Dirt: Gen Z VCs
How venture capital became the most coveted job in Silicon Valley.
Terry Nguyen, Dirt’s senior staff writer, reports on how Gen Z culture infiltrated venture capital, establishing a new investor archetype — or is it just a meme?
On October 7, more than 300 young venture capitalists, entrepreneurs, and tech workers congregated in Chicago to attend the inaugural “Gen Z VCs Future of Chicago Summit.”
The one-day event featured panels and a startup showcase, where founders pitched their companies to potential investors. Mayor Lori Lightfoot proclaimed it “Gen Z VCs Day” in celebration of the city-sponsored summit. “I salute the Gen Z VC community for making the VC ecosystem more transparent and welcoming for the next generation,” Lightfoot said in a pre-recorded speech to attendees. “I’m proud that your Future of Chicago summit will elevate the Gen Z perspective and voice as we look to build our strong future.”
This was a major endorsement for Gen Z VCs, a Slack group-turned-online-collective of young people with aspirations to work in venture capital. But beyond reference to the collective itself, Lightfoot’s speech alluded to a widely-held belief of the tech world: Youth is a cornerstone of innovation, and young people are the prodigies and prophets of what’s to come. “When I think about the future of consumers, you can’t talk about that without culture,” Meagan Loyst, the founder of Gen Z VCs, told me in September. “Culture is intimately intertwined with technology and Gen Z is at the center of that.”
To that end, “Gen Z VCs” has become a catch-all term for a burgeoning cohort of investors in their twenties, part of a generation born after 1997, keen on infiltrating venture capital’s ivory tower. Their elevator pitch? A young person’s perspective in a rapidly changing startup landscape. “Gen Z VC” is a professional persona, an archetypal shorthand for a nascent brand of VC-dom: extremely online Zoomers who, by virtue of being plugged into culture, have appointed themselves as the representatives of an emergent consumer base and the talent scouts for a new generation of founders.
“Gen Z culture has affected the way that people fundraise,” said TechCrunch’s Natasha Mascarenhas on a podcast episode from August 2020. The pandemic upended the staid norms of the tech industry, paving the path for Gen Z’s unofficial takeover. Investors were scouting out deals in Twitter DMs. Viral hype was propelling attention towards new startups led by fresh-faced founders. Funds were being assembled on Zoom. With Twitter becoming the tech world’s temporary public square, young VCs leveraged online attention to their advantage. Rookie investors touted their investments and affiliations like a badge of honor on their social media bios. Their presence has since become pervasive across Twitter and TikTok.
At funds that specialize in early-stage companies or consumer-facing startups, it’s crucial to be on the vanguard of “Gen Z culture.” Many, as a result, have employed recent graduates to the task. “It’s my job to do everything I can so that my general partners have access to founders they’re interested in within a week or two,” said Emily Herrera, a 23-year-old investor at Night Ventures, an early-stage consumer fund based in New York.
Night Ventures is the investing arm of Night Media, a talent management company for content creators like YouTube star MrBeast and Twitch streamer Hasan Piker. Some of these high-profile creators — including other talent not represented by the company — are limited partners at Night, providing capital for its portfolio. Night is not a traditional venture fund, and Herrera doesn’t fit the profile of a traditional venture capitalist (middle-aged, white, male) who might regard internet culture as juvenile. Herrera’s knack for being online, coupled with her interest in market research, grants her an edge in venture, she told me. When it comes to connecting with startup founders and assessing consumer interest in a new product, she pulls a page from the creator playbook: Social-media content can be parlayed for visibility.
Her fund “understands the value of the individual creator and authenticity on social media,” Herrera said. Her frequent, haphazard tweets are part of this strategy. From quippy remarks to vlog-like life updates, the posts help boost Herrera’s profile — and by extension, her fund’s reputation — within the tech-VC Twitter ecosystem where boring, business-minded aphorisms are the norm. They’re fodder for networking. By this assessment, Herrera might be considered a content creator herself. But her objective is not producing content or clinching sponsorship deals. It’s to identify founders with promising startups, ideally before other funds have, and deploy money in exchange for equity.
