mod (Andy) note: this was originally posted in July but he's still answering q's for those interested in VC.
In following the solid threads of the 10x leverage, harvardgrad08...I am offering a Q and A on all VC related questions.
As some of you know, I am a non-target graduate with 2 years middle market investment banking experience and a short stint at a multi-billion dollar hedge fund prior to my current VC gig. Ask away
FYI - I will answer as quickly and as frequently as possible - but cannot promise it will be immediately. Also, let's avoid the PM's and have an open discussion.
You on the East Coast or West Coast? How much is sourcing a part of your job? And why VC over PE or staying at the hedge fund?
I am on the East Coast, but am finding myself more and more out West as we have a lot of exposure there as you would imagine. Sourcing is a big part, but not as much as you would imagine - we have a few dedicated people specializing in this, but it is done time to time (however must of my time is spent with portfolio companies, drafting term sheets / structures, examining exit opportunities, etc.)
VC over PE because I am a techie at heart and I enjoy the hands-on approach my fund affords associates with porfolio companies. We also play very early, so it is great to be in the trenches with entrepreneurs and aid them in flushing out their businesses, etc.
In short, the hedge fund role wasn't fufilling enough for me - and contrary to popular belief, is not the golden paved road everyone likes to imagine.
Also did you have any entrepreneurial exp before moving over to VC?
I was tired of building valuation models all day.
I am actually working on a start-up in my spare time, and am fairly far along in it with my co-founder. I have been an advisor through various fellowships over the course of the last year as well.
Alright, I'll throw one in there - can you talk about how VC differs from IB/PE as far as the "analysis culture"? What I mean by that is how much of the investments are gut feel vs. actually backed up with models (PE and IB being very model and financing driven)? It's been my experience that some VC firms concentrate their analysis almost exclusively around the market, and if they like the space and they like the team, they invest. I know others (typically larger) that focus more on the actual financials of the company. So it would also probably be helpful to know too what kind of VC (series A vs. growth) and how big your typical round is.
+1 SB
What was your educational background? Did you come from an engineering/comp sci background?
How are the hours at your firm? Pay (thought I'd take a shot)?
Coming from a nontarget and a MM bank did you have a hard time landing VC? I understand it is not the esiest thing in the world, and it's quite competitive, but can you tell us a little about what kidns of strategies you used to land a VC gig coming from a non target, with no extensive industry experience?
Can you shed some light on how repubatble your MM firm was? (RWB, Harris, Jeff)??
Thanks
I have an undergrad degree in finance, but if you refer to some of my other posts I was a Division 1 baseball player, which helped a lot. I had IBD/HF internships also. A teammate's father was a serial entreprenuer who had contacts with virtually every top VC out there, and made certain introductions for me - the rest was on me.
Hours vary, as you would imagine. Can be as good as 50/week but can be as bad as banking - it really depends on the needs of our portfolio companies as well as prospective deals, etc. All in all, VC has allowed me a life unlike banking. Pay is comparable to brand name PE (as I am at a very well respected VC shop). Pay varies a lot in VC, however - much different than PE, at least in my experience.
Top MM firm, that is all I will say to preserve my identity.
Great question - and the answer absolutely varies in terms of the type of company, round, etc. For example. if we are in a seed round (pre-revenue, generally proof of concept stage) the analysis is more on the market, eventual product and especially management (this is huge, especally if this isn't their first rodeo). When you are talking Series C and beyond, this is where modeling can be of use (not to say it isn't at earlier rounds, but it is purely assumptions as you would imagine). Analysis is more focused around exits, cap tables at various rounds, dilution, irr, etc. Furthermore, it depends on the structure of the deal (we typically do equity or debt w/ warrants, etc.) so that can decide if an in depth model is of use. By nature, I tend to put models together for each deal I am on - I guess it is the banker in me (but some of the GP's won't review them, it is just a good tool for me to have if and when needed and of course helps if/when we have multiple rounds occuring)
We have several funds (pre-seed all the way to series e, etc), allowing us to go in with as little as $100k initially with our later round funds investing into the tens of millions....in order to preserve anonymity, I will keep the actual amounts to myself.
Thanks - makes sense that most of the analysis is around the exit rather than the entrance, when most of it is vapor anyway.
One more - can you talk a little bit about how you were perceived coming into VC from a finance background? I know there's certainly a culture out there that prefers experienced entrepreneurs, product managers, etc for VC associate roles. Did you feel like you were fighting an uphill battle in interviews against those folks? Do you feel you got different types of questions given your finance background? Also, now that you landed the job, do you feel like the fact that you're a "finance guy" affects the analysis people ask you to do or their perception of you in general?
It was definitly an uphill battle in the beginning, as VC's tend to dislike bankers (probably because they fuck around so much during sell time for portfolio companies). The interview process was rigorous, as my tech knowledge was put to the test. Luckily, I am a techie @ heart and could really sell my passion for that in the why VC portion - since I had healthcare banking experience I made sense for that portion of the business. I am most certainly the finance guy, as I always make a comment in pitches regarding the outrageous hockey stick projections, but I have learned to give entreprenuers a break. They are the true talent, we are just providing the capital for them to re-create the wheel, and giving them guidance in how to derive value from their ideas. As time passes, I am continuing to shed my banker personality, which will only improve my success in the VC game of life.
how does vc do capital raises?
LP's typically have fixed commitments to the fund which are drawn down over time as the fund releases capital. If an LP does not participate in these capital calls, there are large fees associated with this neglect. However, this seems as if it is being re-examined in some instances as it has proven difficult to raise venture funds in these economic times
What types of "techie" interview questions were you asked? How did you prepare for interviews?
More on trends, what was going on in the industry (social/digital media of course) - specifically what companies I would invest in, why, what was their competitive advatage, how to evaulate mgmt. They really wanted to see my thought process and how I would go about conducting due diligence.
I prepared for the interview as I do for all our pitches - heavy due diligence. there is a wealth of knowledge on the web highlighting the coolest, newest tech companies out there.
Can you touch on "techie @ heart" does that entail a passion for gadgets and the latest technology or is it more so a function of writing code, creating systems, etc.?
passion for gadgets and the latest technologies, start-ups, etc. I am very involved with start-up challenges, incubators and the like.... but I can write code although that is not really what I am a fan of.
What is your fund's investment profile (don't need to go into too much detail if it will out your fund)? How were the parameters of it determined and how rigid is it regarding potential investments?
We invest in: digital/social media, biotech, medical devices, photonics, clean tech (this is not everything but a snapshot)- we have a broad investment scope as we have the necessary deal team members to specialize in each
The parameters have evolved, 2 of our funds are new to address social/digital media and the earlier stages of investment.
We (deal team) have a lot of autonomy in determining what we invest in, etc.
Being an analyst at a MM shop and from a nontarget as well, what would be the best way to break into a VC role? Also, what type of deal experience would you say is most valued? M&A or just plain vanilla capital raising? ANd what typyes of technicals were you asked - what is the best way to study up on them since I am assuming your not being asked about LBOs and merger models?
