20VC: True Ventures Founder, Phil Black on 4 Major Risk Categories for Startups, Why The Funding Gap Is At The "Rational B" Round & Why VCs Must Start Small But Think Big
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Early VC Days
recounts his early venture capital days, starting with his undergraduate experience at Stanford University. He initially saw venture capital, investment banking, and consulting as similar fields, but soon realized their differences. Phil joined Summit Partners, a young venture capital firm, where he honed his skills over six and a half years 1. His approach at True Ventures remains rooted in first principles, focusing on founders targeting large, untapped markets. "We start small, but we don't think small," he emphasizes, highlighting the firm's commitment to significant minority ownership and long-term partnership with founders 2.
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Internet Bubble
The internet bubble of the late 1990s was a pivotal period for Phil, shaping his understanding of venture capital's risks. He describes the era as one of extreme valuations, followed by a sudden crash that highlighted the peril of financing risk 3. "You had all this increasing money coming into the market and then there being no liquidity," Phil recalls, underscoring the importance of capital efficiency and the reduced costs of starting businesses post-crash. This experience informed his approach to managing his angel fund, Blacksmith Capital, where he learned the significance of being a fiduciary and making strategic investment decisions 4.
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Lessons from Blacksmith
Managing Blacksmith Capital was a formative experience for Phil, teaching him the intricacies of fund management and investment strategy. With limited capital, he focused on companies that could thrive on smaller rounds, gaining traction before seeking further funding 4. This approach laid the groundwork for his later ventures, emphasizing efficiency and strategic ownership. At True Ventures, Phil continues to apply these lessons, valuing significant minority ownership and long-term partnerships with founders 2. "We care about ownership and the underlying company," he states, reflecting his commitment to impactful investing.
