Is VC possible right out of undergrad?

I was wondering if VC was possible right out of undergrad? I know a few companies do take undergrads for PE and HF, but do not know about VC.

My ultimate goal is either PE or VC.

Working in Venture Capital out of Undergrad

Some venture capital firms take undergraduates. These spots usually go to a student with a VC Firms That Hire Undergrads
This list is not all inclusive but it shows that even some of the largest names in venture capital hire undergraduates.

from certified user @VCmonkey"

Breaking into VC/PE from undergrad is very challenging. I did it coming out of university (I cannot reveal which university since that will give me away...I'm on my firm's website). I also cannot reveal which VC fund for similar reasons, but I will tell you that it is an independent (not bank arm) and top-tier VC based in Silicon Valley.

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There are few firms that take undergrads straight out of school, and in most instances, it's from networking or a prior relationship. Insight Venture Partners comes to mind as one of the rare opportunities to join a VC firm through OCR (Harvard, Penn, Princeton, NYU only), but they have a very different role for junior personnel than most.

I am permanently behind on PMs, it's not personal.
 
Best Response

It's definitely possible. I'm currently doing an internship at a VC firm, and I have seen several firms based in Asia that take in undergrads. Usually they have top stats or strong connections with someone in the firm, typically at the partner level.

VC and PE are two very distinct fields. VC focuses more on the business model since most start-ups have projections that are overly-optimistic and so aren't as heavily regarded as compared to the growth potential. On the other hand, there is a significantly greater emphasis on financial engineering and making equity sweat, so you'll be actively engaged in modeling to find ways to load debt on the company instead of taking an active role in managing the company.

Please choose wisely. Don't dive into either field simply because of the $ and the notion that buy-side > sell-side in terms of compensation. In fact, compensation at ibanks at the entry-level pay SIGNIFICANTLY higher than at VC firms UNLESS you work at a mega-fund i.e. Blackstone/TPG/Carlyle. Remember, the grass is always greener on the other side.

 

I'm pretty sure nobody actually cares about financial modeling experience in venture capital. Some DCFs are nice but they're never ever going to need somebody who knows M&A or LBO modeling. It's literally no use to them.

VCs are successful if and only if their deals are successful. That means they need good deal flow. Which means they need credibility. In a world where there is tons of excess capital and not enough good entrepreneurs, the best deals end up becoming a contest between just a few investors - Sequoia, Accel, Greylock, KPCB, and the like. The reason these firms are successful is not only because their founding partners are typically illustrious billionaires, but also because the people sourcing their deal flow are very accomplished in themselves.

Take, for instance, the Sequoia scout program: http://pandodaily.com/2012/05/04/sequoia-confirms-existence-of-stealth-…

This program focuses on the use of angel investors to source deal flow. The reason is that the number one source of deals for any accomplished VC firm is through other entrepreneurs, whether they're acquaintances or current portfolio executives. Using angels adds credibility and allows entrepreneurs to place trust into a person who they know can add value to their company as they scale.

Now imagine you're an entrepreneur, and instead of an angel or a current entrepreneur, some kid who just graduated from college approaches you attempting to get in on the next investment round. Would you take him seriously? No.

Here's a good tweet to reflect on: https://twitter.com/jordancooper/status/352498731100291073

Few people can argue with that. VC firms hired experienced people because they need to find people who can represent their brand. KKR doesn't necessarily need to care that much about who their associates are because they'll add more value through modeling than actually sourcing deal flow (especially at the scale with which they operate). But with entrepreneurs it's not only hard to source deal flow, but new associates are heavily relied upon to source and research incoming deals, screening for potentially lucrative investments. This means they need to be respected by their target entrepreneurs, which is more likely if they're ex-bankers, consultants, or engineers as opposed to some frat bro that just graduated college.

I'm sorry if this answer is long winded. I'm kinda drunk right now and it's 4AM.

Tl;dr - VCs want people that entrepreneurs will trust. Entrepreneurs will not trust fresh college grads. They will be more likely to trust the experienced banker, entrepreneur, or product manager/engineer.

 

Totally agree with the post above. Experience is crucial for the top firms. Reputable VCs and corporate venture arms (ie. Google Ventures) are more about your vast knowledge and experience. In addition, they want people with actual experience in building and potentially selling their own tech start ups. Two to three years at a top BB won't always do the trick. Also, remember that VC is a lot about forming relationships in the tech community and helping the company you invest in grow through operational and strategic support. Unless you sold a start up to Marissa Mayer at age 20, a kid coming out of college with no tech or finance experience will not be very valuable to a VC.

That being said, some firms (very small minority) offer junior positions to TOP graduates out of college. Insight Venture Partners, Summit Partners, Bessemer Venture Partners and a few others come to mind. Most of these graduates have at least some rock star tech/finance experience and come from Ivy League school. Moreover, these analyst positions typically fall under the sourcing model (a lot of cold calling) job description. These jobs are still top-notch / great experiences though. If you can get one, grab it!

 

You actually won't do much modeling in VC and all due diligence/company&industry research/business analysis require you to have vast knowledge and experience in that industry, which are not commonly seen from undergrads. It's normally a small team, so if somehow you need to see a client, why that tech start-up will believe that you, a young recent graduate without any credentials, can give advice and make right judgement?

But certainly there are some top kids who break into vc out of undergrad, but i wouldn't really recommend to do so.

 

It depends on a lot of variables. For example... Do you have a better offer elsewhere? What type of responsibilities will you have as an analyst (sourcing or actual transactional/operational)? Is the firm located in a city where you can easily network to other firms later on? There are many other things to consider.

Fund size is merely an indicator of prestige (IMO). If its not very well known, I would concentrate on the responsibilities and experience that you might get out of the analyst gig.

 

Check out the book "Venture Capital and the Finance of Innovation" by Andrew Metrick. He teaches a class of the same name at Wharton.

At my school (not Wharton) a couple of VC funds, even a mega, recruited UG analysts. From my understanding you need to be more creative and have unique qualifications/experiences to catch their eye than say your normal IB recruiting resume.

 

1- The title you've given yourself at your company/project is a little on the toolish side and I'd probably change it to "Founder and President" but that's just me.

2- I'd seriously consider getting rid of EDM from your interests section, assuming that's electronic dance music.

 
turtles:
1- The title you've given yourself at your company/project is a little on the toolish side and I'd probably change it to "Founder and President" but that's just me.

2- I'd seriously consider getting rid of EDM from your interests section, assuming that's electronic dance music.

Agreed, I would replace EDM with "raving on ecstasy"
 

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