500 Global China Head: 24 Rules I Learned in the VC Circle

Written by: 500 Global China Region Head Stella Zheng

This is written for VC practitioners or newcomers intending to enter the VC industry. The work in the VC industry may not be what many people imagine, and I hope my insights can be helpful to you.

1. This job is actually very unorganized. Working in venture capital is not a highly organized job. If you enter the VC industry right after graduation, it's like being thrown into the water without knowing how to swim. Basically, sink or swim… I personally went through a very painful and confusing phase, not knowing how to start working correctly and appear proficient.

2. VC Pipeline = Access/Network + Judgment + Convincing. The most important thing is still the network. So, always be proactive in meeting new people.

3. VC is essentially a service industry; simply put, your main function is "sales." You "sell" yourself and the brand of your fund to the entrepreneurs you are interested in, convincing them to take your money. You "sell" the startups you invest in to potential users, buyers, talent, and investors. You "sell" your fund to potential LPs.

4. Have your own opinions, but don't be stubborn. I might be "older" now and don't argue with people who have different opinions. I think if I can express myself effectively, that's enough. Voices that do not resonate will eventually be drowned out; it's not anyone's fault, so there's no need to cling to your own views.

5. Always maintain a learning mindset and don't be afraid of looking foolish. I am not a technically trained investor, so I actually don't understand many technical parts. Of course, for startups, technology is never a decisive indicator. However, I was always afraid to ask unprofessional questions. Now I realize that asking some questions, even if they seem silly or basic, is not a big deal. Moreover, asking experienced people is indeed the fastest way to learn and understand an industry.

6. Question everything. Don't believe every word you hear in this circle, even those said by so-called "big shots"! Often, their words can quickly backfire… Don't blindly worship; the same goes for entrepreneurs—maintain independent thinking.

7. Following the previous point, however! When dealing with each project, believe that they have the potential to succeed. Don't have any biases. In the early stages, don't look down on a very simple product, especially if it looks like a small toy. However, after the Series A round, let the data speak (if the team and vision are credible).

8. So, Be Nice. No matter who it is.

9. Respect every entrepreneur. Don't be late for scheduled meetings; always consider others more. In fact, many of our LPs are entrepreneurs I have previously invested in, and after their success, they invested in our portfolio companies or our fund.

10. No one can predict the future. Good insights and networks can indeed provide you with cutting-edge information, but that doesn't mean any of us can clearly define the future market direction. I have consulted with many well-known VC partners and some unicorn C-suite individuals, but I found that the information gap is not as significant as imagined. In fact, because they already have a certain social status and capital accumulation, they may not be very eager for new information and directions. Of course, this is also why startups will always have the opportunity to "take down" large enterprises.

11. There are always WeChat friends who haven't contacted me for years suddenly reaching out; perhaps he/she has started a business? Haha.

12. No matter which VC you work for, always remember to build your personal brand.

13. The feedback loops in VC are very long. Usually, it takes 4 to 5 years before you have some success stories to showcase. Before that, no one knows how well you are doing, and almost no one gives you clear feedback except your direct supervisor. So, if you always seek affirmation and recognition to have the confidence to complete your work, you might not be suitable for VC.

14. Try not to gossip. This circle is too small; it's wise to avoid the center of public opinion as much as possible.

15. You can connect with entrepreneurs you want to reach out to through public social media (like Twitter), but don't look for deal flow through Twitter (social media)! Twitter can give you illusions and FOMO feelings. Hype, FOMO, and competition among multiple VCs often lead you to invest in companies that are not worth such high valuations. Such companies often experience a return to value during cycles.

16. The noise in this market will never disappear; be clear about your path and strategy, and stick to it.

17. Always walk with the "right" people. VC indeed deals with "people" every day; focusing on entrepreneurs is far more important than focusing on entrepreneurial projects.

18. Following the previous point, the "right" person is always yourself. So, establish a good image and reputation for yourself, and strategically make friends with trustworthy individuals; in the future, you are likely to collaborate/work together.

19. When it's time to refuse, refuse directly; don't give entrepreneurs false signals. Don't waste each other's time, and don't be perfunctory.

20. Some entrepreneurs are very good at answering investors' questions; they are very smart, but that doesn't mean they can really create great, successful companies.

21. Following the previous point, avoid wasting time on people who just talk big; spend more time doing practical and concrete things, as those are the ones that accumulate.

22. When it comes to evaluating entrepreneurial projects, most early-stage VCs (I mean pre-Series A) focus 90% of their attention on the team, product, and market, and 10% on specific data. For specifics, refer to previous articles.

23. Most VCs are super unfocused; if entrepreneurs do not attract investors in the first 5-10 minutes, there is a high chance there won't be any follow-up.

24. Most VC practitioners are not as glamorous as they appear… The VC industry is interesting, but competition (both internal & external) is also fierce.

About 500 Global

500 Global is a venture capital firm that provides early-stage investments to founders building fast-growing technology companies, focusing on markets where technology, innovation, and capital can unlock long-term value and drive economic growth. 500 Global has invested in and supported over 6,000 founders, representing more than 2,600 companies operating in 77 countries, with a portfolio that includes 51 unicorns and 125 soonicorns. Team members are distributed across more than 15 countries, bringing together the experience of entrepreneurs, investors, and operators from the world's leading companies.