Hey there!

It’s Sparsh here!👋 

Breaking into the world of venture capital is tough, especially if you're an outsider. There’s a hidden system of networks, rules, and incentives that can leave even the best founders feeling lost. 📖 

This guide is inspired by insights from Mat Sherman’s Twitter thread (@Mat_Sherman), who shares real talk about why breaking in is so challenging and what you can do about it. 💡 

Let’s dive in to know more! 🚀

🏦 Why Incentives Drive Everything

➤Venture capitalists don’t invest their own money. Instead, they manage funds for limited partners (LPs) and must deliver big returns: think 3x or more on the fund.💰️ 

➤Their livelihoods depend on this. That’s why they are always on the lookout for deals that feel like a sure win. If they fail, LPs just stop funding them, and it’s game over for their VC career. 👀 


This constant pressure means VCs naturally stick to what feels safest and most promising. 💼

💪The Power of Warm Introductions

This is where “warm intros” come in. In places like San Francisco, trust and reputation are everything. If you’re introduced by someone already in the circle, your odds skyrocket. 🤵 

1. Warm intros act as social proof; someone vouches for you. 👋 

2. Time is limited, so VCs are more likely to prioritise deals from trusted sources. 🤝 

3. The “insider” network is tight, and most capital is controlled by people in this loop. ➰ 

For outsiders, not having that connection puts you at a huge disadvantage. 🌉

🧱The Reality of Being an Outsider

So what actually happens if you’re not in the network?

Here’s the honest truth👀:

VCs receive tons of cold outreach. Sorting through it all is overwhelming, so they default to safer bets, the ones that come in through warm intros. Unfortunately, this leaves many promising founders out in the cold. 🥶

📧 Cold Emailing: The Uphill Battle

There are exceptions; some investors do seek out diamonds in the rough and have systems for handling cold inbound, but they’re rare. Most just stick to what works: deals from people they already know. 📥

🏃‍♂️Two Main Ways to Break In

If you’re looking for ways to get into the VC network, your best bets are:

1. Work for a winning company in a hub like the Bay Area.🏆️ 

2. Start your own company, show real traction, and attract great investors. 🏢

Most outsiders begin with the second route, but it’s a marathon, not a sprint. If you do go this way, expect to prove your growth with regular updates and persistence, sometimes for over a year, as Mat Sherman did. 🏅

📊 The Numbers Behind the Curtain

Only a small fraction of VC funds ever deliver a 3x return. Most VC-backed startups don’t succeed; over 90% fail within a few years. Warm intros will always be the faster track to a meeting and a check. It’s not fair, but it’s how the game is played. 📉

🌍 Geography Still Matters
It’s not just about who you know, but also where you are. Startups outside major cities face extra hurdles. Silicon Valley still attracts nearly half of all U.S. VC funds. Accelerators and programs like Y Combinator can help level the playing field, but most of the capital and experience are still concentrated in places like San Francisco, New York, and Boston. 🗺️

🔄 The VC Paradox

➡️ VCs say they want outliers and bold bets, but end up chasing the same deals from the same networks. Meanwhile, great companies in overlooked places go unnoticed, while insiders raise money on hype alone. The system is far from perfect, especially in the early stages.⚙️

➡️But never forget: VCs need you to make money, not the other way around. Founders create the value. If you understand the rules and keep pushing, you’ve got a shot.🌟