Getting a job in venture capital is extremely hard. There are a lot of really smart, well qualified, eager people who want to work in VC, and very few jobs. And it’s likely to only get harder as the industry contracts.
If you look at the backgrounds of partners in VC firms, they generally either came in as a partner after being a successful entrepreneur or worked their way up in VC. There are books written on how to become a successful entrepreneur, so here I’ll just focus on the other common path – career VCs.
First, you should understand how VC firms are structured. Every firm is different, some have no junior people, some have just a few, and some have a lot.
The key distinction between junior and senior people is whether they can write checks – meaning they can independently lead a deal. If you can’t write checks, you have to get a check writer to sponsor an investment you like. Check writers get almost all the credit and blame for an investment.
The hierarchy within VC firms is basically as follows: (There has been a wave of title inflation in VC lately, so I’ll put the inflated titles in parentheses).
Partners – Owners of the firm. Get the most of the management and carry fees. Can write checks.
Principals – Usually get small piece of carry. Can write checks. (Inflated title: Partner; in which case it’s hard to tell the “real” partners from the principals).
Associates – Usually post-MBA or 4-6 years work experience. Usually get little to no carry and can’t write checks. (Inflated title: Sr. Associates or Vice President).
Analyst – Usually right out of college. They do research or cold call companies. No carry and obviously can’t write checks. (Inflated title: they just don’t list a title or say something vague like “investment professional”).
As you can see with the title inflation this is all pretty confusing. It’s meant to be. VCs want entrepreneurs to take their junior people seriously. (Which, by the way, entrepreneurs always should: even though they can’t directly write checks, they can be extremely influential)
You can break down working your way up in VC into 3 challenges:
1) Getting a job in the first place. The two most common places to break into VC as a junior person are after undergrad or business school. VCs are heavily biased toward certain top schools. On the MBA side, the industry is dominated by Harvard and Stanford. Undergrad, the VCs I know only recruit from Wharton, Harvard, Stanford and maybe a few other elite schools. (Please don’t accuse me of elitism-I’m just reporting on elitism, not promoting it). 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. Other things that help you: computer science or other relevant technology background. Single best thing is to have started a company (even if it didn’t succeed).
2) Going from non-check writer to check writer. This might even be harder than breaking into VC. There is kind of a Catch-22 here: you can only gain credibility by having led deals, yet you can’t lead deals until you’ve gotten credibility. Some partners are nice and let high level junior people “virtually” lead deals, join boards etc so they can get credit. My advice here is to try to get your hands on a checkbook, even if it means leaving a top tier VC and going to a second tier one. Too many junior people hang around top tier firms waiting to get promoted.
3) Once you get your hands on a checkbook, then you just need to find the next Google/Facebook and invest before anyone else figures it out. 
If you really want to break into VC and aren’t just now graduating from a top school, my top suggestion would be to go start a company. If you don’t have the stomach for that, the next best thing is to work in a VC-backed portfolio company, hopefully in a role where you get some VC exposure.
And, finally, if you just want to work in finance, try to get a job at a hedge fund or a big bank. Breaking into VC so hard that it’s only worth it if you really love startups.
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One sub-point to #1 is identifying the VC firms where a spot is feasibly available. These are firms that have either just finished raising a new (and most likely larger) fund, or firms where a junior person has just left. It is virtually impossible to break into a firm otherwise.
Chris, I've been digging your posts (that's “dig” in the colloquial way, not the Kevin Rose way). I learned about your blog from Fred's tweet a couple weeks ago.
Nice post Chris. Let me add my 2 cents to expand on your “getting a job in the first place” section.
1. Approach the process like a sales guy. Most MBA's have never had a sales role, and are a little uncomfortable about doing this. But keep in mind that there is a finite universe of firms that you could join. Make your list, prioritize your leads, network like crazy to get good contacts at these firms, then work the pipeline. You don't want to be disingenuous about this, but you need to be aggressive and focused.
2. Working the pipeline means showing that you can deliver value as soon as possible. Have a point of view on one or two markets that you know well and think the target VC should care about. Try to find some early stage deals that are interesting, or entrepreneurs or executives that the VC should get to know to help them learn more about these markets.
