Aside from receiving a lot of pitch decks (which I generally love receiving), the second largest category of emails I get are from MBA students (and recent grads) asking how to get a job in venture capital. This post is for you.
The emails I receive generally take this form:
I’m a second year student at XYZ MBA program, and I’m interested in getting into a career in venture capital (or private equity) after I graduate. I believe that with my strong analytical background, intellectual curiosity, and leadership skills that venture capital would be a great fit for me. I would appreciate learning whether BlueRun Ventures has any plans to hire an Associate, and if so, whether I could speak with you about this opportunity.
Joe (rarely Jane) MBA
There are a few parts to my answer to this type of approach.
The first question that I would discuss with you is whether working as an Associate help you build a career in venture? I don’t think that this is at all clear. The most common post-MBA entry-level jobs are investment banking or consulting, and both have very established Associate programs. You join the ‘i-bank’ or consulting firm, and you work at a certain level, and things follow a well defined pyramid of ‘up or out.’ After 12-24 months, you’re either promoted up to the next level of the pyramid, or you move on. And the skills you learn as an Associate, generally help and prepare you to be a Vice President, which in turn prepares you to become a Managing Director, etc. Very clear and generally well understood processes exist there.
In venture, this defined process doesn’t broadly exist. While some firms take an approach similar to what an I-bank or consulting firm would do in an Associate program, most especially in early stage investing don’t take that route. Instead of setting the Associate up to become a Principal or Partner, the firm asks the Associate to get out into the startup community and meet as many founders as possible, to see everything. Generally this involves a very large expense account and lots of parties and networking—a job that can be fun as all get out, but not one that necessarily sets you up with the skills you’d need to be value accretive to the firm or the venture industry long-term. More often, these Associate roles are kind of a two year hiatus of meet a bunch of founders and build your network, help run due diligence, and give input at partner meetings. Then after two years, you’re meant to get out into the ecosystem to ‘build operating chops.’
This is certainly a route, and to be fair, some who start as Associates do end up climbing the ladder to become Partners.
At the same time, if you’re going to consider doing the Associate gig at a firm, it’d be useful for you to know whether there is a track record at that firm of Associates moving through the ranks or whether it’s more a 2-years and out program. So that’s the first thing.
The second element to this though is probably even more important, and deserves deeper consideration. That is a more strategic view of how do you as an individual add sustainable value to a venture firm, thereby giving you differentiated substance as to why you should earn the role relative to your competition. This is important not only to land a role in venture; its important to think about how you add value over time once you’re in a firm.
To me this is all about what is the equation of value creation in venture, and how you showcase it. To me there are three elements of value that really matter: (1) proprietary deal flow; (2) credibility; and (3) value add with founders.
Deal flow is lifeblood to a venture capitalist. And proprietary deal flow is about how do you get access to great deals. The more of the great deals you can bring to the firm and get done, the more valuable you are. This is true for anyone in the industry: top partners at the top firms, all the way down to first day on the job associates.
If you don’t have a network in tech startups, you’re at a severe disadvantage IMHO, and you need to work on remedying that. One MBA candidate who contacts me every few months to look for a job in venture attends a top B-school in the Midwest. Every time we speak, I tell this person that he’s got to get out here and get to know people and get a network. Sitting in b-school class in the Midwest does nothing to get him any network or any insight as to what deals are interesting or what teams are worth watching or knowing. Why wouldn’t a venture firm just hire some kid from Stanford who’s worked on their on campus incubator?
If you’re a b-school student who’s not out here in the Bay Area, then find ways to get out here. Do a summer internship out here. Visit during breaks. Get involved in any way you can so you can meet people and start building a network.
Credibility is also important to build: both with the partners of a certain firm and with founding teams. This is also a challenge for most MBA candidates targeting early stage firms. The challenge most often is that the MBA candidate lacks both technical skills and insight and concrete experience working in a very early stage company. While the MBA candidate may be analytically rigorous and a quick study, their inability to approach a partner or portfolio company founder with credibility of having been in the environment or having had strong technical skills makes it difficult to convey value to stakeholders key to your career.
So my recommendation here is that if you have no operating background in the high tech startup world, then get some. Work for a small company or even work for a larger established company, e.g., Facebook, Google, etc. The most important key here is to establish that you have operating chops and you have a perspective formed around getting products into market and getting users interested in what you’re effort has produced.
Finally, and related, you’ve got to have credible value add for founders. If founders think you’re a joke, you’re not going to survive in the industry. The good founders all know each other and your reputation in the industry is mostly controlled by these folks. If you’re useful and effective, then they’ll say that. If you’re not, they’ll let the network know that too. Whenever I speak to an MBA candidate about getting a job in venture, I’m visualizing what an interaction with that candidate and one of our portfolio company CEOs would look like. Too often, my assessment is that the CEO would basically ask me to never put the MBA candidate in the room with them again as they would be a time waster.
With these as the core components of creating value in venture, then my recommendations to MBA candidates seeking to build a career in venture are basically the following:
Don’t limit yourself to looking for a venture role right out of B-school, look also at operating roles at tech companies. Especially as so many Associate roles are 2 years in duration and then you’re bumped out into industry to gain operating skills, why not just start by building the operating skills? In an operating company, you’ll have the opportunity to build a network. You’ll gain opportunities to create real value and gain experiences that give you credibility in your industry. This helps you gain credibility with the partners and the founders in your space. And when you start interacting with rockstar founders, they’ll see you as someone who’s accomplished something, who knows what you’re talking about.
Get out to the Bay Area. New York and Los Angelese are both surging as startup areas and I don’t mean to take anything away from them. If you have strong proprietary networks and connections in either place, then sure, consider those markets carefully. But all things being equal, more venture firms, more startups and more people in the industry are here in the Bay Area. If you want to build a long-term career in this industry, the smart bet is to come out here.
Evaluate your progress on the 3 elements of value I describe abve, and commit to joining venture in the long term. I’ve described above what I think are the 3 core elements of adding value in venture. If you’re really passionate about joining this industry, then commit to getting there in time. Understand that irrespective of when you join the industry, it will be important to always be making progress on these 3 elements of value add. In my view, you want to track progress on these 3 elements before and during your career in venture. So I’d say get started, build your network, build your credibility, and figure out how to add value to founders.