I first came across Spex Capital on LinkedIn, whilst I was contemplating my next career move. Having recently graduated from King’s College London and with previous internship experience in investment banking, the world of Venture Capital was an intriguing challenge, especially the prospect of working at a highly specialised boutique firm. So, when I saw that Spex was hiring, I immediately got in touch and secured myself an internship.
Nine months into the role, I can confidently say that working at Spex has been an eye-opening experience – one that still regularly teaches me important lessons to this day, shaping both my interests and ideals for what I’d like my future profession to be.
Here are some of the biggest takeaways on what a career in a boutique VC looks like – hoping it provides some guidance to others who may be interested in working in the sector.
Good founders have vision, great founders know how to bring that vision to life
The partnership between Spex and MedCity gave birth to a joint investment call at the very end of 2021. At that time digital health funding was approaching an all-time high, with Q4’21 reaching $16.1Bn of investments. During Q2’22 this figure witnessed a drop to $7.2Bn, with a record low of just one IPO. Interestingly, I noticed companies with extremely high valuations drastically adjusting their projections in the span of a few months. Such transition has highlighted the difference between good founders with a great product and vision, and great founders who are able to navigate the current macroeconomic environment and still pursue their mission. For instance, a great leader is capable of taking difficult decisions to reduce burn rate or shifting strategy towards more enriching opportunities.
Being an entrepreneur is an incredibly challenging task that requires a lot of sacrifices. I was particularly fascinated by the their ability to nonetheless show great confidence in their vision whilst appreciating the constant learning process involved in setting up a new company. I was also impressed by their capacity to handle challenging questions and be transparent about the weaknesses of their ventures, while providing mitigations against the main risks they were facing. This reflects what we aim to achieve with our portfolio companies at Spex: investing in companies and people with a long-term view that look to disrupt the digital health industry.
A thorough due diligence is a fundamental step to take before investing
At the risk of stating the obvious, I was surprised by how incredibly important it is to challenge every aspect of an early-stage venture. At times, small details might uncover a Pandora’s box that can lead to a terrible investment if not appropriately addressed. Coming from a different background, I would sometimes struggle to understand complex medical technologies and devices, taking their value for granted. However, appreciating every aspect of the product – from its underlying technology to what impact it can yield and what addressable market can be targeted – is a fundamental step that must always be taken into account when considering a potential investment.
I have often heard about deals coming from trusted sources with little-to-no due diligence executed, which in turn led to investments with poor returns. At Spex, we believe that every business needs to show a good degree of traction, and that distinguishing a good from a bad venture requires a long and patient due diligence process.
Working in a boutique VC is exciting
During my time at Spex, I was lucky to experience key job functions of a venture capitalist at an early stage of my career. The fast-paced and compact environment that comes with a newly founded firm with extremely experienced team members, allows you to get quickly stuck in projects and learn faster. At times, I was the first point of contact for entrepreneurs, actively participated during interviews with the companies and maintained a constant communication flow with the management team. Moreover, there are unique opportunities to learn from senior partners and colleagues with greater experience and knowledge. One of Spex’s significant strengths lies on diverse knowledge and expertise, with a team composed of specialists in different fields, which in turn creates a great supporting network for our portfolio companies and future investments.
How to break into the industry
If you’re interested in becoming a venture capitalist, my key takeaway is that curiosity and proactivity are the essential traits to have for this role. In a distinct change of pace from my other experience in investment banking, where I was dealing with more established companies, working in an early stage focused VC means mostly encountering small private ventures with fragmented information. A proactive approach in analysis is key to building a solid opinion of a potential investment. Having a curious and entrepreneurial mindset, critically thinking about risks and opportunities of a business, building a specific knowledge of the market/sector in which you are specialising, as well as understanding in which direction the world is going, are all elements that helped me grow both personally and professionally.
Becoming a venture capitalist can be a challenging ride, but it’s definitely one worth doing.