Q&A: 1st Year VC Analyst at a top-tier Asian fund
Hi all. Saw quite a bit of interest in VC / how to get into VC on the forum, and thought it would be good to do a Q&A for anyone interested in breaking into the industry.
I'm just about to begin my 2nd year as an analyst at a top-tier, sector-agnostic Asian VC fund ($1b+ AUM). Happy to answer any questions on the job / lifestyle / recruiting / trends / etc.
Ask away!
Hi, thanks for the initiative
VC is one of the exits I would contemplate in the short-mid run but I know almost nothing about it. So my questions if you allow me are:
1/ what’s the usual background to get into a top VC? (Do they only hire mbas?)
2/ lifestyle-total comp ratio? Where r u based?
Thank you! 😎
I'm not quite sure why people think only those with MBAs get hired as VCs. It's very much a commodity.
1. Usual background for analysts and associates: 2 - 4 yrs in product management / consulting / IB. At the associate level there are more laterals. It's not as clear to me what the typical background for principals and partners is. That said, the one defining characteristic that most principals / partners have is some sort of track record.
2. Lifestyle - I think for most people in the VC space, they'll understand what I mean when I say VC is a lifestyle in and of itself. It's very hard to separate work from life particularly if you love the job. In terms of hours I probably work about 70 hrs a week (not including the time I spend reading up on industries / trends / companies), more when we're making an investment. Working on the weekends / holidays is fairly uncommon, but I don't really mind it at all. Comp. is good, slightly more than MBB, but less than what some make in IB. Wouldn't recommend VC if you're trying to optimize for getting the highest base/bonus package though - PE and HF are the way to go if that's your goal.
Curious how you think the hours look at the associate level, given people tout VC as having a better work life balance than PE/IB while still being a transaction oriented career. If you’re still pulling 70 hour weeks, that doesn’t sound like that much of an improvement (still would imply 9 am - midnight Monday to Thursday and 9 am - 7 pm on Friday, assuming no weekend work)
What's your firm's mandate and what's your role?
No restrictions on geography or on stage, the firm is very opportunistic when it comes to investments. I'd say the typical way to describe us is that we're a Series A/B firm, but with slightly more emphasis on B nowadays as the funds grow larger. We also tend to fall into the bucket of VCs whose first question when looking at a company is "What's this company's tech edge? (ala Khosla Ventures, Lux Capital)" instead of "How could this business become a large monopoly? (ala Sequoia, Founders Fund, etc.)".
I wear a lot of hats - although my role is primarily on the investment side (sourcing, analysis, dd, executing investments), I do help quite a bit on the portfolio management side, as well as in fundraising, investor relations, and typical admin stuff that analysts have to do. Based on my calendar this past year, my job is a ~70 / 30 split between investment work and non-investment work.
What do you mean by portfolio management? Are you going around to check in on the financials and how burn looks, or are you diving in next to the founders to solve problems?
Are you satisfied with compensation relative other possible careers within alternative investments (e.g., PE)?
I would love to make more. I'd be lying if I said that comp. wouldn't be a major factor in my mind if I decided to lateral to another firm or try to make the jump to a tech PE.
How are the long term compensation prospects compared to PE and HFs? Are you given carry at a certain level?
It's always relative to AUM. In general, you will make less at a VC vs. at a PE / HF given that VC firms tend to manage smaller amounts of capital.
Carry is typically given to principals and above, associates rarely receive carry. Most firms do allow staff to coinvest when there's room left in the round.
The way carry works varies significantly across funds. Some funds treat investing like a team sport; carry allocation might differ across partners, but they’re receiving their percentages from the same pool of money. Other funds have an eat what you kill system, where partners receive upside only on the deals that they managed.
In terms of who gets carry: GPs receive the vast majority, with principals maybe sharing several hundred bps between them. Associates rarely get it, although some do
How did you manage to land the gig? Any headhunters you would recommend for moving into VC in SEA?
I cold emailed pretty much every VC I could. Got into interviews with 3 firms, was rejected by one, and ended up getting offers from the other 2. Was a snap call to pick the offer from what was actually biggest firm out of the 3 (due to comp, brand name, performance etc.). The interviews were quite different across all the firms.
For one of them I had a couple of phone interviews, a case study (cap table, building a 3 statement model, valuation, etc.), a startup pitch, then a "superday" with the partners and the investment team. For the other two VCs, it was incredibly casual - mostly lunches / dinners with the partners & investment team.
I don't have enough context to speak about SEA, or about headhunters in general as I never went through the headhunting process.
Interesting to hear the range of interview styles for the firms. Did the more casual interviewing firms have structured analyst programs, or were they only hiring when needed and based on fit? How do you think you were being assessed if there weren't any case/ pitch elements?
Also, assumed you were based in SEA for some reason - my bad :D
Congrats on getting in early! If you don't mind, how did you structure your cold emails and what was the general content? Were you simply asking for the analyst role at the firm? Did you attach or follow up with a few deals or companies you sources to show you're willing to source, etc.?
I understand you this for the analyst role, do you think associate hiring (especially lateral associates after a year) changes and is more structured through headhunters? Or can associates land interviews through cold emailing as well?
Any good resources to study cap table analysis, 3 statement model/valuation? I'm more familiar with PE/buyout focused LBO's etc.
Do you source deals? How?
Yes. Most of the volume comes from inbound (cold emails, referrals), although I've found that outbound typically yields better quality companies (researching interesting companies and pinging them / going to demodays & pitch events / etc.)
Are there any differentiated VC dynamics from different parts of the US?
(Boston, NYC, SF, LA, etc.)
(different styles, focus, what they look for)
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