I get asked a lot about how to get one’s start in the VC industry. I have a somewhat standard response, but realized that I never put it into a blog post. So, here it is. FYI – this is tuned towards an individual who is still in the relatively early stages of their career.
There is really only one thing that a VC is thinking about when evaluating a person to add to their their team. The question is:
“Is this person going to help me to invest in companies that I otherwise would not have invested in without him/her?”
That’s pretty much it. There are a two basic strategies to be this kind of person.
- Have domain expertise in an emerging area that the VC cares about and wants to develop more authority and deal flow around. This requires that you go one or two layers deeper than someone who is smart and has done a few hours of internet research. You don’t need to have a PHD in the field, but you do need to demonstrate a POV and that you are more savvy about the market than 95% of other candidates who might pretend to have some expertise. BTW, once you are an investor, it will serve you well to continue to cement your reputation as one of the up-and-comers that is an established expert in this emerging space. A good example of this is Shivon Zillis who has built her early career at Bloomberg Beta on being a thought leader around Machine Intelligence.
- Prove access to entrepreneurs through hustle, pervasiveness, good EQ, and a strong network. This approach is less about being an expert in a field, and more about showing that you have extraordinary hustle and an ability to build relationships and make a name for yourself in a noisy market. Having great EQ is important too, because there is a fine line between someone who is pervasive and has a positive reputation in the startup ecosystem and someone who is perceived as inauthentic and annoying. Usually, people who take this strategy are extremely social, go to tons of events, consume and retain information they read on social media, techcrunch, Medium, etc. They are the people that everyone seems to know and have an unusual amount of knowledge about a large number of startups. Even if all this same information exists publicly, the fact that someone can retain that knowledge and make some sense of it is pretty interesting. The most obvious candidates of this sort are the folks who started or led community organizations focused on startups and their respective tech communities. A good example of this is Peter Boyce at General Catalyst, who seemed to be everywhere and seemed to know everyone when he was a senior at Harvard (in addition to having been a cofounder of Rough Draft Ventures, HackHarvard, and working at a USV funded startup, among other things).
An alternative path for people very early in their career is to join a firm that has a structured analyst sourcing program. A number of funds that invest in growth-stage companies have established sourcing teams that essentially cold-call founders and track them over a long period of time. These firms often hire junior folks from top-notch schools, sometimes right out of college (and often collegiate level athletes). It’s a tough job, and one that requires a lot of grit and tenacity and a high tolerance for rejection. It seems like a real grind at first blush, but it’s actually a pretty amazing training ground. Many very successful investors got their start in this way. Some of the firms that have analyst sourcing programs include places like Summit Partners, Insight Venture Partners, Bessemer, OpenView, and Volition.
That’s pretty much it. As you can see, it’s much less about “how” to find a VC job but more about “being” the kind of person who can get a VC job. You’ll notice what isn’t on the list is showing that you are great at doing financial modelling or conducting due diligence. This may be somewhat different for later stage investing, but at the early stage, most VC’s like to do a lot of their work themselves to really internalize the feedback. The leverage they get from a non-partner handling operational stuff or due diligence isn’t terribly great, and almost certainly isn’t the same as helping to find the next great investment. Once you are a VC, developing your ability to select the right opportunities and help the portfolio companies succeed becomes increasingly important over time, but that’s something that is often developed through the apprenticeship nature of the business.
In terms of how to go about the recruiting process, it’s pretty simple. Make a list of every firm you want to talk to, then find a way to network into every single one and cultivate the relationship over time until you get a job. These activities actually mirror the process of hunting for an investment, so how you go about doing it is actually fairly indicative of how successful you might be as a junior VC. Some other practical tidbits:
- It’s hard to catch a firm at the moment when they are actually looking to add to their team. Timing is pretty unpredictable, and it’s a long sales cycle. My advice is to focus on firms that have raised a fund very recently or are about to finish raising a fund. Most VC’s raise a new fund every 2-4 years, and their fundraises are publicly disclosed, so you can use that as a guide. But because of how long this takes, it pays to invest time even with funds that don’t immediately seem like great prospects, as long as you think that they are on the rise and likely to expand their team over the next year or two.
- In selecting a firm, I’d prioritize fit and the strength of the firm’s deal flow. Fit because life is way too short to join a team where you don’t feel like you fit in. Deal flow because your success as an investor will end up being shaped by the type and quality of deals that you see. If your VC judgement algorithm is trained with good data, you’ll likely be a more effective investor down the road. Beyond that, I actually wouldn’t sweat some other things too much early in your career (stage, sectors, team size, etc)
- Start doing the work. The best way to demonstrate your potential value to a VC is to actually start doing the work. In particular, start flagging companies that you think are really interesting that might be under the radar and in the sweet spot of the investor. Even better if you know the company is raising or raising soon. And even better if you have a relationship and can connect them with the founder. Of course, for everyone’s sake, don’t oversell and don’t make introductions indiscriminately – that can backfire quite badly.
- If you are able, find a way to invest on the side if possible, whether it means finding a few high net worth folks to back you, or dabbling on Angelist or other platforms. If that’s ot feasible, just buy and sell your favorite tech stocks, or speculate in Bitcoin or Etherium, or anything else. VC is an investing job, and honing your muscle making investments and dealing with emotional swings and biases will pay off down the road.
- If you are unable to get into VC now but want to later, I think a good path is to work at a winning, high growth company and make a great impact. It will help long term in building your network, domain expertise, and ability to stand out above the crowd. That said, I don’t think that a long operating career is absolutely necessary to be a successful VC. There are different thoughts on this that I respect and there is not one right answer. But I am allergic to the idea of doing a job purely as a stepping stone to another career. If you want to do something, try your very best to start doing it early and keep at it.
My last word of advice – think hard about whether you really want to pursue venture capital. It seems like a cool job for the outside, but it’s not really right for most people. I talk about four things to consider in this old blog post here.