You most certainly will not be asked LBO models, but the drivers of value and such are key to understand, but these are intutive by this point, especially if you are in the industry already. Deal experience is of course valued - I was grilled to the point of exhaustion on deals I worked on, but they will be examined from a different perspective. Your interview will not be about how to construct a vaulation model, but rather how value is created itself. Modeling will come into play when you are asked to determine valuation at different exit times.
I think the best way to break into VC is to determine the type of associate role you want and target them accordingly. Also, events such as TechCrunch Disrupt and various innovation challenges are a great way to build your network. At some shops, you will only source all day. I joined my fund because associates are expected to be extremely hands on with portfolio companies, which is my favorite part of the job. It's not very often you can be in your early 20's and have the chance to really drive value on a cool tech start-up or be a part of a critical round of financing for the next great medical device that will change the way a surgery is performed.
VC requires you to be much more than a number crunching machine, which is important to point out. As a VC associate, this is important but not that determinant in funding. VC requires you to be intuitive and think outside of an excel sheet - something that is not for everyone. IBD requires you to follow the status quo, while venture investing is extremely non-traditional. A simple valuation model is no longer the norm.
OK how about a fun one, want to see if this is comparable to banking/PE - what's the craziest perk you've gotten in VC, and what's the coolest thing you've ever gotten to do as part of work?
Private jet travel with GP's has happened quite a bit, and the expense policy is pretty unreal. The coolest thing would most certainly out me and probably make a few people upset with me that do in fact check out WSO but do not necessarily post :)
Can you describe your process of landing a MM banking job given that you were a non-target graduate?
Networked my ass off....alumni from my baseball team are well connected in industry - began picking their brains and was fortunate enough to get some leads and eventual interviews for SA, which I took huge advantage of and got the offer. Baseball was a huge driver of initial success for me - showed I was dedicated, team player, etc. Also, we were extremely successful during my 4 years there, and bankers/financiers love athletes.
Can you give us a "standard" day? Are you spending a lot of time at sellside conferences / industry events / meeting entrepreneurs or the majority of your time doing dd / processing transactions? Also, how common are VC funds that allow their associates to be as hands on as you describe compared to a sourcing mode? Also curious as to what the "path" would be at your fund? Are you expected to get an MBA or would you be able to move up with out one?
Also, thank you very much, I will be sending you some SBs as soon as I get some more..
I will post a standard day shortly.
The common practice would be to get an MBA, but of course there are exceptions to the rules, and I hopefully am on track to be that exception, An MBA is still in the cards for me, but at this point it would be only 2 choices for me....it seems that I will be able to progress without it at my fund, however. Time will tell - and I am going to continue to churn on my start-up.......
Best of luck to you with your start up dude...appreciate all the input...I hope to one day think outside of the excel spreadsheet and leave the misery of pitch books and formatting of banking..
I posted a standard day, but of course I attend a ton of conferences, meetings, etc. I have immersed myself in the start-up community, and try to be present whenever possible. As you imagine, a lot of due diligence and transaction work is done (especially structuring term sheets).
Couple of Questions:
What sort of technical questions did they ask at your interview?
How were your colleagues different? You went from working with banker/finance types to product/entrepreneur types? Did you miss your old coworkers or did you fit write in with your new team?
What do you wear to work? Is it pretty casual? Would you dress casually even if you were meeting a portfolio company?
I'm a front-end developer looking to eventually get experience in product/UX. Are their people like me at your fund?
Are you on Quora?
Thanks in advance, threads like this (along with 10XLeverage and HarvardGrad's add an incredible amount of valuable content to the site - I'll rain down some SB's as a thanks)
1.) It was very heavy on why VC – since I was coming from a non-traditional background (in the sense of banking and landing at the top hedge fund I was at, as this is viewed as the pinnacle of making it for banking guys)… Technical questions were focused heavy around the exits, specifically what multiples would I use for respective industries and the companies at different exit times – this is where industry knowledge comes heavy, as if you don’t know what is going on in digital media, you are going to struggle like hell attempting to explain the valuation and exit multiples.
2.)My colleagues are a lot of ex consultants as you would imagine, as well as entrepreneurs, engineers, product managers at high tech companies. They are a much different breed than bankers, but it is a refreshing environment to be in as there are multiple personality types and there is actual work being done (meaning thinking outside of the box). There is much more interaction with senior guys, and a lot more responsibility for your work (at this point no one is checking anything, it is assumed it is perfect times 100…if you are careless, that is your ass and there are 10 million more qualified people that would love to take your VC role) 3.)I wear a dress shirt, slacks and sportcoat daily – suits are extremely rare and I think it makes entrepreneurs uncomfortable. When meeting with certain portfolio cos., I will wear jeans and a polo or even shorts – start-ups are all about rejecting the “suit” aspect of thing. 4.)A lot of people at my fund have developing experience – I would suggest to leverage that into a product manager type role…somewhere that you can gain experience both developing a product but also have the chance to derive value from it. There is one guy I know who was a lead developer at Qualcomm, became a product manager, went to Stanford MBA and joined a leading VC at the post MBA role and is a wonderful addition to the team. 5.) I am on Quora, and you never know when I will pop up
Thanks JimmyD for fielding Qs.
How many of the associates in your firm (or that you know at others) come from consulting backgrounds? How do you recommend people from a MC background to get a foot in?
Coming from consulting, you actually have a leg up on your banking counterparts (at least I think) in terms of convincing VC's you are a right fit for the position. I have seen (at my fund and other top shops) a huge amount of Bain, Mck and BCG guys that have risen the ranks quickly (yes at this point prestige does matter, I'm not going to lie to you) It is not the end all be all, but VC is heavy on what you have done prior and why you are the associate they should choose out of all the stanford, goldman, bx, harvard etc guys fighting for a position there.
Can you give us more background on your fund: size, # employees, just so we know what kind of VC you're talking about. (Sequoia vs boutique, etc)
We have a lot of funds - but total fund size is over a billion. Remember, a lot of that is deployed....we are currently deploying about $500 mn across different funds to give you an idea without too much info.
Think close to Sequoia, and definitly not a boutique
is it just me or is anyone jelly our of their fucking mind?
no reason to be man, I'm just a fortunate guy who was in the right place, right time. I'm sure there are far more qualified people to have my job, but you can bet your ass I am doing everything I can to succeed in it.
Hey man, thanks for taking the time to do this.
I have a few questions.
1) I'm very interested in VC (did a VC internship after my sophomore year) - especially in clean tech. But I also like following the markets a lot so I'm also considering a career in HF/AM. Seeing how you made the switch from HF to VC, do you sometimes miss the more fast-paced environment of the liquid markets? Do you still spend time following macro trends and analyzing how the economy as a whole is doing?
