Without hesitation, I can estimate that I find myself twice monthly responding via email to a query from an aspiring venture capitalist. The question always carries with it some inconsequential variation, but it can typically be surmised as follows: “How do I get a job/begin a career in venture capital?”
The tired bromide that ‘to ask ten venture capitalists how they entered the business is to get ten (very) different responses’ is an accurate one — perhaps, stubbornly so. I believe this has just as much to do with the humble and ragtag origins of what we now consider the modern-day US venture capital industry as it does with the intrinsic speed with which the overall technology industry is evolving, growing and adapting to new market realities at an ever-increasing pace. That said, the venture capital ‘profile’, for lack of a better word, has remained inarguably broad.
Reid Dennis, the legendary venture investor of IVP fame, is a venture conference fixture and is often asked to re-tell his stories of how, in the early 1960s, he and a rogue’s gallery of “angel” investors — most often Reid’s buddies in the San Francisco Financial District establishment — made their earliest investments from a back booth at Jack’s on Sacramento Street into companies that would later form the fabric of the west coast tech industry. Typically, a budding entrepreneur would be hosted to a martini lunch where he (and it was always a ‘he’) would be peppered with 20 minutes of Q&A. After a bit, the entrepreneur would be asked to wait outside the restaurant while the investor group debated the deal. In usual fashion, the “round” would come together when one of those in attendance would inevitably say, “What the heck, I’m in for $10k,” which would then be followed by a chorus of “Yeah, put me down for $15k” and the like until the round was closed. No three-hour conference calls with Wilson Sonsini, no 90-day no shops and due diligence binders. That was how deals got done.
The “investor group” ran the gamut from serial entrepreneurs with multiple successes under their belts who were looking for exciting new invesments, to semi-retired corporate executives who liked the investment game, to investment bankers and tax lawyers who never spent as much as a day slogging away at a startup.
The intervening years brought the gradual “institutionalization” of venture capital as firms such as Mayfield in the late ’60s, and KP and Sequoia in the early ’70s began to come together in a formal sense and pursue these investments in a more structured, less seat-of-the-pants manner. Through the subsequent booms and busts, there were evident tendencies whereby firms might shuffle the deck to focus on, say, more technical partners to replace softer-skilled ones so as to better understand emerging “hard” technologies, or, in later years, to bring on consumer internet-knowledgeable partners to pick up the slack (or outright replace) more ‘idle’ partners in busted or out-of-favor sectors where opportunities were few, far between, and not terribly attractive. That said, the professional breadth at many top firms remained “democratic” in their diversity of talent and their bench strength.
That said, for the benefit of the freshly minted MBA or career changer intent on a career in this field, I can only offer my qualified opinion — and it is just my opinion — that given where the industry is and where I feel it is headed, having hands-on operating experience at a startup (or three) is going to become especially valued at the more established firms. [For what it is worth, my firm, Citron Capital, has made it an unspoken requirement that anyone it brings on have hands-on operating experience at an early stage company. That has been an understanding since the formation of the fund and is not likely to become less emphasized in its hiring practices going forward.]
This is not to say that ‘other’ experiences are minimized. Let me be the first to say that I have worked with and alongside many successful and highly competent venture investors who, truth be told, never put in a day at a start-up. However, I would venture a guess that those same investors might struggle to point to their days in a 40th floor conference room assembling investment banking pitchbooks or writing industry reports as being the formative ones that they still draw from each day in helping early stage companies (Ask me how I know.) Investment banking, management consulting and corporate development roles are excellent training grounds for a wide swath of career paths, but there is something true and visceral about having slogged up and down I-280 or Hwy 128 raising funding, building a mangement team, bringing a product to market, and taking a company from zero to 60 (or, too often, from zero to 60 to zero. Again, ask me how I know.)
So, my principal advice is to do something bold. Take some risk. Leave the comfy confines of the 40th floor conference room at the investment bank/consulting firm/corporate development group and get some real start-up experience. Either be a founder or join a company at a stage that is still embryonic enough where you can have some real impact. If you do join the ranks of venture capitalists later in life, you will undoubtedly draw from that experience almost daily as you then begin to advise those young entrepreneurs about all the mistakes they are about to make that you know so well. After all, does it not follow that a chief component of a venture capitalist’s role (particularly an early stage one) is to advise and mentor young founders?
The second suggestion is fairly common-sensical. This is a relationships business. Few venture firms ever hire someone they do not already know in some capacity. That does not mean carpet-bomb the email InBoxes of every partner on Sand Hill Road asking for informational interviews. What it does mean is to make yourself valuable, nay, indispensible to those in The Life. Pick an area of expertise and deeply understand it, know the players (deal flow is a must in this business), have conversational expertise in the technology, and know about which firms are doing what deals and why. If you can advise a venture investor on an emerging area you know well. or find a way to run down deals that they might be looking at, do it. Networking is great, but when you do it, remember the old saying about asking for a bank loan when you don’t need the money. [During the last informational interview I granted, the young chap was relentless in his desire to impress upon me how much he wanted a venture job. Basically, he did everything but hump my leg.]
In other words, if you are legitimately just trying to meet new investors and not doing the full-court press for a job, great. You will be more successful.
At least when it comes to landing venture roles, success is attracted not pursued.