We’d love to tell you that there is an easy way to learn and understand the worlds of startups and investments. Truth is, we all learn through doing. We talk to people, we test things out, we listen to podcasts where others smarter than us share their learnings. We attend talks and seminars and we read. And we read a lot. Between all of us, we have read hundreds of books for junior VCs, for startups, for angel investors. For starters, we would like to share a list of mandatory books for junior VCs. They can be useful to anyone who is just starting and wants to get a better grasp of what they are getting into.
1. Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb
Antifragile looks at a big number of mental models and shares wisdom that is hard to find in other places. The author has a unique way of analyzing markets, statistics, and optionality in this book. He explains what fragility is and what it isn’t. He also takes a look at why resilience is different from antifragility. But he also talks about the most relevant thing for a VC: optionality. In short, Taleb says that the more freedom of choice you have to respond to unforeseen circumstances, the less fragile you will be to negative black swan events. Making optionality a cornerstone to venture capital.
Why it’s relevant for junior VCs:
Taleb going into both the math and the principles of every mental model presented. He’s not just approaching things from a social or psychological point of view. He dives into the data. And you know what we always say: Data beats gut feeling.
2. Zero to One by Peter Thiel and Blake Masters
Peter Thiel, co-founder of PayPal, believes that there is still a lot of room to innovate in the world. But innovation doesn’t come from doing what we already know. Doing what we already know will only take the world from 1 to n, adding more of something familiar. He says that a new creation goes from 0 to 1. This book is about the realities of the hard work it takes to become an entrepreneur.
Why it’s relevant for junior VCs:
At first glance, this is a book that would interest founders more than junior VCs. But to be a good VC, one needs to understand it all. Successful VCs learn all there is to learn about the whole ecosystem, not only on their part. Good VCs know how a startup is built, how founders think, and what successful startups have in common. This way, they can make better decisions, based on both data and experience.
3. Lean Analytics: Use Data to Build a Better Startup Faster by Alistair Croll and Benjamin Yoskovitz
Metrics are a startup’s mirror. If tracked honestly and correctly, metrics can give investors a pretty accurate image of the business. But for metrics to get to investors, they have to be tracked. This book speaks to founders about what and how they should track to make sure they have a healthy business.
Why it’s relevant for junior VCs:
You might think this is a title you can skip, but understanding how startups look at metrics will help you make better decisions too. If you know how founders think, you know what to look for, what questions to ask, and how to spot red flags. For a VC, especially a junior VC, the decisions they take at an early stage in their career will make them or break them in the industry.
4. Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld and Jason Mendelson
This book is designed to bring transparency to the venture capital funding process. It looks at the status quo of how venture capital approaches startups and how deal structures are constructed, how they work, and what motivates venture capitalists to propose certain outcomes.
Why it’s relevant for junior VCs:
As someone just starting out, a junior VC needs to absorb all information available on venture capital. Especially if they are looking to improve something. You know what they say, you can’t fix something if you don’t know what’s working and what’s not.
5. Break Into VC: How to Break Into Venture Capital and Think Like an Investor Whether You’re a Student, Entrepreneur or Working Professional by Bradley Miles
Bradley Miles gives the world a good book about breaking into the venture capital industry. He boldly dives into explaining the mysteries of the industry and provides approachable advice on how to enter the industry and how to succeed in it. It is a very comprehensive “how-to” material and we love it because Miles also talks about the key metrics that matter to VCs. Company performance metrics are, in our opinion, one of the more important things to look at. Other topics detailed in the book are: the stages of venture investing, accounting fundamentals; returns, and valuation.
Why it’s relevant for junior VCs:
Bradley Miles not only explains the industry very well, but he also offers solutions to many challenges. Moreover, there are case studies on young VCs. This book is a valuable addition to any new or aspiring VCs library.
6. eBoys, The First Inside Account of Venture Capitalists at Work by Randall Stross
This book is one of those rare accounts from true life. Randall Stross tells the story of the six tall men who backed eBay, Juniper, Priceline, and other billion-dollar startups that are transforming the Internet and the economy. The author was privy to the conversations where the Benchmark boys debated which businesses to support. The book may not be filled with data, but it is a great place from which to learn how the old world of venture capital worked.
Why it’s relevant for junior VCs:
The book offers a pretty real image of the VC industry and it describes a glorious period: Benchmark Capital in the middle of the Internet wave. You get a great idea of how investors think, and how they make decisions. But you will also understand how venture capital firms are built.
7. Venture Capitalists at Work: How VCs Identify and Build Billion-Dollar Successes by Tarang Shah and Shital Shah
If you were looking for a collection of insights and approaches of leading VC practitioners, Venture Capitalists at Work is the book for you. You will learn a lot about the personalities of prominent VCs from the current generation, including Jim Goetz and Alfred Lin of Sequoia and Rich Wong of Accel. The book is, in fact, a collection of interviews that display the true colors of the venture capital process.
Why it’s relevant for junior VCs:
Understanding how seasoned VCs think can be a real advantage to any junior in the industry. Apart from the valuable knowledge and lessons, juniors can get a better grasp of the expectations of their future bosses.
8. Term Sheets and Valuations by Alex Wilmerding
It may have been written some time ago, but this book is still an amazing primer. It should be on the list of mandatory books for junior VCs, entrepreneurs, and financial professionals. The greatest part is that this book includes an actual term sheet. It is from a leading law firm and it features line by line descriptions of each clause, what can/should be negotiated, and the important points to pay attention to.
Why it’s relevant for junior VCs:
This book can get you up to speed on how venture deals work, including terms types of preferred stock, governance rights, and different wants to value an early-stage company. It can help you develop a better decision-making mindset.
9. Angel by Jason Calacanis
Jason Calacanis offers good insight on how to evaluate entrepreneurs, build deaflow, build a calling card as an investor, and avoid investing mistakes. While he talks about them from an angel perspective, they are valid for VCs too. Calcanis invested in Robinhood, Wealthfront, Uber, Desktop Metal, Datastax, Thumbtack, Superhuman, and Trello. He is also the host of This Week in Startups, a show we’ve mentioned in our article about useful podcasts for startup founders and VCs.
Why it’s relevant for junior VCs:
Calacanis offers a great investment process and framework for angel investors. So if you are considering investing as an angel before entering the venture world, this book is crucial.
What are some other relevant books we might have missed? Let us know and we’ll add them to this list.
Other useful resources for startup founders:
