So you want a job in Venture Capital?
There seem to be an abundance of blog posts lately advising on how to get a job in venture capital. Or perhaps more have just come across my desk.
One of the recent themes centers on the concept of drafting sample investment memos of potential startups to gain the attention of a VC fund by showcasing your deal screening chops. This is not bad advice. Drafting a hypothetical investment memo could demonstrate not only your ability to think critically about an opportunity, but also your ability to reason thoughtfully on an investment thesis about a market.
However, I hold a slightly different view on the most effective way to beginning a career in VC, at least from a European perspective.
A common misconception of VCs in Europe is that they spend the bulk of their time reviewing new investments. Some prolific investment funds (Kima Ventures in France comes to mind) bear this out, and to their credit have honed their investment process into an efficient machine. The vast majority of European VC funds, however, invest in a relatively limited number of new companies each year on a per partner basis.
Funnel math of course means that for each new deal, probably hundreds of pitch decks were skimmed and dozens of meeting sessions were held. Still, I would posit that the investing partners of the major VC funds spend more time helping their portfolio companies than on any other activity.
I personally spend 1/2 to even up to one full day, per week, on each of my portfolio companies. People tell me that’s on the high side, but we lead deals and always take active board positions in our investments. With that comes a certain level of commitment and responsibility.
So if the principal activity of the job is supporting the venture portfolio, then as an aspiring candidate for a job in VC, your appreciation of this aspect is what interests me most.
Being an effective venture capitalist usually requires drawing upon a diverse set of talents to help your investments overcome obstacles. I like to think of it as a combination of experience, moxie, and humility.
Have you started companies before? Do you have experience operating and scaling small ventures into large ones? Is there particular industry expertise in your background relevant to our investment sectors? Beyond the obvious domain knowledge, do you have experience in fostering diverse points of view? Do you have experience making decisions under conditions of extreme uncertainty? Are you comfortable being uncomfortable?
How will you convey your message and if necessary be persuasive to a management team over whom you hold little official authority? Have legitimacy when holding those difficult conversations with a portfolio CEO? Be your portfolio company’s best unpaid salesperson? Can you be an iron fist wrapped in a velvet glove?
The VC is not the hero, but rather enables heroes. Are you willing to play this role, or do you prefer to own the glory? Are you willing to be a fixer, clean up messes, soften up arch rivals, handle nasty litigations, and in general play the Michael Clayton on behalf of the portfolio company? Are you intellectually curious and willing to recognize that often, you are not the expert? Are you argumentative, or rather, inquisitive? Are you attached to academic theories, or rather, pragmatic and willing to simply get things done?
The VC industry is changing, no doubt about it (although it’s evolving much more slowly in Europe, I would argue). New models are emerging. There is no universal truth, such as “Only experienced entrepreneurs can become VCs,” or “Journalists and lawyers will never make it unless they come from money.”
On the contrary, practically anyone can become a VC. It’s easier today than ever before (unless of course you’re a woman or minority, but that’s a topic for another rant). There even seems to be a proliferation of self-annointed VCs these days. However, I submit that becoming a VC should not be your goal. Your goal should be to fulfill the role well, to selflessly support and add value to your portfolio companies, and to be a good steward of your own investors’ capital.