2) At your firm, are there any clean tech associates that don't have an engineering background? Is it possible to join the cleantech team after a few years in banking in a relevant group?
thanks!!
1.) Excellent question – I definitely do miss the liquid markets at times. It can get very tedious when you are waiting for companies to hit milestones that will trigger liquidity events or follow-on investment rounds. As a GP at my fund says, it always takes a day longer and a dollar more than they are asking for (of course this can mean years and millions of investment more, but you get the idea). I still follow the markets heavy, as I am actively involved in my own portfolio management and like to think I am far more competent than most in terms of investing. However, the economy question is more valid, as this comes into play heavy in our due diligence. Think of it this way, if you have a digital media company that wants to sell its app in the open market but unemployment is 12%, you have a severe hole in the business model and eventual value this company can create. Economic drivers and situation are a huge part of the decision process in any investment style. 2.) I actually work with quite a few from engineering, and I would think a banking stint in clean tech would be a wonderful position to be in when applying to these types of VC funds (or start-ups, which are a hell of a lot more interesting than VC – at least I think )
Thanks so much for your responses! Very helpful and it's definitely interesting to see how important macro concepts are a part of your work. Regarding the second question 2, I'm not sure if you understood what I meant. I was wondering if there are entry-level VC positions in clean tech teams for people who do NOT have an engineering background. I'm asking because at the clean tech VC i worked at, almost all younger employees had engineering backgrounds..since i don't have one, i was wondering what i should do to best position myself for a clean tech VC gig? I'm a a rising senior, so my best bet would probably be to find an analyst position in (clean-) tech banking?
Tried to find that sand hill slave blog by the way, I think she took it down :( sounded hilarious tho
How did you build your knowledge base about the tech/VC industry? You mentioned you came from HC banking, so I'm curios how you found time to network, keep up with a different industry.
If you can, can you specify what websites, forums/blogs that you thought were helpful that you would recommend to us?
Also, I have a close friend who has contacts at many VC, he's a CEO of a 50 man healthcare company. How did you go about asking for contacts at VC from your friends dad?
first off, that sounds like a fantastic contact to have. Approach wise, I would not just ask for contacts, but rather engage in a discussion where he can talk about himself mostly (ceos and high finance guys love this) and leverage this into a networking discussion, and if he's not a dickwad, he would probably make introductions for you given your interest and smarts (if he likes you)
I just kept current with trends, products, the market as they developed. This was done via online research, wsj, tehchcrunch - like sites, etc. I will post some sites I think could be good resources for prospective monkeys. In banking, I utilized my downtime between turns and other mindless suffering from MD's and the like to do a lot of this research. Anyone can find time to do this, it is just a test of your dedication, especially if you are an analyst.
Typical Day:
Gym in the morning, head back to place review some emails.
-Get into office around 8:30-9. Check out email and some financials just received from a portfolio company and get prepared for the 9:30 board call to discuss funding requirements and milestone status. On the call, continue with email and check out TechCrunch to see what’s new today. End board call, maybe facebook and Gchat while taking calls from prospects and portfolio companies on strategy execution and help finding a new developer (which then causes me to reach out to developer friends, headhunters etc to kick start the process). Check out my portfolio, etc. This (or something similar will continue until about 1).
-around 1 head out to local Starbucks to meet an entrepreneur working on a interesting digital media idea (prior to which he sent me a deck and executive overview, which we are big on receiving by the way). Have to end the meeting short as we have a pitch for our seed fund scheduled. Pitch ensues followed by heavy Q&A session, and post-meeting with deal team to analyze company, poke fun at whatever we feel like, and decide if it is worthy of due diligence. During the meeting, email was blowing up as portfolio company C fucked up negotiations on their lead contract, ruining status of a critical milestone which has caused a co-investor to question this round. Series of emails, phone calls takes well through the afternoon.
GP comes in and wants notes from a meeting 10 weeks ago with company who he doesn’t remember but an idea cropped to his head. Work with admin to find memo and figure out what the fuck he is talking about. Find memo and the model I made, give to him for review. He doesn’t understand my assumptions and forgot the potential of this product, so time is spent working with him. (remember, we see thousands of proposals, it is really easy to slip through the cracks and have a GP forget you). GP’ are like spoiled kids and they must be nurtured. If you want a hilarious read from an anonymous admin assistant from a high profile venture fund – check out Sand Hill Slave.com
Finish that, and continue working on a waterfall model of XYZ Company, while working in tandem on my pitch the next day to our investment committee for $2m Series A investment in Company D. Wrap up around 8 pm and head out.
As you can see, multitasking is key.
All in all, no day is the same. I can profile an example of the worst day ever and best day ever if that is of interest?
DO NOT, I REPEAT DO NOT enter "sandhillslave.com" in your browser. Super NSFW
Jesus christ I wish I had seen this sooner. Thank god I'm working from home at the moment.
Important to note that not all clean tech focused funds are vc, a lot of money entering clean tech in the later stages is from a more traditional PE structure.... I know this is very off topic but just throwing it out there...
absolutely, very valid point
Thanks for this Q&A, very interesting JD.
What is a typical career path when you enter VC and what do you want to do? Do you eventually want to start your own fund or move up the ladder?
typical path would be 2/3 yrs then off to a port co, start up top mba or stay and advance if fortunate. It has been expressed I might be able to stay without the typical requirements, so we will see. For me, I am going to continue my start up and keep moving. Eventually I would love to have my own fund
+5 SBs for you since I know the work it takes to keep these posts going!
props to you on a wonderful thread...old teammate of mine works for apple corporate development as his experienced seems to mirror yours
Would love to hear a "best" day and a "worst" day if you have some down time
SB for you, thanks for the very informative thread.
As a consultant, what are some things you can do to make your work experience more interesting to VCs? Does your firm hire/interact with consultants frequently?
Are former consultants at your firm recruited primarily from pre-mba or post-mba roles? At what level would a post-MBA MBB consultant with 3-4 years of experience at their firm join your VC? What is the compensation at that level?
I'm a physician who is joining one of the MBBs and my long term interest is in either joining a VC or a medical device start-up. Any advice related to this path is greatly appreciated!
Any work you do as a consultant that you can shape as VC related is key…ie if you are working with a high tech company or healthcare co, etc. During the interview you should focus heavy on why your experience in MBB is relative to VC. (so if you worked on strategy for a Fortune 500 tech co., you should be able to explain the scope of your work on this engagement)
Consultants are both pre-mba and post, as you would imagine. If a candidate was Harvard u/grad with 3-4 years MCK/Bain with all the other credentials, they are obviously a good shot at HBS/Stanford and coming from here is a shoe in to VC (ie. If you don’t get a gig out of b-school it is your fault and something is wrong with you). However, I have seen a lot of VC’s go 2 years at top MBB then join in the pre-mba role as a great position to bschool or organic growth at said fund. Every associate’s path is different, and it is all a matter of timing. If a fund is very active and you have been a critical piece of the team, the fund will do everything they can to promote you without kicking you out for an mba first. Post-MBA experience is on-par with top PE shops (at least at top VC funds) and the upside from carry can be ridiculous.