Nice post Chris. Let me add my 2 cents to expand on your “getting a job in the first place” section.
1. Approach the process like a sales guy. Most MBA's have never had a sales role, and are a little uncomfortable about doing this. But keep in mind that there is a finite universe of firms that you could join. Make your list, prioritize your leads, network like crazy to get good contacts at these firms, then work the pipeline. You don't want to be disingenuous about this, but you need to be aggressive and focused.
2. Working the pipeline means showing that you can deliver value as soon as possible. Have a point of view on one or two markets that you know well and think the target VC should care about. Try to find some early stage deals that are interesting, or entrepreneurs or executives that the VC should get to know to help them learn more about these markets.
minor clarification: “General Partner” isn't title inflation, it's a holdover from earlier times when the legal structure of the partnership was a “limited partnership agreement” – that kind of partnership has limited partners (investors in the fund) and general partners (managers of the fund, i.e. investors of the portfolio). These days the more common structure is limited liability company, which has different terms for these roles, but a lot of people still call the fund investors LPs and the fund managers GPs.
Chris – great post. Been following your blog for the past few weeks and not at all disappointed by the content!
As someone thinking about breaking into the field (VC) myself, I was wondering what you (and other comment readers) thought about slightly alternative routes – i.e. moving down to VC from PE.
Having ticked the 'great engineering undergrad school' box, am currently working as an analyst (no title inflation!) in a mid-market European PE fund, often looking at growth investments – but the lack of tech/innovation in the companies I look at is driving me crazy (I used to run a software business – much more exciting than truck parts).
With that in mind, would you recommend sticking with it, working my way up to 'check-writing' levels (perhaps via a Harvard/Stanford MBA to build up the 'right' network) and then switching into increasingly tech-oriented investments; or should I try and leverage my 'investment analyst' experience to actively sell myself to second-tier VCs in Europe?
Sorry, what I meant to say is in firms that now call principles
“partners” they now say “GP” for the “real” partners. (I realize GP
was always the official title of partners)
If you really want to do VC, I'd try to do it now, not later.
Totally agree, especially with the idea of finding real early stage
companies and proposing them to the VCs.
Thanks for the great post Chris; I am currently having a blast in my present role (I work in BizDev @ Pinch Media), but I was looking into VC before landing my current gig. Being on the younger side, with only 3 years of experience so far (2+ yrs of banking, and a yr so far @ Pinch), many of these points resonate with my own thoughts, when I was conducting my search.
The only caveat I would mention is that most VCs I've seen actually do not seem to hire analysts directly out of undergrad; the ones that do really tend to be larger growth equity shops (or VCs with very strong growth equity practices). All the other VCs that hire on the younger end, usually seem to hire at least ex-consultants/bankers/startup employees with 1-3 years of experience.
I think the reason for this is that, the basic skills learned @ startups/banks/consulting firms (vetting companies, breaking apart business models, market sizing, value chain analysis, professional client interaction, etc etc) seem to be pretty important at the analyst/pre-mba associate level, @ a small early stage firm; versus, let's say Insight Venture Partners/Summit Partners/General Catalyst/other larger firms with much stronger growth equity practices (versus their early stage focus). At these places, I see A LOT more undergrads straight out of school (Summit and IVP recruited on campus @ Penn, where I went to school), because the job involves a ton more cold calling and sales, than say, a role @ RRE/Firstmark/xyz other smaller early stage fund.
Just what I've seen; thanks for all the advice!
What would you suggest if you have no top-tier undergrad (but Comp Sci first degree and masters, distinction), a couple years experience in the tech sector and have previously started your own business, whilst @ college?
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If i can share on my personal experience. What got me into a VC was basically my blog. I had absolutely no past in the VC industry. I would have never gotten in this position if i did not had that “tool” for credibility. There were other elements of course (track record and all) but many had equal or better personal assets
So my 2 cents: get a voice.
