A former VC partner shares his advice for founders, investors, and everyone seeking financial stability
My guest for this episode is Marvin Liao. He’s an investor-operator, executive coach, and formal advisor to several large family offices. We crossed paths over 10 years ago at Yahoo, and I’ve been following his career pivots and journeys around the world ever since.
Marvin is a partner and board member at Game Groove Capital, an international gaming holding company. He was previously a partner at the venture capital fund, 500 Startups, running the SF-based accelerator program and investing in seed-stage startups. He invested in over 414 pre-seed and seed-stage startups during the six years spent there.
Marvin also spent more than 10 years at Yahoo as an executive with extensive operating experience expanding businesses across Asia, Europe, Latin America, and the United States in his career at the company.
Marvin presently serves on the investment committees and advisory boards of several venture capital funds. He also mentors at numerous accelerator programs around the world. Marvin is a frequent speaker at many digital marketing and tech startup conferences.
Key points from our conversation
I want to call out a few points from my conversation with Marvin to help you if you’re considering founding your own startup or becoming an investor. He also shared some advice that applies to everyone moving forward in this crazy new world and chaotic economy.
If you work in tech long enough, you’ll often hear people talk about their long-term goal of becoming a VC partner. I think this career dream stems from a few things:
They see the big money floating around in the VC world and want a piece of that pie.
It looks like a glamorous lifestyle. On social media, we watch VCs and angel investors traveling the world in style, eating at the best restaurants, and living large.
It’s a position of power. People in tech are usually sitting on the other side of the table begging for budget and resources. It sure would be nice to switch sides and be the one who decides who gets funding or not.
Investors get to see an enormous variety of early-stage startups working on cutting-edge tech solutions. It’s exciting!
However, there is no single path into the VC world. It’s not on the promotion ladder at work, so how do you get there?
If you listened to Marvin’s story in this episode, he didn’t actually plan on becoming an investor. He had been mentoring at several startup accelerator programs for over a year. He got to know the co-founders of 500 Startups, and they asked him to join.
Advice for new investors
Marvin said that his first 70-80 deals weren’t that good. He felt like he didn’t know what he was doing. His successful investments started in years 2-3.
So, what makes the difference between a successful investor and one who is struggling?
First, get better at reading and assessing people. I’ve heard many investors talk about the importance of the team. Does the startup have the right people? Are they building the startup for the right reasons? Do they understand the space?
Next, understand the market. It may look like a small market, but can it become a large one? If you can’t do this, it’s a total disaster.
However, you can’t predict everything. He remembers some startup teams that didn’t look promising initially but were willing to grind it out and eventually became successful.
Timing is important too. I discovered that with my voice-based startup five years ago. We were too early. Now, you can’t swing a stick without hitting a voice startup (e.g., Clubhouse).
Advice for founders
Marvin said that founders should really understand what they want and why they’re doing what they’re doing. Once you take VC money, you’re on a narrow path.
Be conscious and intentional about the decisions you make. Is this what you really want? Or, is it what everyone around you is telling you to do?
Founders think they need to raise money. Everyone is telling them to raise money, and it becomes a marker of success (especially in Silicon Valley).
Once you do raise, it becomes growth at all costs. You either have a billion-dollar outcome or the investors hope that you’ll fail quickly. It’s tough to get off that path.
He knows founders who regret taking VC money. I know that I regret that we raised a seed round for my startup too soon. I should have waited until we had product-market fit.
Marvin doesn’t like how Silicon Valley disparages “lifestyle businesses.” Lifestyle businesses are fine.
If a business is supporting you, that’s a good business. There are many paths to building a startup and having a successful life. Raising money and chasing a billion-dollar dream isn’t the only definition of success and happiness.
2020 should have taught us that we need to be self-sufficient. Many big companies failed their employees. Our governments let us down in many ways.
Even if you are happily employed, you should have some side hustles to hedge your bets. You should have a portfolio of investments to provide long-term financial stability.
Being an employee with one income stream is riskier than becoming an entrepreneur where you control your destiny or being a consultant with multiple customers.
⬆️ Scroll to the top if you want to listen to our full conversation, hear more of Marvin’s advice, and the story of how he unintentionally found his way into the VC world! 🎧
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