Given your background, you are well-positioned for either. I think it is a matter of you deciding what you want. Remember, start-ups are fun and exciting and can have great promise, but it is not all gravy. You have milestones to achieve and asshole investors that want those hit or your future is unclear – I see it all the time..great team, great idea, poor execution = epic fail. For me, it was all about being on the other side of the table before I took my shot in the entrepreneurial game (meaning if/when my start-up is something, I will know all the VC hustle and bustle).
Something I thought I would share with the forum, and can give you some insight how we early-stage investors utilize convertible debt:
Convertible debt is a widely used early-stage financing structure. Compared with equity, it allows the financing to move ahead without having to reach an agreement on the valuation, is somewhat cheaper in terms of legal fees and offers investors some downside protection.
Convertible debt instruments usually convert into equity at the next financing event under the same terms and conditions as the subsequent investment and at the same valuation, less a discount to compensate the convertible debt investors for the higher risk they take. The discount usually varies between 10% and 40%. Several online articles have argued that convertible debt with a discount is a sub-optimal structure. Such articles typically provide a narrative of how and why convertible debt is not optimal, but do not provide a mathematical rationale or discuss at what thresholds convertible debt may be equivalent to equity.
At the usual discount rate of around 30%, if the company increases in value significantly, convertible debt returns are almost always inferior to equity returns. This comes from the mechanics of the structure, leaving aside other imperfections of the convertible debt structure, such as the alignment between the entrepreneurs and the investors and the fact that discounts can be, and often are, negotiated away at the next financing round.
Let’s assume that an investor already decided he or she wants to invest an amount “Y” in a company’s Series A financing round and has to choose between structuring the investment as equity or as convertible debt. For an equity round, let’s assume a pre-money value of “VA”. Post money, the investor will own Y/(Y+VA) of the company. Assuming the company value increases, at Series B, the pre-money value of the company will be “VB”, and VB>VA+Y. Immediately prior to Series B, the equity investor owns:
Y/(Y+VA)*VB (1)
If doing a convertible debt round, assuming a discount “D”, and no interest, the investor will have the right to convert the amount invested Y into the Series B round at the discounted Series B pre-money valuation. Immediately prior to Series B, the convertible debt investor owns:
Y/(Y+VB(1-D))VB (2)
What should be the discount D so that the return from a convertible debt round is equal to or greater than the return from an equity round? Using (1) and (2) we have:
Y/(Y+VB(1-D))VB ≥ Y/(Y+VA)*VB (3)
Solving for D:
D ≥ 1-VA/VB (4)
The discount D needs to be greater than 1-VA/VB in order for the return from a convertible debt round to be equal to or greater than that of an equity round.
Let’s assume “R” is the growth in company value from Series A post-money to Series B pre-money expected by the investor. In other words:
R = VB/(VA+Y)-1 (5) Extracting VA/VB from (5) and substituting it into (4), we get: D ≥ R/(R+1)+Y/VB (6) The second term, Y/VB, is always positive so the discount D is always higher than R/(R+1): D > R/(R+1) (7) Defined this way, the discount D depends on the expected growth rate in the value of the company. The higher the expected growth rate, the higher the discount. Table 1 shows the minimum discount rate required to fulfill condition (7) above, at various expected company value growth rates between Series A post money and Series B pre-money. Value Growth Rate Expected Min. Discount Rate Required 10% 9% 20% 17% 30% 23% 40% 29% 50% 33% 100% 50% 200% 67% 300% 75% 400% 80% 500% 83% Table 1 What is usually considered a fair discount to the next round of around 30% corresponds to an expectation that the company value will grow in value by about 40-50%, if the positive scenario is realized. If the company value doubles for example, the investors should ask for a discount higher than 50% to get the same value they would get from investing in equity. A 50% discount is usually considered unfair at Series B as the general tendency is to underestimate risks after the positive scenario is realized. Investors in convertible debt with a discount of around 20-30% often “leave money on the table” if the upside case is realized. For investors, convertible debt may offer downside protection if the company has assets that can be monetized, an argument usually valid for companies in later stages of development. Convertible debt may also offer protection in down rounds. Sacrificing the upside is, however, hard to justify from the perspective of the early-stage investor.
The remedy for the investors is to structure the financing as an equity round, ask for common stock or warrants with the convertible debt, or set a conversion price cap. For entrepreneurs, convertible debt helps preserve some of their equity but it is a double-edged sword as their investors’ interests will be aligned with those of the new investors in seeking a low valuation at the subsequent equity round.
Once again, thank you, awesome thread. Another question:
How global is your firm's fund? Do you ever travel internationally to visit a portfolio company? Do you think over the next ten years the industry will become more global?
Each fund has a different profile, but the reach can be global if we find a great opportunity for a newco into our portfolio. We have a few companies with operations in the US and headquarters in overseas, and one of them is in fact a company I cover and serve as an observer as, so I do travel to attend the board meetings.
On a much larger scale, I absolutely think the trend for the industry will become more global. It is already apparent that on an international basis (even smaller countries, think Israel for example) have amazing technological capabilities (and as they are developed) will prove to be venture investible (at least I believe). Side note: Israel is already a large recipient of VC funding, especially in the semiconductor space. The ties to innovation and the military are also interesting. But yes on a whole, I do see the industry becoming much more global.
Thanks for the Q&A. Just a short question - I do corp development for a later stage company (think Zynga, Groupon, etc). A lot of my work is around capital raising, acquisitions, joint ventures etc - for a young company that is experiencing hyper-growth. I've held a range of operating roles here as well - launching new businesses, as well as refining the marketing strategy. Prior to this, I worked in M&A.
How competitive is this background if I want to join a VC pre-or post MBA (i am considering leaving in a year for an MBA)? I have good relationships with both large and small VCs due to the nature and prominence of my company, and I know this is often how many associates land their roles - but am unsure how they would view my experience.
Per your comment earlier - I loved working at what once was a startup and seeing it grow into a +$1bn company. That said, I do want the VC experience - ideally post MBA, and would consider going back to an exciting startup a few years later.
I think you have great experience to transition into VC, especially since it sounds as if you have had extensive interaction with funds already (so you know how most operate, etc). Also, your experience in operating roles and corp development is something I would have to assume any VC would value and see potential for a great addition to the team. Also, M&A is a solid addition as you will be analyzing exit opps for companies, etc. and that is where this experience will come into play. The question I have for you is why VC? I have seen a lot of people take a VC job to become more equipped for start-up companies (so they are ready for capital raising, strategy, etc.) I have a friend who just left a top vc to join a what is now huge, later stage Company in your realm.
