How to be a Venture Capitalist without the Capital

Sourcing Deals

It is crucial to find entrepreneurs early in a company's development. While it is helpful to have the support of a top-flight VC company behind you, fund affiliation doesn't necessarily mean that you must.

You can source deals by finding meetups that focus on emerging technologies. This will help you identify the most talented and interesting attendees.

Diligence:

Due diligence is another important aspect of a VC job. This involves looking into the background of founders to determine if they are trustworthy and honest.

This also involves a deep dive into the industry. Contacting potential customers. Get feedback from top opinion leaders. Create a thesis for an emerging marketplace. Developing financial models. Forecasting the future of the market.

Although it might seem awkward to contact individuals, you can still easily search for market information and create compelling presentations from this information.

Negotiation:

After you have convinced yourself that the founders are trustworthy and there is enough evidence to support the idea, it's time to start arranging finances. What amount of money do they need/want? What type of valuation would they be willing to accept? Although you won't be able to finalize the deal at this stage of negotiations, it is easy to get a rough idea of terms.

Opportunity is your money.

Important: It is crucial that you are 100% honest throughout this whole process. You'll be immediately blackballed if you tell startups you work for a VC company or suggest any relationship not recognized by the VC. Don't claim to be on the team when speaking with VCs. Explain clearly to everyone what you are doing. If in doubt, tell. Your reputation is at stake.

Financing:

You might think this is the reason my insane idea of becoming an independent VC is doomed. You won't be able to bankroll the company on your own, so you will need to find investors willing to take a chance.

Although it sounds difficult, money will chase opportunities. If you find companies that are compelling, and explain why the market is so attractive, and then present a framework to make a deal, there's a good chance that angels or other firms will be willing to pay a check, or at least take a meeting.

Before you ask them about your "deals", it's important to get on their radar. But, after a few high-quality introductions, they'll be keen to hear from anyone who is interested.

How do I get rich?

This model does not provide a clear way to get in on the deals. Although you could request a consultation check from the company that would be a good idea, they will probably turn you down. This exercise can be viewed as a job interview if your goal is to become a professional VC.