Nice article. Missed reading these kind of titbits when I was in school
in his comment, robchogo left some good suggestions for a person in your position..
agree, a blog is a great idea (assuming it's insightful).
Noticed you manage the incubator for LightSpeed in Israel. I think Chris is talking about being on the investment team at a VC firm not in any other supporting. Apologies if you find it offensive but just wanted to clarify.
Chris,
Nice post. What do you think about the following:
1. There are perhaps a few hundred VC firms in US but only 15-20 really good ones – call it the top tier VCs. Is there a point in being a partner-track (say starting out as a post-MBA associate) professional at a non-top-tier VC firm ?
2. Exit options from VC: I have seen people go and become product mgrs (or at times, become entrepreneurs). What else do people do if the journey to the partner gets cut short for some reason ?
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Of course.. For example I am sure your blog could lead you to a great
vc job
I think non top VC firms probably won't have positive returns hence you probably don't want to spend your career there, but if you think you really are a good investor I would say just get your hands on a “checkbook” and prove yourself. With a good track record you can move to a top tier VC.
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No It was not an incubator. We funded companies at series A and for
some I seat on boards.
How is 2-3 years of public accounting as a background before trying to get into vc?
don't think it really helps.
To chime in with a little more anecdotal experience –
I found the VC recruiting process to be incredibly geography-specific. Stanford and Harvard not only place the most post-bschool VC's because they are Stanford and Harvard (and don't get me wrong, that seriously helps!), but also because they are located in the heart of the two largest and most prominent tech communities in the world. By sheer force of magnitude, these locations offer the largest supply of venture opportunities (the corollary may very well be increased demand/competition for the opportunities…).
However, if you look at the NY region, the vast majority of newly minted post-MBA VC's are Columbia grads – e.g. see RRE, DFJ Gotham, L Capital and Rose Tech Ventures (no slight meant on NYU as I imagine NYU places VCs as well).
And these results should not come as a surprise – venture capital, particularly at the early stages, is an innately geography-specific business.
On a related note – a major point of entry into VC is through an internship. Top b-schools in active venture markets are breading grounds for VC interns. I ran Columbia Business School's PE/VC club last year and securing internships for our members was our #1 priority (http://www.cbspevc.com/site/).
Unfortunately, even an internship at a top venture firm is far from a ticket into a full-time opportunity. In fact, I would guess that only a tiny fraction of those lucky enough to land an internship eventually land a full-time job. The conversion rate from intern to full-time associate is generally driven by something completely out of the intern's hands – fundraising and or internal associate departures. Absent one of these two occurrences, it is incredibly difficult to land a junior venture position.
A related question to the experienced voices out there – what should those of us seriously interested in VC be reading on a daily basis (and maybe some one-time reads as well)? I'm looking at this from the healthcare side, specifically, but general suggestions would be great as well. There's so much out there, it's tough to know how to maximize your time.
Umm. Your advice is factually correct – in these sense that it is useful for getting hired by a VC firm. But is the goal to be just a VC or the be a *great* VC? Investing is an art, not a science. There is no recipe for success. The world is full of me too guys. I see little difference between the entrepreneur who realizes an idea has legs, and an investor who agrees to finance it. They are different sides of the same coin – and we all know that entrepreneurs can come from anywhere…
@bwilson, I linked to the VC Careers section of my blog, which has a ton of blog posts, job posts, internship info, etc. I compiled this over the last couple of years while I was searching for a VC job and subsequently when I was working as a VC. I have been out of the VC game for about a month (joined an early stage software startup) but am trying to keep it up to date. Take a look and let me know if you find it helpful.
Re: day-to-day, PE Hub Wire is a great free email blast that will give you a good summary of deal activity as well as VC-backed M&A. And following VCs on Twitter is a good way to keep up with how folks in the industry are thinking about various sectors.
Another fantastic post Chris. Nothing more to add on the topic but the reason I found it great was that it focused on the junior employees of VC firms. Coming back across the other side of the table how would you recommend dealing with the analyst/junior associates making the cold calls?
