I am often asked how to get a job in venture capital. Is there an optimal path to a career venture capital? How much operating experience do I need? Should I get an MBA?
Like most venture capitalists, I did not follow an obvious path into the industry. I studied Mechanical Engineering in college, worked as a strategy and process improvement consultant, worked in operating roles at a couple of startups, and was referred into my first VC job. I knew almost nothing about venture capital when I was approached by a former colleague whose friend’s firm was looking to hire a new analyst. I did pursue my MBA, but only after my first venture capital job.
My experience is not likely to help you think about how to get into venture capital because my entry was serendipitous. But that’s the point. Unlike investment banking, consulting, or many other careers, there is not really a “path” into venture capital.
So how to make your own path?
One route to a venture capital job is relatively proscribed: generate significant wealth from another activity – preferably an entrepreneurial one – and use some of it to create a venture capital fund.
Another route is to land a management team (preferably founding) role at a wildly successful startup, have a major impact on its success, and wait for the recruiting calls to come in from venture capital firms.
You probably would not be reading this post if either of the two routes above were open to you at the moment. So I will assume you have not yet tread either path.
In that case, first understand that getting a job in venture capital is hard. One major reason is that the number of jobs in the industry has been shrinking for some time. In 2000, according to the NVCA, there were 791 active venture capital firms in the US; CB Insights reported that there were 479 such firms in 2013. That means that there are a lot of experienced venture capitalists who are vying for open positions, even accounting for the increase in size of some of the largest firms.
This oversupply of talent to the industry means that you probably should not spend your time looking for a venture capital role unless you can sacrifice for and dedicate yourself to the search. That will probably mean a lot of networking meetings, follow-up e-mails, and offering free help to venture capital firms.
If you are willing to pursue such a path, start by seeking a part-time (intern, entrepreneur-in-residence, advisor, or similar) role. Reach out venture capitalists you know or to people who know them and ask to get coffee. You want something of value – the opportunity to work with a firm in some way – and will need to provide value in return. Develop relationships with entrepreneurs and others so that you can be a source of new investment opportunities and become familiar with the market. Conduct your own independent research on markets or technologies that interest you and write up your own analyses on them. In short, get smart and build network(s) in your areas of interest that you can leverage to help a firm. Then, when you get coffees, share your insights and offer to help however you are qualified to do so: due diligence, market assessments, deal sourcing, etc.
Your goal is to get a role – probably part time to start- that gives you exposure to the day-to-day of venture capital. The industry is not for everyone. I worked with a colleague in an analyst role who got out of the industry because he didn’t like the “needle-in-a-haystack” nature of the sourcing and investment process.
You also want the first role to be something you can add to your resume and that will supply you with references within the industry (the people you work for). Ideally, that role turns into a full-time, permanent, paid position, but the experience and references are enough to take the first opportunity that comes your way. You can then leverage those assets to seek a full-time role at another firm – which is still not easy – or to land a role with a portfolio company of the firm you helped. If you take this second path, you can then pursue a venture capital job, if you still want to do so, from that new perch.
Although I have an MBA, I don’t think it is a necessary credential for a role in venture capital. It is more helpful for roles at later-stage firms. An MBA from a strong program comes with a great network that is useful in investing and other careers, and probably helps lend credibility to a venture capital firm with some potential limited partners, but only marginally so. Professional experience is much more important than education, both in startups and in venture capital.
A final note on operational experience. I don’t think there’s a magic formula here, nor do I think that any experience is the perfect preparation for a career in venture capital. Like most roles, the best preparation is experience in the job itself. That said, operating experience is very helpful for a number of reasons which have been widely and articulately described by others. So, if you cannot find an appropriate venture capital role, an operating role – preferably as senior as possible – at a startup is a logical alternative, so long as you are actually interested in the startup opportunity on its own merits (and not just as a stepping stone).
