The Venture Capital Investment Framework Venture capital is the economic engine that drives entrepreneurship and innovation through capital investments, board membership, advice, introductions to relevant employees, and customers. Despite the outsized importance of venture capital, the inner workings remain hidden. Venture is still a mentor-led industry and it is an industry where you have to do a lot of self-education—you have to learn by doing, and you have to get up to speed quickly. Until now. Author William Lin spent over a decade in venture capital, starting in an entry-level position, helping to start a leading VC firm from scratch, and eventually becoming Managing Partner. In The VC Field Guide: Fundamentals of Venture Capital, Lin shares his unique framework, the Venture Capital Investment Framework, to help any venture capitalist, entrepreneur, or investor make better investment decisions, quicker. He delivers an incisive and practical handbook for the world of venture capital. You’ll learn about the industry, how to break into it, and discover the art of investing in startups, and more, including: How VC deals are analyzed, vetted, and made Which questions experienced and successful venture capital investors ask startup founders when making investment decisions, and why those questions matter The venture capital mindset that dominates the thinking of the most prominent venture capital investors The best ways to begin a career in venture capital and tips on advancing your career Key differences between multi-stage and boutique firms and what it means for entrepreneurs The different factors VCs use to evaluate early-stage versus late-stage companies If you want to be close to company creation and innovation as a venture capitalist, investor, or entrepreneur, this book is for you. If you want to be involved in situations that impact economic growth, innovation, and the founders, employees, vendors, and communities that support the broader entrepreneurial ecosystem, this book is for you. The VC Field Guide is not only a primer on the inner workings of the venture capital industry, but a timely framework for how investment decisions are made. Anyone who wants to better understand how venture capital investments are made, and why will find this book helpful.

Table of Contents:
Foreword xi Preface xiii Acknowledgments xv Part I Introduction 1 Introduction 3 My Background 3 Who Is This Book For? 9 The Framework’s Origin 10 Endnote 14 Part II The Venture Capital Investment Framework 15 Chapter 1 The Venture Capital Investment Framework 17 Startup Investing 17 Chapter 2 Who = Team 23 Different Paths to Success 26 Curiosity Is a Must- Have for Founding Teams 27 Individual or Company Growth? 30 The CEO and Team Challenges 31 Curiosity and ? 33 Failure Is a Valued Asset 37 In- Person Data 38 Team Dynamics that Work 40 Chapter 3 What = Problem 47 Deep Questions, First Principles 49 Common Sense and Bias 52 You Don’t Have to Solve Your Own Problem 53 Finding a Problem 55 Chapter 4 When = Timing 59 Timing = Environment 61 Specialization Leads to Success, Leading to Optionality 62 Generational Timing 64 Timing and Disruption 66 The Rise and Fall of Companies 68 Chapter 5 Where = Market 73 How VCs Look at TAM 74 Strategy for VCs Based on the Size of the Firm 79 Calculating TAM and What Does It Imply? 81 Chapter 6 Why = Solution 83 Solving One Problem Really Well 85 Building the Right Solution 87 Building a Sustainable Business 90 Chapter 7 How = Scale 91 The Sales Organization 93 Sales Organization and Customer Alignment 96 The Technology Organization 98 Chapter 8 How to Use the VCIF 101 The VCIF in Action: An Investment We Made 102 An Investment We Didn’t Make 107 Stages 112 Part III Notes to Stakeholders 115 Chapter 9 The Venture Capital Role 117 The Basics of a Venture Capital Firm 118 Winners Lose a Lot 123 Metrics 126 My First Trial by Fire 128 Chapter 10 Notes for Students 135 Three Entry- Level Career Paths in Venture 135 Chapter 11 Notes for Current VCs 141 VC Career Paths 141 VC Career Myths 147 Chapter 12 Notes for Entrepreneurs: Some Thoughts 151 Chapter 13 Notes for Startup Customers 155 Chapter 14 Notes for LPs: Characteristics of Some of the Best VCs 159 Sector Knowledge 161 Chapter 15 Long- Term Planning: Venture Capital Cycles, Optionality, Starting a VC Firm 165 Venture Capital Cycles 167 Optionality 168 Could You Start Your Own VC Firm? 172 Conclusion 175 Afterword 179 Glossary 181 Index 185