Or put another way what is usually the purpose of the cold calls? Is it for the analyst to present an industry analysis to the wider partnership? Are analysts looking to nurse a deal through to a funding (often the outbound interest on their part has no qualification or indication that the firm they are reaching out to is actually raising capital so it would seem an inefficient use of time)? Is the analyst helping to complete due diligence on an investment the checkbook partner is considering making by looking at tangential companies?
I realize it could be all of the scenarios but what's a general handicapping/probability of each?
The cold calls – I've been debating posting about this. 99% of the time they are looking for investments and the motives are clean. They are also looking to collect information, but mostly in a non-nefarious way. They call a bunch of companies, figure out what's hot, and then invest in the best company in the space. Very few will call competitors once they've decided to make an investment in the space.
I think you understate the banking career path as a way into VC. Especially here in Europe, the majority of VCs are former technology bankers from the majors (Credit Suisse, Jeffries, etc.). California has a disproportionate number of ex-entrepreneurs as VCs, but there are still quite a few bankers that have made the switch and commute down to Sand Hill now.
For aspirants with a high tolerance for insufferable drudgery, the path up via an investment bank is one of the more plausible paths towards becoming a VC. Work on growth-stage tech M&A or financing deals, understand how the companies operate and you're better positioned than most for a VC job.
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Having been an analyst at a 1B+ early stage fund, here are a couple of observations:
1. Most places won't hire analysts straight out of undergrad. Typically growth PE shops (TA Associates, Summit Partners, etc) will more because they're running around making lots of cold calls to find interesting companies to invest in. That requires a lot of calling and you'll find that they tend to have larger numbers of analysts. Tech banking is one route into early stage VC, but probably not the best. Mainly because the excel spreadsheet skills and valuation skills learned from banking aren't as useful in early stage work (these companies don't have historical financials). I tended to run into more folks who had come out of management consulting (specifically BCG, McKinsey, Bain, etc.). Early stage investing has a lot more to do with understand market dynamics, market growth and barriers to entry. Often times, you're also evaluating markets that haven't even been created. So, hence why the consulting experience is useful to VCs. Entrepreneurs also will make up the third bucket, but the only problem with entrepreneurs is that it's difficult to distinguish yourself as an entrepreneur (unless you made someone $1B – then you go in as a partner at a major firm or have your own). I've met analysts/associates who came in from start-ups, but its not quite as common as the ex tech bankers and management consultants. By the way, I came out of none of the above buckets – but from what I can tell, I was kind of a weird case.
2. Networking, networking, networking is the only way to get a job in a VC fund. Best time to hit up a VC for a job is before the final close of the fund. It's still possible that a VC firm is hiring once they have the final close, but usually the firms know their employee requirements as they get along the way in their fundraising process. So, they'll already be interviewing people, if not have already hired people by the time they close their fund. So, the problem is knowing when a fund is getting ready to have their final close of a fund and that requires having contacts in the industry who know who is raising money. Furthermore, there are a lot of people looking for these jobs. So, half the trick is getting to the top of the stack of resumes (even before final fund closing) and often times the best way is to have a friend within the firm or at least a friend of a friend within the firm. I knew of one firm that got 400 resumes for an associate job. Getting someone to pass your resume along will get you to the top 20 (or so) of the stack and make it more likely you at least get a phone interview.
Network with VCs. Network with portfolio of companies of VC firms you're thinking of trying to get into. Network with folks who are at fund of funds. Maybe even service providers (but less fruitful). Get your resume in through a trusted source. In terms of knowing who is raising a fund, VCs and fund of VC fund folks are the ones who know who is raising what fund.
3. Headhunters work sometimes too. Problem is that they're magnets for talent. So, the pool there may be difficult to compete in unless you've already got VC experience and already at another firm. Headhunters that come to mind are the glocap group and there was this little outfit in Arizona I think that also did a lot of VC recruiting.
