The Future of Venture Capital

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Hey friends 👋 ,

Happy Monday and welcome to the first issue of Through the Noise!

A newsletter that helps you cut through the noise on startups, community and capital.

There is an abundance of noise on the internet. I started creating content to distill concepts to the essential and help you go from A→B without the frills. I'm now taking that one step further.

Through the Noise is a newsletter that does what it says on the tin.

Every Monday I'll write about a big company, a small startup, VC and community building to help you get smart. Every Thursday I'll be chatting with a founder, funder or friend on a live podcast.

This is the first of its kind– strap in and enjoy.


The Future of Venture Capital

A Shift in Trust

Brand building in venture is changing. We're transitioning from a company level to an individual level. Static news to dynamic news. Let's dig in.

The trend of venture is moving to solo GPs. Individuals are the brands. Prime examples include MrBeast, Harry Stebbings, Packy McCormick and Sahil Bloom. What common trait do they all have in common? They each meticulously constructed their own distribution arm. Harnessing the power of Twitter, newsletters, podcasts and video to create behemoth content machines.

On the flip side, traditional firms have neither brand nor distribution. 50 years ago you had the mainstream paper, everyone believed it. But this narrative has been steadily eroding for decades. In order for journalism to work you need all journalists to buy into a certain code of journalistic behaviour and ethics which is all about objectivity. The press doesn't buy into this anymore, it's opinion skewed fact to generate clicks. In turn, we are seeing a shift in trust from institutions to individuals.

There are now many alternatives to traditional PR. We prefer going direct to our audience and customer. The catalyst? Maintaining control over our message. To develop a social media presence you speak directly to your audience without going through the press. By going through traditional media, it is a harder intermediated way to get your point across. Now more than ever, traditional PR is in ferocious competition with social media. The internet has commoditised the reporting of facts whilst the mainstream media has moved to rigid agenda.

Stebbings, Packy and Sahil don't use traditional PR methods. They all go direct to their audience. Raising a new fund? Scouting for talent? Looking for recommendations? All three are a tweet away to receive answers from audiences of 100K+ deep, connected individuals.

The answer is simple. Individuals are truth seekers, the mainstream media are click seekers. The bottom line is people want to find affinity with people. Platforms including Twitter, Revue, Substack, Callin, Spotify, Apple Podcasts, YouTube, TikTok and Twitch enable a direct relationship between the source and the audience. The removal of traditional media houses allow everything to be taken at face value. Individuals can now arrive at the truth through a more efficient marketplace of ideas:

By building online you speak directly to your audience meaning greater control of your message through ownership and accountability. The marketplace is becoming more efficient. Traditional practices will get left behind and have to pay the highest price.

Finding Founder-Funder Fit

At the most fundamental level, venture capital is about providing capital to ventures. It is people driven and on its own, a product.

"The only thing that matters is getting product market fit"– Ben Horowitz

Your product must satisfy a strong market demand: the desires of a founder must match the product of the funder. In a 2011 article from Forbes, @nicoleperlroth said:

"It’s both the money and the network, advice, services, and judgment that come from the person or firm investing in your company... The best VCs are constantly thinking about how to improve their product to attract the best customers."

Entrepreneurs are the customers. Founders must always derive the value they are receiving beyond the capital put forward. When VCs think of startups as "customers" instead of "deals", the dynamic is restored and focus of the VC is realigned back to their product– the true value add. Yet the current landscape looks something like the Tweet below...

As of recent, commoditisation within venture has been prolific. More players are entering the arena, both from a firm-level and and individual-level. This means a significant uptick in noise for founders to navigate. How do VCs bring differentiated value that surpasses the capital they put forward?

One of the most prolific differentiators is community. The ability to leverage a social following across multiple channels is a force to be reckoned with. A broad-spanning community's backbone is distribution. This moat is a function of a positive multiplier effect. Individuals become known, liked and trusted within their niche. More followers, listeners and super-fans lead to greater perceived credibility. This can be leveraged to receive instant, candid feedback and community based product advisory for the founder.

Now more than ever, structuring your firm around the product is what will set you apart. Founders care about one thing: what you can do for them. As a VC, being all things for all people is not the right answer. The solution lies in finding what you're great at and doing more of it to help the right people.


Through the Noise Podcast

E1: Dave Kline - Hiring Winning Teams and Startup Leadership

This week we recorded the very first episode of the Through the Noise podcast.

Our guest was the owner of SkillScouter and ex-Bridgewater Associates, Dave Kline.

Discretion advised: he brought the heat in our hour-long conversation covering hiring winning teams and startup leadership.


That's all for today friends!

As always feel free to reach out @thealexbanks as I'd love to hear your feedback.

Thanks for reading and I'll catch you next Monday.