I would think you should be a shoe-in for a top MBA, pending you can tell your story well and have the test scores to match. You have a banking background but have startup experience, and it’s clearer than ever top schools are really focused on adding these profiles into the mix. If anything, I would leverage this experience to a new start-up (either yourself if you have the capability or find a new one, etc) as a possibility. I think you have a lot going for you, it will just be about selling why VC after you had a gig most people essentially leave the game for. If you can get over that hump, you should be golden. Or, do a top MBA and VC’s will be lining up to take you aboard.
Thanks, this is very helpful.
Quite frankly - I'm interested in VC since I'm pretty interested in being on the investment side as opposed to the operating side, at the moment. The reality is I don't know if I will like it or not - I've spoken with many partners at big and small VC funds - so I'm aware of the grind and stress involved - but that said, it's still something I feel compelled to try.
Leveraging this experience into another startup is something that is also an option - in many ways, I feel conflicted since going to an MBA is more of a personal choice (I don't think I need it to go to a VC - but I'm a big fan of the potential experience on a personal level), though there are some very early stage startups that I have been recruited by as well, that are very compelling.
Thanks again for the input, glad to see this forum is still chugging along with some good advice.
Durban, you're a complete moron. Jimmy, I think this is a great thread (as do many others), and please continue on with it. Ignore this joker.
In the spirit of keeping this thread clean (thanks for doing this Jim), I'm deleting DurbanDiMangus's trolling posts. Carry on.
thank you! he rocked my above question haha
Thank you, guys. Glad to see there is some appreciation. I will be addressing the above questions shortly, as I was out of touch for the weekend (sorry for the delay)
Great post. Thanks for fielding questions and offering your perspective on VC. I'm considering healthcare VC or the HF space - and I'm wondering if you could describe the pros/cons. Is lifestyle better in VC? I've heard comp can be less in VC - but terms of job security it's better short term compared to HFs. Thoughts on learning, responsibilities, etc?
Thanks again!
I have no complaints in the compensation department. As I mentioned earlier, comp (at top VC Funds) is comparable with other high finance positions (pe, hf, etc.) The lifestyle is so much better, however. When times are tough, they are as bad as anywhere…but from a weighted average perspective the good days always outweigh the bad. Also, as you are able to receive carry in the funds, that is when you are talking real money.
The mega HF I worked at was an absolute sweatshop. It was as shitty as my days in banking, if not worse. I hardly had a day off and all I did was build models day in/out. The pay was ridiculous, but it doesn’t matter much if you can’t spend it (lol). I needed an environment different from banking, as I completely hated it (other than the obvious tangibles I received from it, most importantly work on the buy-side)
For me, the fact I get to work with start ups, work on strategy and leverage my past experiences all while having fun / and a life is the ultimate situation for me.
This has been an overall informative thread so far but I have to add my .02 here. VC lifestyle is definitely better than PE/HF, but the pay is at a pretty steep discount unless you're at a very large and late-stage focused fund (think NEA). Even then you very likely won't crack $200k pre-MBA. Each VC shop is pretty different, but in general the range for a pre-mba associate at an early to mid stage VC fund is probably around $130k-$170k. I know some shops pay less than that. I'm not sure if that's what JimmDormandy meant by comparable but I wanted to clarify for any prospective VC associates.
I will give some more info on the different perspectives shortly
I'm going to be a pre-MBA associate at a smaller, late-stage VC firm, and can confirm the $150ish range. Maybe not as much as PE (though, size-wise, probably not too far off from a comparable PE firm), but the lifestyle is a huge improvement. About as close to 40 hours a week as you can find in "finance."
Interesting thanks very much this is a very good thread SB +1 man
Great thread. Thanks so much for the insight.
Amazing thread Jimmy! Lot of great stuff!
What is the best way to get a job at a top VC fund like Kliener Perkins except for being at a wildly successful startup or the like?
Thanks for the support.
Well, that is a very broad question. I can tell you I am at a top fund like aformentioned and I was not at a wildly successful start-up. If you go through the thread, getting these gigs is right place, right time scenario (paired with valid experience from other VC shops, consulting, banking, start-ups, etc.). You have to be able to sell your experience as true value for the VC you are targeting. Of course, a top MBA helps (esp Stanford, HBS) as this is where this shops will look for candidates outside of industry (if they have positions open).
Great thread, wealth of knowledge here.
Just a general question, what sites are similar to TechCrunch? I already get my technology fix from the web, I'm interested in reading about startups in industries outside of technology.
VentureWire is a wealth of knowledge for tech related info, and what is going on in the VC world. Will give you a a great idea of what is hot in VC.
I will also post other relevant sites for you.
Never heard of VentureWire and can't find the website?
Great thread Jimmy, very very helpful!
I was wondering if you might shed some more light on the international aspect .. Does your firm (or the other big ones) offer positions outside the US? If so, do you detect any commond ground between those holding said jobs (i.e. foreign language proficiency / growing up abroad / study abroad)? At what level are these positions offered (pre/post MBA)?
I for one would love to someday work at a top-tier VC and be sent to some other country to follow up on a portfolio company.
Investment positions overseas are tough to come by in funds based here, but if they have Asia or Europe based operations with a lot of staff, might be more attainable. I think otherwise, you would have to be hired by the fund in the US and then be moved if there is a calling for your skillset in the particular office (say if the Asian office needed a guy who knows Hadoop well - just using this as an example). Studying abroad could help, but again it is all about the current needs of the fund. If they need people in Silicon Valley, you probably won't get hired in London just because it works for you. Of course, there are exceptions to every rule and no fund is the same - it is important to point this out referring to the entire thread that this has been my experience, and doesn't mean this is how your path might potentially be.
The quicker way to getting overseas would be, as you strive to, gain a position with a portfolio company that is international. There are usually open positions in bus development, sales, coding and development, etc. VC shops typically list the open positions for their portfolio cos on the fund website, so these are very transparent and your search should be rather simple, also gives you great insight to each fund as you can see what they are investing in, etc...
Hey Jimmy this is a great thread! I think VC is something I would genuinely be interested in. Are you still answering questions? I haven't read through everything yet so I will save my questions for a little later but I wanted to say thanks for the information.
Absolutely..ask away
I will be answering the above shortly
question - how do i become the next michael moritz?
Find the next Google, and duplicate that success over and over again. Everything the guy touches turns to gold, maybe he really is Midas.....
lol, i wasn't expecting a serious answer, but yeah man the guy's a legend. do you think guys like him have a big say in the the strategic direction of their portfolio companies? does it depend a lot on the stage at which the investment is made? seems like for an angel investment, they would just let the company do their thing, but for growth stage, the stakes are much higher so they would want a much more active role - but then again, at the growth stage, the company can be way more picky about who they take capital from so they probably wouldn't want to take money from someone who will insist on having a big say... what are your thoughts?
Jimmy -- are you in Boston, New York or somewhere else on the east coast?
One of the two mentioned - although I am on the west coast a shitload, so at this point it is difficult to say where my home is, jk. If I move up in this fund, the west coast will be full-time.