Investments in consumer-facing industries — the creator economy, direct-to-consumer commerce, fintech, and Web3 — have lately become regarded as a form of cultural production that is as valuable as, if not more than, product development. Investors are operating more like patrons, dictating the flow of cash towards founders, as the Guggenheims did for 20th-century art. The role of venture capitalists has veered towards the curatorial: Startups are artifacts to be acquired into an entrepreneurial portfolio. Young investors are keeping their eyes peeled for the upcoming spate of unicorns that will supplant the old millennial world order. Tech’s Gen Z cohort is boldly set on funding their desired vision of the world into existence. “There’s a need for different kinds of culture to be funded,” Herrera told me. “It’s such an exciting thing to think about. The technology we’re investing in has the potential to meaningfully affect society.”
Venture capital didn’t always have cultural cachet.
A subset of private equity financing, the industry once consisted primarily of Ivy Leaguers staffed at family offices. Its archetype recalls that of a stale, white, old money boys’ club, and the field is still very much exclusive to already-successful startup founders and executives. Investment partners usually spend years, if not decades, cultivating a track record. Venture by nature isn’t a space that young people can easily disrupt, unlike the technology it funds. The industry moves at a much slower pace: Most funds operate on ten-year investing timelines, roughly the amount of time it takes for startups to yield returns.
Since venture’s emergence as a financing vehicle in the 1970s, the role of a VC has morphed from behind-the-scenes advising into something much more public-facing, even culturally engaging. Not so long ago, self-promotion was frowned upon as gauche by top VC firms. By the early 2010s, even storied funds like Sequoia and Bessemer were begrudgingly hiring public relations teams and announcing investments on Twitter and to the press, indulging in the cult of online personality.
This shift was largely driven by the showboating prowess of Marc Andreessen and Ben Horowitz. Over the past decade, their firm, Andreessen Horowitz (a16z), has constructed its own media network, launching podcasts, newsletters, and blogs featuring foresights from high-profile staff. Its partners are billionaires cosplaying as culture-makers at the forefront of innovation, bolstering their investment brand by blatantly leaning into techno-optimist thought leadership. (Per a 2015 New Yorker profile, Horowitz is mentioned quoting Nas and Kanye lyrics, comparing Andreesen to the rapper on the basis of his “emotional intensity.”)
Andreessen Horowitz believes that such visibility is good for its business, a principle that has become gospel for new funds with no brand name recognition. Visibility enhances “deal flow,” or knowledge of and access to funding rounds. Social capital begets financial capital. In steering this ship, investors are not just gatekeepers. They’re potential kingmakers, the “midwives to innovation.”
“We are in the golden age of venture capital exits,” a general partner at IVP told The Information in December 2020. Over the past five years, record levels of venture capital investment, coupled with massive exits, have spawned more venture funds. This industry-wide expansion has led to more entry-level inroads for recent graduates and twenty-somethings. The pandemic spurred on an unexpected tech boom — a boon for the junior-level VCs who entered the industry in a bull market. Historically, young people were expected to have experience running a company before shifting gears into venture: Get an exit, then start a fund or join one as partner. That’s no longer the case. Young standouts have been able to bulk up their resumes, with some leaving storied venture funds to start up their own.
For those looking to “build the future” of tech, venture has emerged as an appealing alternative — better, arguably, than toughing it out as a founder, who has to hedge their future on a single idea.
“As a founder, you’re essentially putting all your eggs in one basket. You are building something because you believe that it’s the future,” says Reggie James, founder of Eternal, a startup that supports artists. “As a VC, your job is to spread capital over many things you think could potentially be the future.” James, who is 27, is also a partner at a VC firm, and has made angel investments in Parade, an underwear company, and Rainbow, an Ethereum wallet. However, James told me he doesn’t “identify” with being an investor. Since the startup is his main priority, he is foremost a founder, then an investor. It’s a notable distinction: Investors are symbiotically linked to founders (and vice versa) within the greater tech ecosystem, but the tide, as of late, seems to have turned in favor of VCs.
“We’re at an interesting transition point,” James said. “The best place to be right now is at a capital institution, a fund, where you can freely produce knowledge and deploy capital, rather than create an actual product.”
Success — and funding — is harder to come by for young founders in a crowded startup landscape. A decade ago, opportunity for “disruption” was rife. A billion-dollar startup could unlock a multi-billion-dollar ecosystem’s worth of apps, platforms, and services. Investing was a relatively easy decision: Everything was going up.
