If you’re a tech entrepreneur you probably have at least one friend that fits this description. He or she have a freshly minted MBA and a strong desire to work in venture capital. They previously worked for a bank/law firm/tech company and can’t wait to start investing in the hottest startups in their region… There’s something about VC that creates this fatal attraction, but with very few openings a year (it’s a very small industry compared to banking/law/tech) landing that dream job can be harder than you think. I share the best advice out there, and some pointers for wannabe VCs out there.
What’s the “typical” VC profile?
The short answer: it depends. Judd Rogers from Bolder, CO tried to answer this question in his paper titled “How to be a venture capitalist when you grow up“. He read the bios of 151 partners in US funds and looked at the 2008 NVCA Venture Census (including over 500 professionals working in the venture capital field in the US). Most partners in funds were either successful entrepreneurs or worked their way up in VC. There are plenty of books on how to be a successful entrepreneur, so this post is focused on how to work your way up in VC. According to the studies, this is the profile of the average VC:
- The average partner is 46 years old
- 75 percent of respondents were men.
- GigaOm reported on the 2011 NVCA Census, which included 600 respondents. 79% were men and 87% of respondents were caucasian. Sadly, not very diverse (yet).
- Of the 151 VC bios scanned, 79 or 53% had an MBA. Another 15% had a Phd, JD or MD. In the US, 60% of the MBAs were graduates of Harvard or Stanford.
- They previously a job in consulting or finance (if you choose this path note the warning from Guy Kawasaki “It will fundamentally corrupt you and eat your brain out.”)
Mark Suster, entrepreneur turned VC, posted on his excellent blog when he was recruiting for two VC analysts for GRP Partners. In the post, he described what a successful candidate may bring:
“The chosen candidate will probably have worked for a very reputable firm that is either in technology, consulting, investment banking, media or a startup. If you worked for firms like McKinsey, Bain, BCG, Goldman Sachs, Google and the like you’re probably more likely to rise to the top of the stack. Or if you did something really interesting / innovative in a startup company. The likely candidate will probably have graduated with an undergraduate degree in the past 5 years. We’re willing to accept people who were graduated only 2 years ago and would maybe consider somebody who was graduated around 7 years ago. But we’re not likely looking for somebody who has too much experience, like 10+ years. That wouldn’t be a fit for what the role is and you wouldn’t be happy. We want somebody who is ready, willing and able to debate tech with us. Where do you think things are heading? What is the future of social media, digital television or mobile computing. We also have a very strong financial services practice so we welcome people with this interest area, too”.
If they won’t hire you, Blaze your own trail
There aren’t many VC jobs out there to begin with. Competition is stiff, so how can one become a VC if landing a job isn’t possible? According to this anonymous answer on Quora, $1 to $2.5 million can get you there if you first manage to become a successful angel investor. To find out how, read Quote of Anonymous’ answer to Venture Capital: How does one go about becoming a Venture Capitalist? I can think of at least one VC I know that started this way… In the UK, equity crowdfunding is regulated, and using a number of platforms like Seedrs, Crowdcube or Crwdbnk, anyone, meaning not just accredited investors, is able to invest as little as £10 to own a piece of a startup. While this means a very limited pipeline, it’s a good exercise in due diligence.
The 10 commandments for the Venture Capital job seeker
- Determine if this is really what you want to do. Guy Kawasaki created the entertaining VCAT – the Venture Capital Aptitude Test. Passed the test and still want to land a VC job? Keep going through this list.
- Make sure you have “Real World Experience” – a) be a successful entrepreneur or work for a startup b) work for a big corporate in a relevant role c) work for a bank or a consulting firm. Different funds have different approaches about the experience needed – regardless of what your experience is, you should be able to show that you were exceptional at it. Budget a few years for starting a company from scratch. You can still get valuable experience by being an early employee of a venture-backed startup.
