A CEO must have a strategic, unbiased approach toward their organization. They can adopt this mindset by thinking like venture capitalists in risk-taking, investments, and growth decisions. Venture capitalists prioritize opportunities and accept failures as part of the job.

What is the Venture Capitalist Mindset?

While most CEOs avoid failure, venture capitalists embrace it. They expect up to 80% of their investments to fail. However, they know the one business that succeeds can compensate for all those losses.

For example, if they invest in a company and it fails, they know they will lose a small percentage of their money. However, if they fail to invest in a company that becomes a major player, they lose much of their money. They invest to avoid missing opportunities.

Venture capitalists also look for the exception to the rule. They prioritize agility and innovation over structure and establish individuality in business over group wellness.

When to Think Like a Venture Capitalist

Unlike venture capitalists whose business model relies on taking risks on corporations, CEOs have one corporation. Exorbidant risk-taking could be harmful. The key is knowing when to be like a venture capitalist and take bold risks and when to turn it down a notch.

If the CEO makes a routine decision on a predictable matter, such as when to launch a modified version of an existing product, there’s no need to take risks. However, bold moves are necessary if the company is launching an innovative product or acquiring radical technology. They may move forward with a launch or approach, even if they don’t have majority approval from stakeholders.

How to Adopt a Venture Capitalist Mindset

Here are some mindsets often utilized by venture capitalists that could help CEOs take the lead in risky situations.

Individual Over the Group

Many boardrooms take a ‘majority rules’ approach. When VCs operate, they listen to each group member’s opinion. This environment makes people more comfortable sharing unique ideas.

Often, if just one stakeholder aligns with their vision, it could be enough for them to move forward with their project.

You can promote this environment by:

• Keeping Teams Small: People feel more comfortable sharing their ideas in small teams of 3-5 people.
• Ask for Feedback in Advance: Before the meeting, ask for feedback on your ideas to avoid opinion swaying.
• Juniors Speak First: Juniors are often involved in hands-on research such as marketing analysis and customer service, providing them with more in-depth perspectives. Additionally, when they speak first, they are less likely to become influenced by senior members.

Disagreement Over. Consensus

VCs listen to everyone rather than base decisions on a group consensus. The question is, how can you ensure all voices are heard? The following strategy will support this goal.

• Assign a Devil’s Advocate: Many VCs set up their boardrooms to include advisors for and against their investment. This setup ensures arguments will be made to present both sides of the story.
• A ‘Consensus Minus X’ Rule: This rule allows decisions based on just one board member’s opinion as long as the member passionately presents their case.

Exceptions Over Dogma

Some corporations may have majority rules that don’t hear all voices in the boardroom. In these situations, CEOs must make exceptions to the rule.

• Create Alternatives: CEOs may learn a lesson from Qualcomm Ventures. The corporation initially rejected the opportunity to invest in Zoom, thinking it was too risky. However, three firm believers in the project created a workaround that led to a successful partnership.
• Create an Anti-Veto Rule: CEOs may establish anti-veto power to move forward with a project even if everyone else is against it.

Agility Over Bureaucracy

Decision-making is often slowed down by bureaucracy. In the VC arena, delayed decision-making can mean missing out on a significant investment. That’s why many investors have become agile, with some promising answers to potential beneficiaries within a few weeks.

Organizations have similar issues. If decision-making is delayed, competitors can beat them to the finish line. They may also disappoint customers.

However, like VCs, organizations can create ambitious timelines for decision-making and funding, ensuring they outperform competitors and support optimal customer satisfaction.

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