Venture 101: 9 Habits of Great Venture Investors

1. Look Carefully at the Lead Investor

Smart investors pay close attention to who’s leading a deal. The lead investor’s reputation, track record, and diligence often correlate directly with a company’s outcome. Great founders attract great leads — making this a powerful signal of potential.

A recent PitchBook study analyzing tens of thousands of startup deals confirms this: startups backed by highly connected VCs are significantly more likely to succeed, defined by follow-on funding, an acquisition, or an IPO.

At Alumni Ventures, we’ve seen this dynamic firsthand. We leverage a trusted network of 11,000+ investors and 850,000 contributors¹ to access strong opportunities — and we always co-invest alongside a reputable lead investor, such as Andreessen Horowitz, Sequoia, Lightspeed, or Bessemer.

It’s not just about the firm — it’s about the individual VC partner driving the deal. Have they backed similar companies? Do they demonstrate conviction, pattern recognition, network, and value beyond capital?

Tip: Always evaluate the lead investor’s background and track record. It’s one of the clearest indicators of a startup’s real potential.

2. Balance “What Could Go Right” vs. “What Could Go Wrong”

Successful venture capitalists skillfully balance optimism with realism. Venture returns follow a power law — that is, one or two breakout wins can outweigh many losses. Consider Bessemer Venture Partner’s famous “Anti-Portfolio” — a list of blockbuster companies it passed on, including Google, Apple, and Facebook. It’s a list that humbly acknowledges misses. But the fact remains, Bessemer has an even more powerful portfolio of wins, including Shopify, LinkedIn, and Twilio.

Neither blind optimism nor continual risk avoidance work in venture. Good investors weigh both upside and downside with discipline. They avoid pitfalls like overly rosy assumptions about market size — or letting past failures cloud their judgment.

Tip: Good investors stay self-aware. They regularly ask themselves: What’s driving my optimism? What’s fueling my hesitation? They use that reflection to keep their mindset — and portfolio — balanced.

3. Take a Lot of Shots on Goal

In venture, outcomes are often shaped by luck, timing, and forces you can’t predict. Unlike real estate or bonds — where returns tend to follow steady patterns — VC success often hinges on catching lightning in a bottle.

Venture capitalists often use a maxim called the “2-6-2 rule.” For a portfolio of 10 startups:

By this VC axiom, 8 out of 10 investments can be non-performers and you still might hit a home run if those other two companies explode in value. Of course, this isn’t a guarantee of results; more a caution that big wins are rare.

That’s why diversification matters. Great VCs don’t try to find a single, perfect deal. Instead, they build broad, high-quality portfolios to spread risk and increase the odds of hitting a breakout. At AV, we believe in accumulating 100-200 investments over time. The same principles that apply to public markets — frequent, diversified investing — also apply here.

Tip: Good investors maintain a steady, diverse pipeline. They avoid overconcentrating in one sector, stage, or theme, knowing that breadth improves resilience — and increases the chance of backing a breakout.

4. “Think Different”

Successful venture investing often stems from seeing what others miss. It requires independent thinking. Peter Thiel famously asks entrepreneurs, “What important truth do very few people agree with you on?” — a question that applies just as well to investors.

Top investors challenge assumptions, resist herd mentality, and look for early signals that others ignore or misinterpret. They’re not afraid to back ideas that seem contrarian — so long as they’re grounded in insight, not instinct alone.

Crucially, being early and right often requires patience. Contrarian bets may underperform in the short term or even look wrong at first. Great investors combine unique insight with discipline, data, and timing — allowing them to stay ahead of the curve without drifting into speculation.

Tip: Good investors ask themselves — and the founders they meet — what unique belief drives their conviction. They’re willing to support ideas that might be early, unpopular, or misunderstood, so long as the thesis is clear and the upside is compelling.

5. Do Their Homework

I’m often surprised by how many deals proceed without thorough diligence. Research shows that due diligence is positively related to returns on investment. Good investors differentiate themselves by doing the work: digging into market dynamics, competitive landscape, team quality, and financial fundamentals.

Skipping this step can be costly. At AV, we use structured diligence scorecards to evaluate opportunities systematically — and increasingly leverage AI to enhance the quality and speed of our analysis. We also sometimes monitor companies for years and always leverage the expertise of our co-investors.

Tip: Good investors use disciplined processes and structured diligence techniques and tech to raise the quality of their decisions.

6. Chase the Winners

Great investors stay close to their portfolios. They track performance, spot early signs of breakout potential, and lean in with conviction. Doubling down on top performers through timely follow-on investments can significantly improve returns. This is especially true for metrics like Internal Rate of Return (IRR), which factors in the time value of money, and Total Dollars Gained, which captures total profit regardless of timing.

At Alumni Ventures, our co-investment model adds a layer of objectivity. Because we’re never obligated to reinvest, we let the data lead — free from signaling risk or internal bias — so we can allocate capital where it’s most likely to drive meaningful results.

Tip: Strong investors build a disciplined framework for evaluating portfolio performance. With that structure in place, they’re able to act quickly — and confidently — when a winner starts to emerge.

7. Keep Learning

Warren Buffett often says that “the best investment you can make is in yourself.” That principle holds especially true in venture capital, where success depends on staying ahead of change. Unlike more predictable asset classes, venture operates on the frontier of innovation — where assumptions age quickly and new patterns are constantly emerging.

The best VC investors are lifelong learners. They don’t just follow trends — they interrogate them. They ask sharp questions, synthesize new information rapidly, and remain curious about what’s coming next. They read widely, seek out diverse perspectives, and regularly reflect on their own decisions to refine pattern recognition and improve judgment.

That process includes techniques like pre-mortems (anticipating what could go wrong) and post-mortems (analyzing what actually did happen), along with a steady flow of insight from industry events, thoughtful conversations with peers, and candid feedback. Continuous learning isn’t a luxury. It’s a discipline that separates good investors from great ones.

Tip: Strong investors make learning routine. They block time to read, attend webinars, and engage in real conversations that challenge their thinking and sharpen their edge.

8. Taking Chips off the Table Along the Way

Knowing when to sell is just as important as knowing when to buy. Some of the most successful investors exit earlier than expected — locking in meaningful gains rather than holding out for a perfect outcome that may never come.

On average, it takes a startup around 10 years from its founding to be ready for an IPO or acquisition. However, the amount of time from founding to IPO has slightly increased in recent years, as more companies choose to stay private longer. As a result, the average time to exit has increased — raising exposure to competitive shifts and changing sector dynamics.

Holding too long can mean missing ideal exit windows, while exiting too early can leave value on the table. Great investors learn to navigate that balance.

Tip: Strong investors set clear exit guidelines — and follow them. Whether using specific performance benchmarks or a phased selling strategy, they stay disciplined, protect gains, and keep long-term outcomes in focus. As legendary investor Shelby M.C. Davis said: “Invest for the long haul. Don’t get too greedy and don’t get too scared.”

9. Love the Process

Passion matters. Good investors are more likely to excel at tasks they genuinely enjoy, and investing is no exception. Loving the process helps them stay focused and make better decisions, even when outcomes are uncertain.

Beyond financial returns, venture investing offers rich spillover benefits. Investors can come connect with fascinating people, gain early exposure to groundbreaking technologies, and be among the first to learn about nascent trends.

Tip: Good investors regularly reflect on why they invest. Many prioritize enjoyment of the process, cultivating a resilient mindset that thrives amid uncertainty and setback.