Jimmy, thanks so much for helping us out.
I majored in healthcare management and will be joining the TMT group of a BB in SF for my 1st year. I am thinking about either going straight into VC after my analyst program, or possibly doing a post-bacc and getting my MD/MBA.
As a former HC banker, do you think VC's find MDs with former finance experience helpful? Or is an MD just a waste of time in VC?
Thanks!
Not at all, most GP's at namebrand shops have MD's within the healthcare practices (medical devices, biotech, etc - you get the picture). Do a search on VC funds that are purely healthcare focused, you normally will not see top guys without an MD or pure healthcare experience (former CEO of biotech start-up...)
can you just explain a little bit the concept of GP and LP in the VC world? in your day in the life you mentioned the GP came in does that mean the owner?lead investor? your boss?
thanks excellent posts
Funds are structured a lot of different ways, but typically GP’s are the guys running the fund (of course they typically have a lot of money in the fund, but they are running the actual day-to-day operations. These are the guys receiving the mgmt fee/performance fee (as you know with PE/HF, VC funds can charge excess fees if they are top-tier and have a strong track record so you will see some charging >2/20 etc.) There are some funds that have special limited partners, who are more involved on a daily basis than regular LP’s are – who just usually commit capital to the fund for the fixed amount of time (some LP’s serve as advisors, etc. but that doesn’t seem to be the norm)
As a general theme of this discussion, each fund is different. Some funds the GPs might not have a lot of money tied in, and some might not have the special LP I mentioned. I think investors want to see a GP’s interests aligned with the fund – meaning they have substantial capital in as well.
OP, thanks for your input thus far, it's been insightful.
I notice there has been some discussion related to VC positions involving people with engineering backgrounds, and was wondering if you could expand a bit on it? I'm interested in pursuing a VC career, and I come from an engineering background. While our backgrounds don't align perfectly any thoughts/conjectures based on colleagues experiences would be welcome.
Specifically, I am curious about: Do VC funds hire engineering talent specifically related to their focus/interests? (only comp. engineers for web-based funds?...chemical/mechanical for funds with clean tech interests)
How much outside, non-VC experience do engineers usually have before they are considered valuable to a VC firm?
What sort of roles/opportunities do engineers have at the firm? Do they contribute to things like fin. modeling, due diligence, other things you were working on in your sample day post? Or are their functions completely different?
Sorry for bumping an old thread, but JD, are you still taking questions?
yes
I understand it is more common for VC firms to hire entrepreneurs and ex-consultants over bankers. Do you still see many bankers breaking into VC after the traditional 2-3 year analyst gig?
What is the usual timeline for VC recruiting for bankers? Is it March~May ish during the first year, similarly to PE recruiting, or does it almost always depends on the needs of the firm?
What is the fundamental difference between the work an associate might do in the east coast (NY) vs the west coast, if any?
I was expecting this thread to be more popular, but I guess that just goes to show you how many more people are interested in breaking into PE/HF over VC. Thanks for the awesome thread!
A lot of larger, growth equity VC's are more apt to hire bankers bc the work is more related. A lot of the earlier stage, seed funds (top tier) have the move traditional consultant, corp dev, start-up experience - but of course bankers pop up at each fund type (but tend to have TMT experience or healthcare)
Recruiting is not as structured of a process as PE/HF - it is more on hiring needs of funds. For example, another top fund we co-invest with lost an associate to a portfolio company in January, and looked to hire (and did right away). As I mentioned, some of the larger, growth equity shops are 2 and out to MBA or another fund as a typical path in PE. VC is much different - when I began this thread I was still a high level associate, I am now a principal at the same fund (and do not have an MBA, while all others here do). The best advice I can give is to network, network, network- with funds, top recruiters who place in venture and venture-backed companies and the start-up scene. If you are in NYC and interested in VC, you should plug yourself into the tech community, as top funds are looking to expand investments there and want people who are already involved in the tech ecosystem.
I have worked on both the east and west coast (we are on each, of course with the roots of the fund on the west coast as all traditional VC funds). Fundamentally, the work has been no different because I have been evaluating deals from the same investment thesis since I have been at the same fund. That being said, deals are different (valuations are not as crazy in NYC, yet etc as an example). NYC is becoming a huge VC playground, and you will continue to see VC's spinning out of larger funds to set up NYC-focused funds.
To be honest, it still baffles me that people are so much more set on PE/HF. As I have always said, banking was hell, but I would do it all over again and feel my experience really prepped me for my career in VC. Also, I tried the mega HF route, and it just wasn't for me (I was tired of simply modeling all day and night).
Congrats on the promotion.
greetings,
how can i align myself in landing a pre-mba role at a VC firm? i am 27, have a b.s. in molecular biophyics, an m.h.s.a in health management and 3 yrs life sciences consulting at a big4. i would like to avoid an mba if possible.
thanks!
Can you give us an idea of what the investment process is like in your fund? Aside from evaluating the quality of the people at the start up, how do you decide where to invest? What data do you look at? I'm more interested in the actual investment process and how you establish your macro view than anything else.
We have a very rigorous investment process - without going into too much detail that would potentially out me or my fund, I will give you an overview: Your first question was spot on - management team - has the team worked before? Do one/many of them have start-up/entrepreneurial experience? Is the team rounded out, or am I going to have to spend ample time finding a CEO, product manager, sales person etc (if the founder is technical and not business, will he give up control? These are issues you want to flush out prior to term discussions because you don't want to be arguing over board composition at the 11th hour (after you have completed due diligence and have spent a shit load of time on the deal already). We spend a lot of time on market validation and the technology (involving demos when possible and technology evaluation, etc where feasible as well is the Company's IP position (this is a critical component). We ask all companies for financial projections, but as you can imagine the majority of them are the insane hockey stick projections (we have our own templates and process on cutting the models down with sensitivity and other market assumptions we develop during due diligence). For later stage, growth equity deals, we spend a lot of time on modeling out exit analysis, etc (ask more on this if anyone is interested I can elaborate). Also, cap tables are another focus, specifically pre/post money as if the cap table is messy and we cannot obtain a preferred position (we like to be the majority equity holder as do most VCs). Also, most deals we do come in through referrals (we simply do not have the time to look at every deal submitted with no tie to someone internally) so a lot of time is spent validating the team and reaching out to relevant industry experts. VC is a huge relationship business, and more often than not we know the company or players directly or through our network of co-investors. This is a very brief snapshot of some of the things I look at - please feel free to ask any and all questions and I will get to them as I can.
Jimmy,
Given you took the banking -> HF -> VC route, would you be able to point out the major differences in the type of work one of your peers with an engineering background would do compared to your daily responsibilities? Are the responsibilities entirely different? I guess I am asking more about your previous position as a pre-MBA associate rather than a principal. Any thoughts are greatly appreciated.