4. This point is more for the associate and principal level jobs. Be aware what is hot and what current skill sets are already in the firm. Often times, VC firms may be looking to round out experience and technology knowledge in certain areas. So, if a firm is looking for an associate or a principal, they may be looking for someone (at least in the last three years, but maybe not now) who had social media / consumer experience. If your area of expertise (last I heard) is semiconductors, you're out of luck. I'm hearing that a lot of the semis principals / associates in silicon valley are all rebranding themselves as green / cleantech experts these days.
Last piece of advice is this. Don't get into VC because of the money. I was in VC during the last big bubble burst. In some ways, this one is much much worse because the fundraising from the LPs is collapsing. While your salary will be decent and there may be some bonus from the management fee, don't count on getting rich at any level (from analyst to partner) in the next few years. The other issue is that deal by deal carry went away when the last bubble burst – so no one is seeing a carry check until near the end of the fund life.
Furthermore, what you will see at a VC fund will be very ugly. Be ready to have massive cramdowns of management teams, aggressive terms to crush other VCs (play-to-play provisions in term sheets) and working with restructuring companies. In many ways, what you will see will be very depressing and stressful at times. On the other hand, you will learn more from the experience about how business is done and how people react in weird times that will serve you a lifetime. When things are going well, portfolio company CEOs are out raising money, making sales and everything is going well. They tell the VCs to get lost and VCs generally do since things seem as if they're going ok. It's when all hell is breaking loose that the CEOs want the VCs involved (both to get more brains around the table and in hoping for the next round of funding) and when aspiring junior VCs will learn the most. As a partner used to say to me, any monkey can get an investment into a company, the real work (and 90% of the job) is getting to an exit. This will be the time to learn how to work through companies and get that exit.
Great comment. Thx.
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“My advice here is to try to get your hands on a checkbook, even if it means leaving a top tier VC and going to a second tier one.”
This is one I'm sure I'll have to contend with at some point… How do you sit across the table from a great entrepreneur and try to convince them that they should take money from you if you're on the second tier? Call me naively honest, but there's no way I could take a job at a VC if I didn't think either that the rest of the team was awesome–unless we weren't leading and that the syndicate was awesome.
Good point. I guess I'd say just because a firm isn't considered “top tier” doesn't mean they aren't great people. They could be new for example.
My main point is I see a lot of people at name brand firms waiting around to get promoted when if I were them I'd be less brand name focused and more focused on building a track record.
Agreed… and many of the “brand names” are very hierarchical, so you
know there's a glass ceiling there.
Oh… PS… I wrote this a while back:
http://www.thisisgoingtobebig.com/2007/06/how_t...
Perfectly written and completely spot-on comments.
Chris, I'm so glad you wrote this. Everybody asks the question and now I'll just send them the link
We recently hired an associated. I got > 700 resumes and I didn't even post that widely. 65 of them were of unreal quality in terms of education and job experience. Undergrad: Harvard, Stanford, Wharton, Princeton, Yale & MBA: Harvard, Stanford, Wharton. Many had near perfect SATs and GMATs. Many worked for Goldman Sachs, Morgan Stanley, McKinsey or had worked in P/E or VC before.
It was UNREAL. Not that you need these qualifications to be successful. But when you're staring at 700 resumes (and we VCs don't have an HR department!) you need some way of filtering quickly. In my process I also gave high street cred to CS undergrads – particularly from MIT or equivalent and for premier tech experience: Google, well-known startups or even one great candidate from Microsoft's Xbox group.
From the 65 we did 16 1-hour in-person interviews. We short-listed 6 and did full day interviews including a presentation from the candidate analyzing a market. They were given less than 1 week to prepare. We finalized 3 that we took to dinner to check social fit. We chose 1.
My point is … the numbers are so daunting that anything “standard” won't work unless you already walk on water. The people who “sneaked into” the process were a) great networkers b) great networkers and c) had other people contact me on their behalf (great networkers). But if you don't have GREAT street cred already don't hassle the VCs. Just accept that it isn't likely you'll get in without doing great things at a start-up first.
Thanks! Yeah, when I got my job in VC it was like a political campaign. I had one partner tell me “I've heard your a great guy from 6 people” – which wasn't an accident. I had done so many free projects, favors etc for VCs and startup and then I asked them to make calls on my behalf. It's brutal.