The golden decade of tech has since passed, and the bubble is now at high risk of bursting. Capital is more difficult to come by for early-stage startups, and founders no longer have it as easy. Optimism has slowed and a recession is (probably) nigh. In 2021, venture investment reached a historic high of $621 billion. Nearly 60 percent of that amount went to funding mega-rounds, or investments worth $100 million or more. More money was deployed, but data revealed that securing funds was as challenging as ever for the average founder.
Meanwhile, VCs — the gatekeepers of all that cash — aren’t as preoccupied with the short-term anxieties of keeping a startup afloat. Their focus is the future. Suppose there is, as one investor theorized to me, a surplus of young startup founders. There are more existing software tools and APIs, which lowers the technical barrier to entry. Anyone, in theory, can start a company. Venture, by contrast, is a more rarified position to land at a young age. There’s less personal risk involved, even though VC, as an industry, operates on a high risk-high return basis. And the mechanics of the role — attending conferences, lunching with founders, writing industry theses, tweeting — offers more immediate social prestige and recognition. Young investors are capitalist tastemakers. And clout, like economics, is a game of supply and demand.
The social element of the job also sets VC apart from traditional roles in finance, where junior employees function as quiet cogs in a well-oiled machine. These optics can seem exciting, especially to impressionable grads. “You get to travel, meet founders, speak on panels, and lead deals,” James said. “With social media, you’re seeing this status inflation [for VCs] overnight.”
This newfound interest in VC investorship can be seen in the pages of Forbes, increased engagement with university-based venture funds, and in many, many tweets. Just search the keywords “break into VC.” The unsolicited advice doled out online consists mostly of vague, hustle-culture truisms: Students are advised to build a following (of at least 100,000 followers, according to one general partner at HustleFund); join their school’s accelerator or venture fund; think and act like a VC before they are hired as one; and send out cold emails. One gets the sense that people are chiming in because venture capital is a hot topic in the tech zeitgeist. Venture capital is less a job than an identity, a mindset, and a lifestyle to aspire towards.
It stands in stark contrast to the enervating entrepreneurial experience. “As a founder, you’re hustling. You’re not getting paid a lot of money,” James added. “You’re always thinking about fundraising.” This gravitation towards “capital institutions,” as James described them, has occurred at certain economic inflection points, not exclusive to the tech industry. We’ve seen it with independent fashion designers becoming creative directors; magazine editors helming the editorial strategy of tech startups; culture journalists and screenwriters working for streaming services. Throughout all of these shifts, capital has been the constant. So why not go straight to the source — no, why not be the source yourself?
The title of “investor” or “VC,” when bestowed upon an ambitious twenty-something, imparts a semantic aura of authority, though it comes in varying degrees.
Some, like Reggie James, are independent angel investors making personal contributions to a startup of choice. These investors aren’t affiliated with a particular institution or fund; they route money directly to founders or through crowdfunding vehicles, like syndicates or rolling funds. Most young VCs employed at funds, however, are entry-level analysts or associates, not principals or partners. They don’t yet have the seniority to actually deploy cash. Their day-to-day responsibilities involve meeting with founders and assessing whether a startup is worth the fund’s time and investments.
“The advantage of being a junior VC is bringing deals to your fund, but knowing which deals to do is the hard part and takes years of practice,” according to Will, a 24-year-old junior investor at a fund in Menlo Park, who asked me to withhold his real name for professional reasons. “This approach is better suited for crypto or industries with younger founders, since [older investors] might not have a good understanding of the space.” As investment interest shifted toward crypto and the creator economy — niche consumer-facing arenas that require digital fluency — Gen Z-aged staff were in demand. Whether age is a relevant metric of investment knowledge is beside the point; youth is trendy, and firms don’t want to appear out of touch.
Junior VCs function as gatekeepers to the firm, responsible for facilitating introductions to higher-ups. Will described this role as “a conduit for clout.” The appeal of such a position lies in the social and financial capital it commands, among founders and within funds. It’s still a finance job, Will added, just with the added merry-go-round of networking events to ensure consistent, ongoing deal flow.
