Venture capital is a private asset class. As a result, beyond evaluating companies well, knowing about and getting the right to invest in great startups are two important determinants of investment performance.
In addition, there’s a limit to how many great startups any single investor can know about and develop a sufficiently good relationship with for the entrepreneur to accept the investor’s money.
For an investor to know about and get the right to invest in a greater number of great startups, they need a network of people to refer them to these startups, and to vouch for them to the entrepreneurs of these startups. In other words, they need a network of like-minded entrepreneurs and investors with integrity, intelligence, personal energy, collective energy, and salesmanship.
In fact, many of our best investments, as well as many companies that we passed on which went on to be very successful, came from this network of like-minded entrepreneurs and investors. The figure is certainly larger than the number of our best investments which we discovered ourselves.
In addition to the professional upside of building and cultivating such a network, there’s the personal upside of spending time with people whose company you enjoy and who contribute to your growth.
And to be able to build and cultivate this network, you also need to deliver similar value to the entrepreneurs and investors who you want to be part of the network.