I once blogged about our statistics at BVP for hiring a pre-MBA analyst: Of the more than 650 resumes we received, we conducted 42 first-round interviews (~6%), seven second-round interviews (17% of the 42), and eventually extended one offer (14% of the seven, but 0.15% of resumes submitted!). It's a crazy process, and qualities that stand out for a pre-MBA position are different than qualities that stand out for Associate positions. Likewise, qualities for Associates are different than for Partners. For example, for the pre-MBA role at Bessemer, we get excited when we see someone who has had advertising sales experience in the past. I can't imagine a VC firm getting excited about that for a Partner!
I've known people who were at very top tier shops that left because of that glass ceiling. It's just always hard to figure out who helped a company do well… was it the partner or principal? That being said, having sourced a deal gives the junior person a bit more credibility.
One thing I've also seen are situations where junior VCs see something they really like and they hop out of the firm and into a portfolio company to make them successful. That's one way of making it to partner without ever having had “checkbook” experience (and making a little coin along the way faster than being a VC of course). This road is heavily influenced by how much risk you're willing to take though. If you fail, you may not get your VC position back and your risk exposure is to only one company (whereas at a VC firm, your exposure is to a portfolio of companies).
There's another problem going on with the glass ceiling right now. As I alluded to in a prior post, the funding of the VC and growth stage funds are just collapsing because of the situation a lot of LPs got themselves into with liquidity and in general with too much cash going into the asset class with too much money chasing too few good deals. So, if the fund size isn't expanding (if not shrinking) and the senior partners of the firm aren't leaving, then where is a young up and comer to get their way to partner at a major firm? This is where I'll agree with Chris a bit that sometimes it's better to join a bunch of senior junior principals that hop out and start their own VC firms that may not start top tier. There's just a higher likelihood of making it into a partner position when you're at the firm early on.
Last point is this. As I pointed out earlier, networking, networking, networking is the way to get into VC (especially a good one). While I appreciate the thought that it's better to get into a top tier VC fund, not everyone is fortunate enough to have access to getting into a top tier fund. Sometimes, starting at a second tier fund is better from the standpoint that it's a better platform to do networking and finding out what's going on in a geographic region. Much easier to talk to a brand name shop and network when you're from second tier VC rather than being joe schmoe off the street. Maybe you're on boards of companies or speaking at panels where you can meet other VCs. So, I don't think people should blow off opportunities at second tier shops.
On the flip side, just be ready to take the calls for business plans for crap deals they're trying to salvage by getting more dumb money into their companies…
more good comments, thanks.
I got to know a Glocap Recruiter who was Stanford GSB classmates with one of my former bosses at Ebay, who told me that for the average associate/sr. associate posting they will receive on the order of 2000 resumes. From that they will conduct first screens on maybe 50-70, then have <20 they will send on to the hiring company, which may over 6-9 months lead to 1-3 offers. As many have pointed out above, the numbers can be daunting, but it's not impossible. Churn at lower levels is high, for glass ceiling reasons, lack of fund raising reasons, other totally random reasons.
The best post I have read on this topic is Seth Levine's (of Foundry Group) series of posts on this topic. http://www.sethlevine.com/blog/archives/2005/05... , http://www.sethlevine.com/blog/archives/2008/04...
When I was trying to land an associate gig 1.5 years ago I actually passed up getting an MBA at that time, figuring I'd learn more getting to see the insides of the company building/sausage making process, and I haven't been disappointed at all.
FYI I tweet pretty frequently on the #JuniorVC hashtag trying to give people tips on what life is like as an associate. It would be cool if anyone chiming in on the topic wanted to use the same hashtag, so there'd be an easy for way for people to see what's out there on this very popular topic.
Thanks for this post Chris. I'm about to graduate from undergrad and I have been asking this question to everyone I know who has worked in VC. This post and the comments about it were incredibly useful.
Thanks for this post Chris. I'm about to graduate from undergrad and I have been asking this question to everyone I know who has worked in VC. This post and the comments about it were incredibly useful.
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