Breaking into the venture capital industry

While the topic of career counseling is not the focus of this blog, I get enough requests from people who want to break into the VC industry, I thought it was worthwhile to write a blog entry about it so I can refer people to my viewpoint. There are plenty of articles (Seth Levine has two posts on this topic that are relatively popular – first, second) on the web you can find through a quick search on tips and advice on this subject but I’ll add in my two cents. Just a note – this is specific for early stage tech VC which is my experience (not as relevant for later stage VC/private equity or healthcare VC).

Before diving into some thoughts around how best to break into the industry, I will assume you have done your homework on exactly what being a VC entails and you still want in. I think plenty of people are attracted to VC for various reasons – many of which only scratch the surface of what being a VC is really all about. There is an aura around VC that doesn’t really reflect accurately what it can be like on the inside. Rather than trying to dissuade you or confirm whether you really know what you are getting into, I’ll spend most of this entry with just the practicalities of preparing yourself for trying to break into the industry.

Some quick bits of information to start that will set the stage for this topic

  • VC is a small industry (and getting smaller). I believe there are on the order of 1000 venture capital firms with less than 10,000 total investment professionals in the entire industry. Just to put this in perspective, Microsoft alone has around 80,000-90,000 employees. Google has 20,000-30,000. Apple has 30,000-40,000.
  • Most VCs have educational degrees from very select schools – Harvard, Stanford, Wharton, MIT, Yale, Princeton, Berkeley, etc. Most have advanced degrees – MBA, JD, MD, Ph.D., MS.
  • Most VC firms are relatively small in terms of number of investment professions – 5-10 being the most common. Cultural fit is paramount as its often a small team.

So given this, what are my tips and why?

  • One question I get quite often from people what want to get into VC, don’t think they have an opportunity immediately, but want to know what job to take that would position them best for VC down the line – should they join a startup or join a larger “brand name” company or go into investment banking or go into consulting. My advice is there is no one perfect career path….but whatever you do, just do it REALLY WELL. To get evidence of this, do your homework. Take a look at the bios of as many VCs as you can on the web (almost everyone has a bio on their website or LinkedIn) and see if you see a trend. From my experience, there really isn’t one. Early stage VC is not like later stage private equity where most people have been investment bankers in the past. Early stage VC backgrounds range widely – entrepreneurs, big tech company experience, consultants, finance and a wide range of functions – engineers, sales, BD, etc. The other point I like to make is that arguably the best VC in the world was a journalist. But the one consistent thing is whatever the background, most did whatever they did really well. So, don’t worry about trying to pick the best “VC prep” field. Pick based on what you LOVE to do and will EXCEL at – this is the best way to get to where you want to go, whether it be VC  or not.
  • Every VC will have a different perspective on types of backgrounds that they prefer – and it will vary based on individual partner’s preferences and needs at the time. Because of the diversity of backgrounds, you’ll get the same diversity in what they each view as important. Personally, I look for startup experience and some kind of general business experience (it could be from a startup if you were in a business role or consulting or large company experience).
  • Because the VC industry is so small and hiring can be somewhat opportunistic in many instances, luck and timing play a HUGE role. So, how do you prepare to have better luck and timing? Work your ass off, “you create your own luck.” To do this, you need to be in the right places at the right times. The only way to do this is work it. Network like crazy. Get to know VCs and entrepreneurs. Be known….and hopefully, when a position opens up, you may be top of mind because of the luck you created.
  • Do what you can to get experience early – and not necessarily in a formal role. Internships are a great way to get exposure and experience. Work with very startups in a consulting capacity as a way to get exposure to the fund raising process.
  • Read and track the newest trends. I (like most early stage tech VC’s) track a number of site regularly in my area of focus. For me, its sites like TechCrunch, VentureBeat, Socaltech, PaidContent, PEHub, etc. Also, a long list of blogs through RSS feeds to Google Reader. Why do this? Well, hopefully you do it because you are already interested in this stuff because you love it. Practically, the way you’ll often break the ice with a VC is by showing you know their industry very well and can show real insight into spaces they are looking.

Again, there are plenty of other important things to consider aside from just the specifics of how to break in. How to prepare your background to be a successful VC. How to know whether you will actually like the work on a day-to-day basis. How to add real value once you are a VC. How to rise to partner once you break in (assuming you don’t enter as a partner).

Ultimately, there is no silver bullet that will be your answer to what you can do to get a job in VC. Its highly individual. It varies widely. It takes a lot of timing and luck….and, if you’ve made it down this far in this blog post and you still want in, its a good sign – perseverance and optimism in the face of tough odds could be your edge.