Why VCs peak late

By Nic Brisbourne on July 11th, 2012

Over the weekend, Dave McClure, currently aged 46, wrote a heart-felt post saying that he is a late bloomer. New York venture capitalist Fred Wilson, 51, replied saying that he was, too: “I could have written this exact post five years ago. When I was Dave’s age.

“Venture capital doesn’t create 20 something millionaires. The prime of your career in VC is the late 40s. Right where Dave is. I am not exactly sure when I stopped feeling all these things that Dave is feeling. But I did. It happened sometime in the past few years. And I am happier for it. But also worried that I don’t have that big chip on my shoulder anymore. We will see.”

There are many strange things about being a venture capital investor, but one of the strangest is that I get to play a supporting role in lots of great companies, but never the main role. In his post, Dave described it as “helping others to achieve greatness as I attempt a bit of my own”. I think it is because our role is a supporting one that it takes such a long time for VCs to reach their peak.

You need multiple successes in a support role to really know you are adding value, and because each supporting role takes years to play out and we can only do a few at a time, that will most likely take ten or twenty years.

The other reason that overnight successes are rare in venture capital is that it takes most of us a long time to learn to be good at choosing investments and helping companies. I’m twelve years in, and still learning fast.

I’m 39. When I started out in the venture capital industry, I was hoping for quick success. The internet bubble was still growing, and anything and everything seemed possible. Then, after the bubble burst, it took me a while to understand how long it takes to build a career in venture. In 2006, I made partner, I’ve been lucky enough to be involved with two great exits. I’ve even won the odd award.

But, while I’m proud of these achievements, I am still some way from achieving my ambitions. I think I am good at this game, maybe even very good, but at the moment that is just speculation. Only when I can look back on a decade of consistently great returns will I be happy moving from asserting my qualities as an investor to stating them as fact.

And that will take years. I need for the investments my partners and I have already made to be successful. That will most likely take three to five years. After that, we need to continue making good investments and give them the time to bloom. Adding it all up, if I’m lucky, I might be looking back on a decade of success by the time I’m Dave’s age (46). More likely, it will take me until I’m Fred’s (51).

I almost titled this post “VCs need patience”, because that captures well how it takes time to build a career in this industry. But “patience” has connotations that aren’t appropriate: I love this job, and just about every successful VC I know feels the same. It’s great fun to work on the leading edge of innovation, to be trusted to make calls as to which markets and companies are going to be important and which aren’t, and to not even be expected to get it right very often.

More importantly, it is a privilege and a thrill to play a small role in helping entrepreneurs build great companies.

If you’ve ever stopped to wonder why VCs are often much older than the entrepreneurs they back, or noted the contrast between the speed at which VCs like their companies to move and the speed with which their own careers and partnerships develop, perhaps this will help you understand. VCs peak late.