4 Keys to Becoming a Pre-MBA Venture Capital Associate
After recently joining PGVC, I’m excited to share my thoughts on how I approached the interview process. My hope is that others pursuing a similar role in VC can benefit from the recommendations below. Having the opportunity to participate in the process from both sides of the table over recent months, I believe there are four key items to landing your dream gig in VC — networking, technology passion, analytical horsepower, and preparation.
1. Start Networking Early
Networking is extremely important to become ingrained in the community and build valuable relationships across sectors. Unfortunately, networking is not something that is easily conveyed through a resume and must be started well before the interview process has begun. With 100+ other incredibly talented candidates pursuing the same job, building genuine relationships in the technology community (starting as early as an undergraduate student) is essential. Having experience working at a tech startup is certainly a way to become engaged, but there are other ways to become plugged into the tech ecosystem as well. This can also take the form of grabbing coffee with a local VC, attending tech events (at 1871 and MATTER in Chicago), or meeting with entrepreneurs who you’ve been tracking and demonstrating ways in which you can add value. By proactively building relationships, you will have already established a network of investors and entrepreneurs before applying for the job. Demonstrating hustle and doing the job of a VC before stepping into their shoes will help gain recognition quickly.
2. Communicate Passion for Technology
Demonstrating a genuine passion for technology companies is vital for anyone entering the VC industry. There is not a scripted answer as to what this passion should look like on a resume, but previous experience in co-founding or working at a technology company will help create a compelling story. In addition, previous experience in advising technology companies in investment banking, consulting, or private equity will help build credibility. Describing one’s relevant experience on a resume is important, but this may not fully convey whether a candidate has a true passion for technology. Prospective candidates must be able to clearly articulate how technology has become a part of their daily lives (i.e., What do you do to stay plugged into the technology ecosystem on a daily basis? What blogs do you follow? Are there any investors that have particularly inspired you?). Having come from an investment banking background as opposed to a startup, I found it extremely important to devote extra time during nights and weekends towards proactively reading and learning about technology companies and industry trends.
In addition to staying informed, candidates stand out from their peers by forming a well-supported opinion. My recommendation is to pick two industries that you are passionate about and dive deep. Within each industry, be able to clearly articulate the underlying trends that you have observed, where opportunities for disruption exist, and what overarching risks and challenges exist across the industry. As a next step, spend some time researching potential investment opportunities (3 companies within each industry) that would fit the VC firm’s investment thesis and portfolio (e.g., stage of funding, sector focus, geographical focus). For each company, be able to concisely articulate the business model and value proposition as well as form an opinion on the top three investment merits and risks using the themes listed in Section 3 below as a guide.
3. Demonstrate Analytical Horsepower
It is important to instill confidence in your future employer by describing how your past experiences (e.g., investment banking, consulting, operating experience) have shaped your analytical ability and grit. Throughout the interview process, you must demonstrate a deep understanding of the following critical themes when evaluating an potential investment of interest:
- Team — e.g., track record, domain expertise
- Traction — e.g., revenue / margin / customer expansion, capital efficiency
- Product market fit — product addresses large, validated pain points
- Market — e.g., size, underlying growth dynamics / challenges
- Sales efficiency — e.g., LTV / CAC, churn, sales cycles, pipeline conversion
- Technology / IP — is technology proprietary / creating a barrier?
- Competition — assess direct competitors / long-term differentiation
- Valuation / Exit — are price / strength of exit opportunity attractive?
Even at early stage VC firms, several hours will be spent diving deep into the numbers during a diligence process. Demonstrating analytical horsepower and resourcefulness as an Associate is especially important when it comes to: 1) validating market sizing assumptions by utilizing banker reports, 3rd party studies, and internet research; 2) digging through a financial model to understand projections and profitability assumptions; 3) analyzing customer data to gain insights into cohort performance and churn; 4) synthesizing pipeline data to understand conversion rates by stage and efficiency by sales rep; and 5) evaluating competitive and exit landscapes through conversation with industry experts and utilizing internet / database tools.
4. Do Your Research
Before interviewing for any opportunity you are passionate about, DO YOUR HOMEWORK! As it relates to VC, be sure to have a general understanding of the following prior to your first interview: 1) the role of an Associate at that particular fund; 2) the overall investment thesis of the fund; and 3) specific investments within portfolio:
- Role of an Associate: Make sure to understand what exactly the role entails. Is it primarily a sourcing focused role or more diligence / execution focused? To gain this understanding, reach out to a current Associate at the firm and grab coffee to learn about the opportunity. Demonstrating a clear understanding of the role will allow you to craft a better narrative emphasizing your relevant skills and strengths.
- Investment Thesis: Spend the time researching and understanding the fund’s general investment thesis (e.g., typical stage and size of investment, sector focus, geographic focus). This will be particularly helpful in asking thoughtful and impactful questions at the end of any interview.
- Portfolio: Research the fund’s portfolio ahead of time and form an opinion on your two favorite and two least favorite investments across multiple sectors within the portfolio. Understanding the various types of investments within the portfolio will help aid in assessing portfolio fit as it relates to your investment recommendations during the interview process.
Would love to hear your thoughts — either through comments or @eduboe on twitter! In addition, if you’re interested in learning more about breaking into VC, feel free to e-mail me at firstname.lastname@example.org.