“The name of the game is seeing every deal as soon as possible,” said Caroline, a 24-year-old associate at a New York fund focused on Web3 investments, who asked to withhold her real name for professional reasons. “That means constantly meeting people, maintaining relationships, and staying in the flow of the social ecosystem so that you’re top-of-mind for founders.”
It’s an ideal job for curious generalists, according to Emily Herrera of Night Ventures, that comes at the cost of work-life balance. As the staffers doing the social grunt work to bring in deals, it requires a lot of energy. The hectic schedule is easier for young, single people to maintain.
“It’s really a question of whether you’re willing to sell your social circle and life,” Herrera said. “It’s not always glamorous. I’m working all the time. I spend 90 percent of my time in front of a computer trying to get in touch with founders.”
These Gen Z VCs are highly attuned to the mechanics of personal branding, leveraging age — and to an extent, inexperience — to their advantage. This compensates for the specialist knowledge they lack that comes with startup-operating or investing experience. With members of Gen Z soon becoming businesses’ largest consumer base, young VCs can claim to have a cultural edge in forecasting youth-oriented consumer trends and behaviors. More early-stage funds are also realizing that they can benefit from having a young person in the room to build ties with up-and-coming founders, typically of the same age.
“I try to bring the perspective of not just a Gen Z investor, but as a founder, a creator, and a Gen Z consumer myself,” said Loyst, who is 25, of Gen Z VCs. “As a VC, I’m meeting 10 to 20 new founders or companies a week across 10 to 20 different sectors.” Loyst was formerly an associate at Lerer Hippeau, an early-stage New York fund, but recently left the role to work full-time on Gen Z VCs, monetize her online following, and serve as an independent business consultant.
Before landing a job at Lerer Hippeau, Loyst told me that she didn’t expect to start her career in venture capital. She went to Boston College, which she described as “a non-target school,” and didn’t have personal connections in the venture world.
“Breaking into venture,” as the common saying goes, felt daunting. It was through a cold email to one of the fund’s partners, Andrea Hippeau, that led to Loyst’s eventual hiring. In November 2020, she began Gen Z VCs as a Slack channel between friends who work in tech. More than 19,000 members have since joined the open Slack. Loyst, the self-described “Queen of Gen Z VC,” represents the group in press interviews and on panels with the winning earnestness of a class president. She has since launched several networking initiatives and summits to connect students and founders with like-minded investors and mentors in tech.
Silicon Valley, for better or for worse, has always operated via networks of wealth and influence, blurring the personal with the professional. Connections and conversations are easier to facilitate on social media. Previously, introductions between, say, a founder and a potential investor would be made through alumni networks or well-connected mentors. The mission of groups like Gen Z VCs and Gen Z Mafia, a Discord channel consisting of young techies, is reducing those hierarchical barriers to entry.
In the process, they have produced an insular social media-powered ecosystem that, while likely more diverse, may not be significantly more democratic. Within tech’s supposed meritocracy, inclusion isn’t a necessary prerequisite for success — least of all in venture, a numbers game. Yet, a facade of chumminess permeates these virtual settings, which are not immune from the toils of respectability politics and status signaling. An oft-parroted term one encounters on these forums is “community,” as if investment decisions are determined by collective likability rather than key performance indicators.
Friendly pretenses aside, social media does offer exposure and credibility to those who otherwise would have struggled to gain an institutional foothold: women; Black, Latino, and Indigenous investors; and candidates without Ivy League credentials. Venture is notorious for its lack of diversity, which has led to a “funding gap” for founders from underrepresented backgrounds. The 2020 VC Human Capital Survey found that, while gender diversity has improved (women comprised 23 percent of VC roles) since 2018, there have been minor gains in racial diversity (with the exception of Asian Americans): Only 4 percent of VC employees are Black, and about 7 percent are Hispanic.
Firms and individual groups, including Gen Z VCs, have launched mentorship initiatives and diversity partnerships, but the industry is slow to budge. It’s a paradoxical blind spot for white investors looking to fund technological projects that influence culture, given how mass culture is often appropriated from marginalized groups. Most of the Gen Z VCs programming, according to Loyst, is geared towards underrepresented groups and those from “non-target backgrounds.” This underdog mentality undergirds the collective’s generational rallying cry: Hire more Gen Z VCs. And in doing so, heed the opinions of young investors — the self-appointed representatives of young consumers’ tastes and desires.
