Why A Veteran Lawyer Made The Jump To Seed Investing

Why A Veteran Lawyer Made The Jump To Seed Investing

Although the venture industry is notoriously hard to break into, there are some known pipelines that typically feed into various roles at firms. The investment banking and consulting industries, for example, have long been places where VCs look to hire associates.

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Seed Investing

Successful entrepreneurs are often highly sought after to fill general partner roles as they can provide portfolio companies with practical information picked up via years of experience running a startup. Lately, there has even been a movement of ex-journalists joining or starting firms—MG Siegler of GV was previously a TechCruncher, while Upfront Ventures’ Michael Carney was the West Coast editor of Pando prior to joining the LA-based VC.

Recently, Cowboy Ventures—a seed-stage VC founded in 2012 by Aileen Lee (a Kleiner Perkins Caufield & Byers veteran of nearly 13 years and the originator of the term “unicorn”)—announced its latest addition, a person that took a road less traveled to the venture industry and sticks out as a bit of an outlier in Cowboy’s management. Ted Wang, a name well known and respected in The Valley, became the firm’s second general partner and only male, or white, executive.

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In an industry that is often criticized for being monochromatic, it’s refreshing to see a firm like Cowboy bringing on a “diverse” new investor like Wang, who spent the last 20 years as a lawyer. He joins from Fenwick & West, where he advised an impressive list of tech startups such as Facebook, Twitter, Square and Dropbox. Outside of his billable hours counseling startups, he also created the Series Seed Documents—a set of open-sourced financing documents freely available on Github.

Lee and Wang wrote uncommonly candid blog posts (here and here) announcing the move and why they both think it’s a great fit.

We had the opportunity to talk with Wang to get his thoughts on the career switch, how unconscious bias often plays a role in investing and how to minimize its effects (a topic we’ve previously written about), and why he chose to join a seed-stage firm, among other topics. While he might stick out among the firm’s existing members, his values and experience align with Cowboy’s focus on diversity and people.

What attracted you to the venture capital industry?

Well, I’ve always been interested in helping companies, particularly later in my career where I became more of a general advisor. After spending a good amount of time in my previous role, I felt like it was time for a new challenge. With this move into VC I have the opportunity to apply a lot of the skills I picked up while working as a lawyer—having a good sense of how to be helpful to companies; how to give advice in a useful and constructive way; how to listen to founders and understand their concerns; how to give constructive feedback, which is encouraging but also shows opportunities for improvement—and apply them to new but familiar industry.

It seems like a lot of skills transfer pretty well from life as a lawyer to life as a VC. What are some skills you look forward to learning or sharpening in this new role?

I’m definitely coming into this with open eyes and a humble attitude, knowing that there is a whole lot for me to learn. In my previous role, I advised startups in a variety of ways, but by design, there were parts of the business that I didn’t have as much visibility into. In my new role, I’m going to have to dig into areas such as recruiting and understanding a company’s market opportunity in order to be effective. I believe one of the most dangerous things you could do is to come into the venture industry from another profession and think you already know it. The best people in this business realize what a complicated and difficult skill set is needed to pick good founders and companies, and help them.

Cowboy has a history of both speaking up about diversity in the industry and investing in a diverse group of founders. How do you think about the topic of diversity and how do you envision applying that to your investment strategy?

I think the magic of diversity is that when you have people with different experiences, different points of views and different perspectives, not only do you gain a better understanding of other people’s struggles and lives, but you make better decisions overall. That, in fact, was one of the motivations behind me and my family moving to Argentina for a year in 2015. My kids were six and nine at the time and had previously spent their lives growing up in Palo Alto. While it’s a great place, I think there are a lot of things that my family would miss out on if we were only exposed to that area. By uprooting our lives and living in a completely different part of the world, learning and speaking another language and experiencing another culture, I hoped it would give all of us a greater appreciation for what we have, as well as expand our worldview

I just finished “The Undoing Project” by Michael Lewis, and in it they talk about the unconscious biases that creep into decision-making. When we look at founding teams, I want to make sure that we’re mindful of our biases, and one way to limit the effects of those biases is being open to understanding other viewpoints. Not only is there a moral imperative to try and limit the effects of unconscious biases, but I believe it’s the right business decision from an investment perspective.

In your previous role, you advised startups all throughout their lifecycles. When you decided to make the move into VC, what drew you to seed as opposed to late-stage?

I looked at a variety of stages and seed had the greatest appeal for two reasons. First, I like that stage because you’re really working hand in glove with the entrepreneurs. It takes a very special person to take on that type of challenge, and I enjoy working with those people. In addition, I love the drama often seen in the early stages of a startup and how every day is full of urgency. It’s also what I know how to do well. In my law practice, I had a pretty good nose for who was going to be a good entrepreneur and who wouldn’t. That skill set is more valuable in early-stage investing when you’re often betting mostly on the person, as opposed to late-stage investing when a lot of the value is in advising the operations of an already established company.

One thing I do want to say is I love what I do but look forward to the learning opportunities that come with trying something new. This mindset is really what’s driven me to do a bunch of different things throughout my life and is something Aileen refers to as being “happy but never satisfied.” Another way I’ve framed it in the past is, there’s a tension in life between ambition and contentment. When you think of both ambition and contentment, they’re very positive words but they both can have negative connotations, as well. Applying that to how you live your life, I think you want to try and keep those things in balance. You want to be ambitious, to do better, but you don’t want your ambition to run your life. Similarly, you should be happy with what you’ve done, but you should also be driven and motivated to improve.

Article by Mikey Tom – PitchBook

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