Responsibilities are not much different, it really has to do with what each of us are interested in, what we are working on etc. When I need an engineer's opinion, I will pull one into the due diligence process with me to address questions I may have (as I might get pulled in for my healthcare background, etc) as my fund is a collaborative environment. The big difference in my principal role is my board involvements are actually official member, not just observer as associates are (although I was an official member on 1 board as an associate). Also, I tend to have associates take the first pitch meeting to make sure a prospective deal is something I should be spending my time on (I have so many portfolio companies I am on the boards of, and have a full pipeline, so my time is very limited). Not to mention, I try to stay as active as I can in the tech community on both the east/west coast which is a full-time job in itself.
also, I now tend to have associates run the due diligence process (and pull me in when they need me) as well as take the first cut at drafting term sheets and reviewing legal documents prior to me discussing with the Partners for final approval as an example.
Read through the Q&A and I don't think this was asked, but please ignore if it's a repeat.
I'm curious to know what kinds of backgrounds you've seen from people have who have transitioned from tech companies. Are they primarily engineers? Product managers? Corporate development? Sales? Graffiti artists? I imagine they all bring different skill sets to the table that can be useful in different situations, but is there a background that VCs tend to value most?
Some engineers, but they typically have some sort of business experience to round out their skill set. A lot of product managers, corporate development and sales as you would imagine and have been in some sort of role that was critical to making the business a home run (or success, as this can be measured many ways). There is no set position, but the majority of the top funds and guys that want to do VC usually come from these positions in their previous start-up life.
I've been noticing that a lot of VC funds are asking for financial modeling skills. I have them (I'm an IB analyst now) but have always wondered why they are needed in VC. Just curious.
Some of the much larger growth equity, later stage deals can involve some fancy financial engineering as you would expect in PE, so having this skill set makes sense. Also, if you have been through IB, your financial skillset is top notch, so you will be able to take a company's projections and make them reasonable and measurable during due diligence. As I've said, a lot in VC investing is gut-based, but there are times when modeling is useful. Also, you will be a wizard in modeling out messy cap tables and various exit scenarios. Being an ex-banker, I had to learn when it made sense to take the time to model and when it made sense to view it just as an exercise and focus on more important aspects.
Firstly, thank you so much for being so helpful. There is a dearth of VC recruitment information available online, presumably because supply is so limited for entry level positions, and you are filling a gap.
I am an analyst at a top tier IB in the UK, and have some interviews for some top VC's coming up (think Accel / Index ventures etc.).
Could you give some more insight into exactly how you go about sourcing companies as an analyst / associate (entry level). I presume it's not just reading techcrunch. Do you build a network of entrepreneurs? If so, how does that work? Any strategies that you have would be much appreciated.
Also, you have already discussed a bit about valuation / technical questions that you might receive during an interview. I appreciate that this process is v. different to PE / HF, but how technical should you expect this to get? Perhaps questions on how to value an exit, structure a term sheet or the relative benefits of different equity financing structures?
Thanks a lot.
Hey Jimmy,
We were talking by PM a little while ago, I was wondering if you had a chance to read my last message.
Thanks alot.
Wonderful thread.
Congrats on the promotion. It was great reading it from where you were to where you are now.
How do the bonuses fare at VC firms or is it all about getting to the carry stage.
Secondly, did you do anything at college that enhances your profile for VC considering you went from banking to a HF?
Like everything else in VC, Bonus/carry/salary is very dependent on the fund you are at. For examply, my fund pays above market base and associates get carry, etc. As you climb up the latter, carried interest increases, as does salary and share amounts as board member, etc. I'd say on average, associate pay/bonus (without carry at certain funds) is in line with middle-market PE. Again, very hard to generalize bc pay varies a lot on fund size, fund history, etc.
Honestly, I was in the right place, right time to transition to VC - made a lot of connections during my career and was sure to leverage those as best I could. Also, I kept very updated on technology and what was going on in the VC community (deals, deal structure, valuations, etc). At the mega HF I worked at I covered tech (and worked on angel investment tech deals for one of the Partners) so it was easy to sell my technology experience when it came time to interview for VC positions. I don't think there is anything specific you can do, other than staying current and networking to the best of your ability.
JD,
What news/blog sites do you read daily to keep up with the recent internet/tech/media/VC/startup scene?
Also, could you elaborate on how you found your VC gig? Did you rely on headhunters, co-workers, boss, outside connections, or all of the above? Since most VC firms don't have a very structured timeline/process for recruiting, how important are HH's?
I work at a small firm, but my boss is very well connected in the VC industry. How do I go about asking him for help in VC recruiting, and how much do you think it can help? Should that be my main method of reaching out to VC's? (It seems like my firm is relatively open to employees interviewing for opportunities in buyside/bschool, etc.)
Thanks again.
Hey Velcro,
Here are my 2 cents before JD comes back on board:
Usual suspects:
Up-and-coming Tech Blogs + former TC'ers:
VCs:
Great Database for Startups:
Hacker's perspective:
Personal Favorites:
But most importantly, Twitter is the best source of Tech-related media, if you follow the right people. WSO is great for financiers; but if interested in VC (at least early stage), imho, you should immerse yourself into startup scene (thus, twitter). Please correct me if I'm wrong, but VC is more tech-focused than modeling-heavy, as JD agrees ("gut-based, not modeling")
Hope it helped.
p.s. get a twitter handle :)
On that note, can you suggest some good Twitter accounts to follow?
Bump....
I wanted to follow-up on VelCro's questions about actually finding VC openings and how to best convince contacts to help you find a position.
Are most VC jobs filled by word of mouth instead of officially listed online? Is there a website where most firms post openings, similar to PE Hub for PE or the CFA Jobline for IM/HF?
Thanks for the thread, definitely a great and informative read.
What is your fund's opinion of the state of venture capitalism and its's outlook? Is that even discussed? You can find povs arguing for both sides (less exits as a % of investments, etc.)
What is your favorite/most fulfilling part of the job that happens on a relatively frequent basis (i.e. not a great exit that happens infrequently)?
Thank you so much for this thread.
I'm currently wanting to go into VC firm later on in my career perhaps after gaining some experience in finance/IB since I am a college student. However, I am more focused towards Asia in terms of joining a VC firm. Are there many firms with offices in Asia? Also, if you are a college student are there any ways in which we can join a firm without prior experience?
Hope all is well.
JD,
Thanks greatly for sharing your insight and congrats on promotion (really glad to see you back as VP on this thread).
3 questions to an experience VC.
Initially thought, VC Analyst/Asso. -> make connections w/ Entrepreneurs -> ultimately Startup, but was told much variants. Based on your personal experience, you think VC->Entrepreneur is a good path against Startup->Entrepreneur? Was curious of your personal thoughts/advice for aspiring entrepreneurs.
Your role/involvement as a board member/observer. You've answered Q's on Investment Process as VC, and VC recruiting. But, I'm more curious of your role as a Board member to startups. How involved are you with startups and what do you help them with as a Board member/Observer (hiring, operations, sales/BD?) Example of your personal experience would be great.