As loud as this cohort can be online, Gen Z insights aren’t necessarily central to driving most investments. It’s also an exaggeration that youth is a marginalized demographic (if it can even be considered one) in need of a seat at the venture table. The meme may be stronger than the reality. “The general reputation in the establishment is that these Gen Z VCs are over their skis,” said Will, the analyst at a Menlo Park-based fund. James added: “I think there should be more challenges to those claims based on the background and general lived experience of these folks, who are leaning on things tied to their youth.”
There is ire and envy over the attention some young VCs have garnered, particularly those whose investing brands are associated with their age.
In a TechCrunch op-ed published in August titled “Why Gen Z VCs Are Trash,” Andrew Chan, a senior associate at the San Francisco fund Builders VC, condemned his peers for falling prey to groupthink. Chan took issue with how they were parlaying their youth into superficial investment trends. “I firmly believe this Gen Z VC movement is a thinly veiled excuse for clout chasing, manipulating and substituting personality for experience and hype for investment principles,” he wrote.
The op-ed was puzzlingly amateur in content and aggressive in tone, commencing with lyrics to Kanye West’s “Lift Yourself” and concluding with the cringe-inducing line, “That’s the tea.” Ad hominem attacks aside, Chan hinted at an under-discussed tension in online VC and tech circles: Should having an online following — a personal brand, if you will — be a crucial factor for the job of investor? “There… someone said it,” one person tweeted in response to Chan’s broadside.
The prevailing emphasis on self-promotion can prove to be a dangerous trend. Influence is often mistakenly conflated with individuality and intelligence. Amateur and aspiring VCs might be inclined to pursue short-term social gains, rather than focusing on career longevity. In venture, the future can be risk-adjusted and accounted for, but significantly less so in emerging markets where the landscape is more mercurial. “You have less metrics with which to evaluate companies, which means traditional financial analysis skills are less relevant than if you were at a growth or private equity firm,” said Caroline, the associate at a Web3-focused New York fund.
Venture is a marathon, not a sprint. Returns will take years to surface, so success is mostly speculative. We simply don’t yet know which young VCs will have good investment records. To complicate matters, some analysts leave firms for startup roles after spending just a few years there, which removes them from further scrutiny. To gain credibility, newcomers to venture may have to project authority without the slow process of earning it.
From what I’ve witnessed on Twitter, most junior VCs at early-stage, consumer-facing funds participate in an exalted form of knowledge-work, quite similar to mine as a culture journalist. They gather data, conduct research, create market maps, network with sources, and formulate conclusions in writing. Many are also perennially engaged in the ambient labor of tending to their own VC brand by posting tweets, personal blogs, or TikToks. But this reliance on social capital, instead of subject matter expertise, is risky, according to Maya Bakhai, a general partner in her twenties at Spice Capital, a seed fund that she founded. (Bakhai is an investor in Dirt Media.)
“You’re destined to chase trends, rather than anticipate and set the trend,” she told me. “The best VCs are the ones establishing narratives for new net categories and setting the trend. That’s where the real returns come from.”
In their critiques of the industry, Gen Z VCs often talk about “venture capital” with stilted remove, similar to how writers talk about the “mainstream media” — as the individual operator divorced from a greater outcome. But no one is immune from the whims of the market. Trouble is on the horizon with a market downturn. The pace of dealmaking has slowed, and junior VCs are anxious. Some may be squeezed out of the industry over the next couple years, predicted The Information’s Kate Clark, “reversing a yearslong trend that beefed up most Silicon Valley firms.”
Depending on the severity of the downturn, venture’s Gen Z takeover might prove to be brief. Young investors can advocate for more inclusive, ethical investing, and help crowdfund for projects they believe in. But in the grand scheme of venture capital, they are newcomers with minimal track records and much less capital. Their investing philosophies, too, are not a far departure from those of their elders: Fund companies with long-term growth potential to generate big returns. Venture as a system isn’t so prone to disruption. If anything, the seeds of the industry’s demise might already be tucked into the pocket of its Patagonia vest. Just like their millennial forebears, this generation might simply be a set of younger, fresh-faced pawns on the chess board. — Terry Nguyen