Hip Hop & Venture Capital: So Many Different Permutations That Work

I’m a proud Hip hop dad, as my kid competes in Hip hop competitions. So I get to watch a lot of these shows. It’s so invigorating watching young talented kids compete on stage. So much energy, so much enthusiasm and so many different styles. It reminds me a lot of the business, practice and craft of venture capital and investing in early stage startups. 

Venture capital is very simple, you invest and support startups and help them grow. Pretty simple and basic but there are so many different ways to execute it. Do you do the spray and pray model and invest small checks into as many startups as you can and build an index of startups? Or are you more selective and have a smaller portfolio and concentrate and get as much ownership as you can in a few companies. Do you do super early stage companies or later growth stages or do multistage or even crossover funds like Altimeter which does both private and public. Are you a generalist investor, or industry focused. Global or geographic specific?

Just like in hip hop dance, with different executions of basic dance steps and dance moves, there are literally infinite twists and permutations to these basic elements of venture capital. Thus, there are infinite ways to express yourself and make money. And the best dancers, like investors, are able to synchronize with what is authentic to themselves. To truly express their own circle of competition and discover their edge. But this is with the constraint of  the long feedback loops that it takes a while to figure this out. You also have to do a minimum number of deals and you need time as well. 

And this is why venture capital does benefit more experienced folks, who hopefully have a better understanding of themselves. Deep self-knowledge helps alot. Older folks can also bring more work experience & pattern recognition to the table to help startups. Although I should add age is a double edged sword when it comes to investing in consumer tech, you get further and further away where the edge happens: ie. Young tweens and teens. You have to work harder and harder to keep on top of consumer trends. This is why so many of us end up leaning towards B2B/enterprise software, deeptech or other sectors that allow you to compound knowledge and don’t change as much or as fast. 

Anyways, the point is to get really good at venture capital you have to figure out the right game to play that fits you which becomes your edge. As Naval said: “You can escape competition through authenticity, when you realize that no one can compete with you on being you. That would have been useless advice pre-internet. Post-internet, you can turn that into a career.”

This becomes your alpha as they say in the business. Some  examples, Harry Stebbings of 20 Minute VC using his amazing podcast empire to build deal flow, connections and brand to build a VC fund. Or Robin Haak or Phillipp Moehring who have built incredible deal flow through their relationships in Berlin, dominating the early stage startup investing scene there. Or Eli Broverman & Jeff Cruttenden at Treasury VC and Sheel Mohnot & Jake Gibson of Better Tomorrow Ventures and their focus on seed stage Fintech.  Or Andreas Klinger of Remote First Capital, focusing on technology driven by remote work and digital nomads (I’m a very tiny LP here but his funds are crushing it). For me, I focus on my international networks and have a willingness to travel and invest in places & sectors no one else does, and tie them back to Silicon Valley. 

This alpha becomes a differentiator in a crowded VC marketplace. And just like in hip hop the best folks in VC are ones that love the game, learn how to bring their own edge and mix of classic forms to come up with something unique that stands out.