Thoughts on SF/SV vs. NYC as a starting place for entrepreneurs It's clear that NYC has been booming as startup hub for the past couple years. But, as an East Coast VC travelling to West Coast many times, bet you have better understanding. I'd appreciate your insight on the difference in culture, vibrancy, development, and future between the two. Still SF/SV the mecca for startups to build connections? or could NYC be an exciting place for tech startups/entrepreneurs to join the early wave to establish network? or.. doesn't really matter?
Thanks for your time to read this and look forward to your thoughts.
Cheers!
Jimmy,
Congrats on your promotion! It took me a while after I started reading the thread to realize this post is almost 9 months old, so congrats on that as well!
I am a 2nd year student at a non-target, majoring in business with a concentration in finance. My question is in regards to career paths and exit opportunities, since you seem to have taken an interesting path yourself.
As a sophomore, I was lucky enough to land a summer internship in the securities division of a BB in New York (let's say either JPM, GS, or MS). I am very excited for such an amazing opportunity, but wanted to get your opinion on a few things. The program is in the securities (S&T, prime brokerage, etc) division, and not IB. Let's say I prefer S&T to IB, but down the road decide I want to break into VC. Is that at all possible? I know S&T exit opps aren't as good as those in IB, but would rather spend the beginning of my career doing something I actually enjoy rather than something just for the exit opps.
If the chances of that are not likely, some people who do S&T break into hedge funds as well, so would it be possible to take a route similar to yours except by starting in S&T instead of IB?
Thanks!
Breaking into VC from S&T will be 99% impossible unless you have some serious connections. This is because there are absolutely no synergies between VC and sales/trading and you would add no value to a fund (not to be harsh, just being honest). Healthcare/Tech IBD is transferrable because you are actually working on deals in the space, understand the market etc.
However, you have a great opportunity with the S&T internship as a 2nd year, so kick ass on that and continue to do well in school - perhaps you can leverage to an IBD internship and a full-time offer. You have a lot of time, so don't get too caught up in setting up your future now, just kick ass in the present opportunities (esp from a non target).
as an FYI, I will get to the above questions soon - don't want anyone to think I am ignoring them...I am just very busy at the moment and some of the above I will provide detailed answers so it will take some time.
First of all thanks a lot for this Q&A, I really enjoyed reading it and the amount of quality information is amazing.
What I want to ask you (and everyone else that might have some input on that topic):
Could you shed some light on VC in Europe? (ideally UK and Germany) Especially how does recruiting differ from what you already described? I'm going to start working full time as a first year analyst in IBD at a MM bank in London. In the future I'd love to break into VC, as I want that entrepreneurial spirit in my life and participate in young, high growth companies. I will be working in the FIG team at my bank, how does this affect my chances of breaking into VC and what can I do to increase them? (I know you already talked a bit about this topic, but maybe you have some Europe specific advice) I'm also doing an internship at an incubator for internet startups right now, does this help my chances or is an internship not enough?
Thanks a lot and keep up the good work!
Thank you very much. I'll definitely vote for this as thread of the year.
I'm currently a 3rd year engineering student and I will be interviewing with a growth equity fund in 2 weeks for a summer position. I talked to a principal at the fund and it seems like he does a lot of market trend analyses. Given my circumstances (engineering student with minimal exposure to finance, some international work experience, one is sales, two in R&D), what kind of questions should I expect? Is there going to be a good mix of technical and fit questions? How technical could it get for a summer position?
Thanks again!!
I would expect some basic technical questions as this is a growth equity shop so a fundamental understanding of drivers af value and some valuation questions should be expected. However, as it is an intern position I would think it would be based more around fit and overall knowledge of the market. Prior to the interview, it is crucial you familiarize yourself with the fund's portfolio and have some questions/discussion points etc. For me, it is an auto-ding if an interviewee knows nothing about our portfolio co's or recent investments. Feel free to ask other questions on here regarding the interview.
Thank you very much for the input. The fund started around 2 years ago and now has investments in just 6 companies. All are tech. What aspects of them do you think I should do research on ? Three things I can think of are the techology's foundation, its market trend and their management people.
To spice it up a little, I am genuinely curious about the following (not trying to disrespect):
1) What's your take on the general thesis that the VC industry as a whole has not made their investors any money long-term? (long-term; anyone had home-runs 1998-2000).
2) VC is changing, especially on the seed level - cf. YC's success. Founders are getting more and more influence (YC founders don't really need VCs anymore; much better terms; retain more influence etc), and the VC "old boys club" is losing influence. New players like Andreessen/Horowitz are just killing it. Yuri Milner bought his way in by sucking up to founders etc. What's your take on where VC is headed for the next 10 years?
3) Also, how realistic is it in the future for VCs to be able to sell their fund to the good founders (the ones who make the "home runs" any fund needs to be able to show 20% IRR) when they only have ex-bankers/number crunchers on board and very few people who have actually successfully lived through the situations where the founders need advice?
Would love to read your take! Kudos for answering so far and congrats on your promotion!
Cheers
Firstly, thank you so much for being so helpful. There is a dearth of VC recruitment information available online, presumably because supply is so limited for entry level positions, and you are filling a gap.
I am an analyst at a top tier IB in the UK, and have some interviews for some top VC's coming up (think Accel / Index ventures etc.).
Could you give some more insight into exactly how you go about sourcing companies as an analyst / associate (entry level). I presume it's not just reading techcrunch. Do you build a network of entrepreneurs? If so, how does that work? Any strategies that you have would be much appreciated.
Also, you have already discussed a bit about valuation / technical questions that you might receive during an interview. I appreciate that this process is v. different to PE / HF, but how technical should you expect this to get? Perhaps questions on how to value an exit, structure a term sheet or the relative benefits of different equity financing structures?
Thanks a lot.
Firstly, thank you so much for being so helpful. There is a dearth of VC recruitment information available online, presumably because supply is so limited for entry level positions, and you are filling a gap.
I am an analyst at a top tier IB in the UK, and have some interviews for some top VC's coming up (think Accel / Index ventures etc.).
Could you give some more insight into exactly how you go about sourcing companies as an analyst / associate (entry level). I presume it's not just reading techcrunch. Do you build a network of entrepreneurs? If so, how does that work? Any strategies that you have would be much appreciated.
Also, you have already discussed a bit about valuation / technical questions that you might receive during an interview. I appreciate that this process is v. different to PE / HF, but how technical should you expect this to get? Perhaps questions on how to value an exit, structure a term sheet or the relative benefits of different equity financing structures?
Thanks a lot.
(apologies - didn't mean to post twice)
Regarding blogs, check out this recent Forbes article: 6 Venture Capital Blogs everyone should read (it includes a lot of the ones mentioned above, but I figured I would share).
http://www.forbes.com/sites/joemaddalone/2012/03/16/6-venture-capital-b…
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