- Go to business school, and ideally a top ranked one. Having an MBA from Stanford or Harvard won’t get you in a fund, but it can keep you out. It pains me to say this (even though I have an MBA), but it’s just a fact that some funds won’t even consider associates that haven’t graduated from a top school. I know several VCs who haven’t and are great at what they do. The level you are entering the firm matters of course, as VC interns and analysts can be hired right out of college. Chris Dixon (now a partner in Andreessen Horowitz, shared his own advice from Business School: “Even if you go to one of these fancy schools it’s still not easy to get a job. You need to network like crazy. I did a whole bunch of volunteer research projects for VCs when I was in business school. I came up with lists of investment ideas so when I got a few minutes with a VC, I could show them I was obsessed with this stuff. “
- Build your reputation – whether it’s making a digital home on the web (in the form of a blog, website, community) and social media presence (in a professional connotation, not your pictures from the beach in Thailand). LinkedIn is the VCs social network of preference (85% of them are active on it according to the 2011 NVCA Venture Census). Forbes calls it ‘Become Fluent‘. Seth Levine of the Foundry Group points out that Union Square ventures doesn’t take traditional resumes, but rather asks for ‘web proof’.
- Have passion for great products – if you’re going to invest in them, you better know your products. USE the products that you’re going to be investing in, whether it’s downloading the newest ride sharing app or testing the alpha social network, become what I fondly call a ‘beta whore‘. What are your favorite new 10 startups in 2013? The Ultimate Startup Intelligence Tools List we posted on VC Cafe will point you to get tools like: Betalist, MOMB and others.
- Network in a helpful way – there’s nothing more annoying than people who ask to “grab coffee” without any context or thought of the benefit to both sides (check out this coffee etiquette). Your network is only as good as your ability to connect people in it – make helpful introductions, hook up startups and help VCs get their job done. Rinse and repeat, and those requests for coffee won’t feel like a drag to the VC. Get comfortable with the etiquette of making introductions.
- Teach and be generous with your time – goes without saying, startups have limited resources. They could use some help looking at their marketing strategy or talking through their launch plans. As Charlie O’Donnell recommends, “be selfless with your time”. A great VC is a good teacher, so look for any opportunity you have to teach – alma mater, accelerator programs, hackathons – you’ll learn a lot by teaching others.
- Never stop learning – the biggest mistake you can make is assume you know everything, because your CV says so. Spend some time on CodeAcademy, Coursera, Khan Academy or Udemy to learn more about the world you want to get into. Here’s a long list of recommendations for learning in 2013.
- Be Informed – in the fast paced tech industry, you really need to be on top of your news to know what’s going on. Find your Google Reader alternative, follow the top VC blogs (Fred Wilson, Dave McClure, Paul Graham, Chris Dixon or take your pick from this top 50 VC blogs list), and take a look at Techmeme every day. If tech news aren’t fascinating to you, find your passion: clean tech, biotech, hardware are all relevant. For example, what did Mary Meeker say will change in 2013?
- Stay hungry, stay humble – this is a simple suggestion with a simple acronym – DBDB- Don’t Be a Douche Bag. Even if you invested your dad’s money in a couple of startups, it doesn’t make you an expert. Venture Capital is a long-term game, and like any other profession, it will require you to spend 10 years to achieve Mastery. Remember it, and give the same respect to the entrepreneurs you talk to, before, during and after you got the job.
You have to do the job you want for 6 months before anyone offers it to you
The world needs startups. That’s where the growth is going to come from, and in many cases, startups are catalysts for creating new industries and leap-frog innovation. Think about it, 15 years ago, there was no Google, no Facebook, no Twitter. How many jobs and lives are currently relying on it for income, information or personal learning?
I see the romantic role of the VC as one who makes this innovation happen faster, increasing the chances of success. There’s many things that suck about being a VC. In part, because you will find yourself saying “NO” 99% of the time, and largely because at the end of the day, the VC is the coach, not the player.
I’d love to get comments from people who are trying to break into VC and people who were recently successful at it. What’s been your experience?