Ask yourself these questions before considering being a young VC
There’s a huge hype around VC these days. From former French minister to movie stars to Beyoncé, everyone finds it sexy to invest in ‘the Facebook of tomorrow’ (for French readers, here is a good summary of this trend).
I personally notice the same trend at my low level and there is not a single week without someone in my network reaching out to me to find out how to work as a VC at the ‘junior’ level (ie, as a proxy, less than 5y of prior experience). So I tried to gather my thoughts after two years in this paper.
Unilever -> Goldman -> McKinsey -> Union Square Ventures
That’s more or less how the succession looks like at the peak of the graduate job hype curve.
I’m talking business-school graduates here. And my approach is absolutely not a statistical one. But the hype among B-school graduated started around industry leaders such as Unilever (or any other behemoth) where you had the power of the label. Then the fantastic boom of the financial system in the 1980s, coupled with the fantasy images around cash and girls pushed Goldman, JP et al. at the top of the target list until the 2007 crisis changed its image (and the relative value of cash vs. work-life balance). That’s when most grads got aware of the fact that the work-life balance is slightly better in consulting, and the tasks a bit more diversified. Then in 2010s, came something we call ‘digital’, with companies like Google, Facebook and Apple becoming the ones with interact with the most. Students started to get interested in tech, startups, and the whole ecosystem behind it.
But starting up a business is freaking hard, scary, it’s an emotional rollercoaster and people believe it takes capital, a ‘good idea’ (whatever that is), and — I agree on this one — the accurate co-founders. + investing has always seemed attractive, because you know, ‘you see plenty of different topics every day’. Hence VC.
6 things to keep in mind before you jump off the cliff
1. The odds are against you. Setting yourself VC as a career path post-graduation is simply irrational. There’s maybe 1 to 2 slots max per year at junior level (talking about France here, but I guess on a population-adjusted basis it works elsewhere as well), most of which are internships converted in full-time jobs. Or jobs offered to other people that are already highly visible in the ecosystem.
But just because it’s not rational doesn’t mean you shouldn’t do it. VC is often about playing against the odds :)
2. Every VC firm is a different context. Even if do make it, keep in mind that a junior’s everyday job is highly variable according to the fund, the timing, and the investment team. It can be anything from ‘just’ sourcing and analyzing deals to attending board meetings to handling portfolio companies by your own. I can’t think of two junior VCs (and trust me, I know a lot of them in France) who do exactly the same job. And that’s cool.
3. The feedback loop takes for ever. Essentially the one KPI that should rule them all is the return. Everything else is just the building blocks of getting there. But that takes a long, long time. And you’re only rarely involved in it as a junior. It’s not a job for people who need to be reassured on a frequent basis about what they do.
So how can you know you’re good at what you do? There was this super interesting post by Jason Shuman about KPIs for VCs. I’d put it simply: above all, be consistent and respectful with entrepreneurs. Work hard, talk to people for what they are (not for what they can bring you), and be on top of the list when someone asks for a recommendation.
4. Self-start and keep being driven. As a consequence of the above, you’ll have to keep pushing in the right direction even if the apparent lack of feedback may make you give up. You’ll have to do whatever it takes to make your fund a 10x success story, and that’s the priority. Problem is, you don’t know a priori what will contribute to that target. And it’s easy to fall into the comfort of laziness and self-satisfaction.
5. Your professional and your private life will be entertwined. In my vision of venture capital, I feel so so so lucky to be in such position, that it’s my duty to work my a** off, night and day, week and weekends. But that’s fortunate because I love it so, so much. Most of the people I drink beers with have something to do with VC or startups or innovation. And most of my reading time is dedicated to those topics as well. But what’s cool is that once you are passionate about it, this results in a greater open-mindedness paradoxically, because the mechanisms at work in VC are deeply linked with the world around us (growth, change, evolution, incentives, …).
6. Finally, it is a thrill, not THE thrill. One surely gets some exposure to entrepreneurship while working as a VC. But make no mistake here, VC analyst/associate position is by no means a kind of de-risked, salary-compensated entrepreneurial experience :). It’s not worse. It’s not better. It’s just radically different. You’ll always be working in the shadows, supporting and not taking the leading role, and will have to constantly move back-and-forth from very operational topics to prospective thinking about what will be on our roads in 5y from now. It’s just a different set of skills than the one required for top founders.
Don’t get me wrong — I fucking love working as a VC. I try to set myself as high standards as I can and do it in the most noble fashion that is, helping outstanding entrepreneurs change the game. I just noticed the current VC-frenzy right out of business school, oftentimes along with wrong stereotypes and idealization, and wanted people to take a decision based on a deep coincidence between their drivers and the job, not based on fancy stuff seen from outside.
