Follow me @samirkaji for my random, sometimes relevant thoughts on the world of venture and start-ups Along with the reasons I’ve previously discussed, this list and chart below clearly suggest that becoming a venture investor (or more specifically a seed stage VC) is easier than it’s ever been. Yes, fundraising is hard, but with patience and pragmatism, the barriers of entry are low for new entrants. 500+ seed funds! While entering VC is one thing, having staying power is another, and the challenge of building and maintaining a durable venture franchise continues to increase. It’s why I often ask aspiring venture managers the blunt question — “Why do you exist”? I ask this question because I want to understand why they are starting a firm, and more importantly, why they believe their firm will stand the test of time in such a crowded field. It’s an inquiry that is often met with generic marketing speak and misplaced moxie, but it’s a question that all prospective venture managers should brutal confront prior to taking third party capital. Starting a venture firm isn’t just about raising a fund and investing in new companies — it’s a commitment to your constituents (LP’s, entrepreneurs, employees) to be a great long term steward of the business. Outside of a few exceptions, I’d strongly discourage managers that are not 100% ready to commit the next 20 years of their careers to building their proposed franchise from raising a fund until they are sure. For managers that are committed to building a venture firm capable of consistent alpha returns, what is needed? Many LP’s would answer that it comes down to the manager being substantially “differentiated” from their peer group. The reality is that almost all successful fund managers possess a degree ofauthentic differentiation, a trait or set of traits that clearly points to a meaningful and comparative advantage relative to the competition. Because venture is an asset class with skewed returns requiring both skill and luck, authentic differentiation is the fundamental basis that increases a firm’s probability of producing consistent outsized returns. Authentic differentiation can be measured in many ways, but I want to focus the scope of this article on how it translates to the three core building blocks of venture investing: 1. Sourcing 2. Picking 3. Winning Sourcing Nearly every manager I meet expresses that they have great deal flow as it relates to companies that fall within their investment thesis. Many managers overrate their deal flow by anecdotally recalling quality deals or viewing deal flow strength through the lens of deal velocity. Possessing a competitive sourcing advantage relative to others requires consistent access to highly curated pools of top founder talent. From my experience, firms with authentic sourcing advantages are intensely formulaic in building...

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