Background for Venture Capital
What is more important in Venture Capital? Knowledge about Finance or knowing how to run a business? The VCs i have spoken with told me that they "consider themselves and Investing Operating companies" meaning that they don't have to wait until their fund reaches a certain point to make more investments. They all told me to "forget about finance" because we "run companies....leave the Finance to the Investment Bankers (and then they all broke out in laughter)".....Is this true?
By the way, these were boutique firms, not a KPCB or Sequoia...
Knowing how to run a business / understanding how the new product/service works is more important, especially in senior positions -- that it why you will see a lot of PhD's, MDs, engineers, or guys that have a lot of experience in a particular industry. You may know a lot about finance, but if you don't know shit about software and you're at a fund that specializes in early-stage software, well... you get the point. They need industry experts b/c it is not an established business.
Good post.
True for early stage firms
Most VC partners are entrepreneurs, or were early employees at successful startups. You see a handful of junior guys from banking/consulting, but far fewer at the partner level.
As XPJ pointed out - you're value add as a venture partner is your insight into execution and operations. A banker's knowledge of a strategic landscape, potential acquisitions etc. is not as relevant at the early to mid stages of a startup. Unfortunately, executing on an M&A/restructuring deal is a bit different from executing a new business, product, or concept.
It is about connections and branding yourself. Usually VC like people with specific industry knowledge.
I have a buddy who has a Master in Geological Sciences from Stanford and landed a job at a clean tech VC. He has never taken a finance class in his life.
It is true.
Knowing how to run a business is WAYYYY more important. Knowledge about finance can be easily obtained, but being able to successfully run a business takes years of experience, thus it is more valuable.
What finance should I know for Early Stage Venture capital/smaller PE firms (Currently in Consulting) (Originally Posted: 02/27/2015)
Hi Everyone,
I'm currently working as a consultant in strategy, risk, and operations and I am looking to switch over to Early stage venture capital hopefully.
I was wondering what type of finance background I should have at those firms, also for smaller MM (lower to upper middle) Private Equity firms?
what kind of role are you expecting to get at at pe firm?
What kind of personalities and backgrounds do VC seek for for an entry level financial analyst? (Originally Posted: 02/26/2012)
I am international student who just got MS finance degree from a non-target university. I majored in Economics when I was in the college. All my previous internship experience were in finance industry, so I am little scared that I will be turned down because of my limited experience. Since I really want to enter the VC industry, and really treasure the opportunity for the open entry level position, I want to be really careful in writing the cover letter. What kinds of points do you suggest me to sell in the letter?
PS: the job description says candidates should be "interested in working across industries and is comfortable with financial modeling". I think I am qualified with these two criteria, but what else should I emphasis on ? (GPA? Internship experience? Academic projects?
Thank you very much!
Modeling will not be important (unless its late stage VC), gpa is unimportant, academic projects are unimportant, internships may or may not be relevant but probably won't prepare you for it - you would be cold calling companies all day every day to ask if they are interested in investment. They want people who can aggressively go out and find people to invest their money in, and who can take rejection day after day, week after week.
There's no such thing as "entry level".
The most junior guys have about 3-4 years of investment banking or consulting (both industry specific doing M&A) and have a technical background (scientists/engineers).
The rare funds that hire out of college (mid market PE funds) have you do smile-and-dial. You just cold-call companies to see if they want to get bought -- you don't learn anything.
You sound like you're in college, get ready for consulting or banking. Or start a company and sell it in a few years.
Dumbledore: Not exactly true, see the following for example: www.bvp.com/jobs/Full_Time_VC_Analyst.html
Insight venture partners, millenium tech partners, quad ventures and level partners are NYC based vc firms that hire out of undergrad. A number of california based ones do as well.
Thank you very very much for your help. Your reply just strengthen my hope and confidence in launching a job in the industry. By the way, where did you find the information? How can I collect the positions in Venture Capital that open to fresh graduate students?
Thanks again! I really appreciate your help.
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