individual knowledge, and good things happen when you put likeminded people in the same room.
Pro tip: Check out our investor interviews and deep dives for non-obvious takeaways from other investors
Finally, building a strong VC network improves your personal odds.
Networking offers more than just professional development opportunities. It can also lead to new career opportunities, mentorship, and personal growth. For instance, by building relationships with others in the industry, individuals can gain exposure to new ideas, trends, and opportunities that they may not have been aware of before. They can also learn from the successes and failures of others, which can help them make better decisions in the future.
In addition, networking can help individuals to establish their personal brand and reputation within the industry. By writing online and speaking at industry events and conferences, individuals can establish themselves as thought leaders and subject matter experts. They can also share their expertise and experiences with others, which can help to build their credibility and enhance their reputation.
Overall, networking is an essential component of professional development, providing individuals with the opportunity to learn, grow, and succeed in their chosen field. By taking advantage of networking opportunities, individuals can expand their horizons, build their professional networks, and achieve their career goals.
The more you invest in your network, the more luck seems to find you.
Networking provides access to quality deal flow and investment opportunities, collaborative partnerships and co-investment possibilities, and the opportunity to learn from experienced professionals and industry peers. Additionally, networking can enhance personal and professional growth, making it a valuable investment for any venture capitalist.
