Venture Capital Associate Fielding Questions
VC
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(Senior Gorilla, 775
Points)
on 3/12/12 at 6:48pm
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
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.
"Jesus, he's like a gremlin; comes with instructions and shit"
You on the East Coast or West
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
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.
"Jesus, he's like a gremlin; comes with instructions and shit"
Alright, I'll throw one in
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.
- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
JimmyDormandy wrote: In
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.
This isn't related to VC, but what made you want to leave the hf industry?
Also did you have any entrepreneurial exp before moving over to VC?
"Have you ever tried to use a chain with 3 weak links? I have, and now I no longer own an arctic wolf."
-Dwight Schrute
+1 SB 1. What was your
+1 SB
1. What was your educational background? Did you come from an engineering/comp sci background?
2. How are the hours at your firm? Pay (thought I'd take a shot)?
3. 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?
4. 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
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.
"Jesus, he's like a gremlin; comes with instructions and shit"
Thanks - makes sense that
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?
- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
CaptK wrote: Thanks - makes
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.
"Jesus, he's like a gremlin; comes with instructions and shit"
how does vc do capital
how does vc do capital raises?
blastoise wrote: how does vc
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
"Jesus, he's like a gremlin; comes with instructions and shit"
What types of "techie"
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 @
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.?
What is your fund's
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?
ferragamo u know wrote: Can
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.
"Jesus, he's like a gremlin; comes with instructions and shit"
Being an analyst at a MM shop
design wrote: What is your
"Jesus, he's like a gremlin; comes with instructions and shit"
SHORTmyCDO wrote: Being an
"Jesus, he's like a gremlin; comes with instructions and shit"
VC requires you to be much
"Jesus, he's like a gremlin; comes with instructions and shit"
OK how about a fun one, want
- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
JimmyDormandy wrote: VC
"Jesus, he's like a gremlin; comes with instructions and shit"
CaptK wrote: OK how about a
"Jesus, he's like a gremlin; comes with instructions and shit"
Hamilton
"Jesus, he's like a gremlin; comes with instructions and shit"
Can you describe your process
I award you no points, and may god have mercy on your soul.
Can you give us a "standard"
SHORTmyCDO wrote: Can you
"Jesus, he's like a gremlin; comes with instructions and shit"
Couple of Questions: 1. What
looking for that pick-me-up to power through an all-nighter?
Thanks JimmyD for fielding
Can you give us more
is it just me or is anyone
nontarget wrote: +1 SB 1.
-MBP
Hey man, thanks for taking
LIBOR wrote: Couple of
"Jesus, he's like a gremlin; comes with instructions and shit"
nontarget wrote: is it just
"Jesus, he's like a gremlin; comes with instructions and shit"
scok15 wrote: Thanks JimmyD
"Jesus, he's like a gremlin; comes with instructions and shit"
09grad wrote: Can you give us
"Jesus, he's like a gremlin; comes with instructions and shit"
Lubyanka wrote: Hey man,
"Jesus, he's like a gremlin; comes with instructions and shit"
How did you build your
Also, I have a close friend
oldmansacks wrote: How did
"Jesus, he's like a gremlin; comes with instructions and shit"
oldmansacks wrote: Also, I
"Jesus, he's like a gremlin; comes with instructions and shit"
Typical Day: Gym in the
"Jesus, he's like a gremlin; comes with instructions and shit"
SHORTmyCDO wrote: Can you
"Jesus, he's like a gremlin; comes with instructions and shit"
JimmyDormandy
Lubyanka
"Jesus, he's like a gremlin; comes with instructions and shit"
Important to note that not
HFFBALLfan123
"Jesus, he's like a gremlin; comes with instructions and shit"
Thanks for this Q&A, very
+5 SBs for you since I know
harvardgrad08 wrote: +5 SBs
"Jesus, he's like a gremlin; comes with instructions and shit"