Career in VC
I am currently exploring different areas in finance and one that has caught my attention is Venture Capital. I would greatly appreciate any information, advice or insights you can offer on Venture Capital. Specifically, I would like to know more about what it's like to work in Venture Capital, including typical work hours, the people you work with, the required skills, and the day-to-day job responsibilities.
Additionally, I am curious about the reality of working in Venture Capital. Are there any common misconceptions about the job or the industry that I should be aware of? Are there any particular challenges that I should be prepared to face if I decide to pursue this career path?
Lastly, I would like to know more about how to break into Venture Capital. Is it necessary to start in a related field such as investment banking or consulting, or can one enter directly into Venture Capital?
I appreciate any information you can give
The world of venture capital is very different depending on which part of the ecosystem you play in. I generally think of a few different layers: (1) angel and pre-seed investing, (2) seed and Series A investing (first true institutional round), (3) Series A-C investing (e.g., early growth), (4) Series C-Pre-IPO investing (late stage venture). These are all fundamentally different jobs, and while different firms have different coverage universes, I think these are the best way of dividing up the world since the work is so different between them.
Which would you like to know more about?
Not OP but also curious - could you talk more about angel investing (as a side hustle rather than full time job) and series c to pre IPO?
thnak you!
First of all, thanks for the answer and the clarification of the different stages.
I just read a few articles on venture capital to learn a bit more on the stages. I'd appreciate if you could talk to me about angel investing and pre-IPO investing. One question, does one VC firm perform all the stages? Or does the firm forexample invests up to series B and then sells to another VC for them to perform stages C +?
Thanks in advance!
No singular VC firm does all stages. Different types of firms and Investors have gotten famous at dominating their respective stage (e.g. Y Combinator being much earlier investors and Craft / Founders Fund being later). Comes down to your strengths. Early stage investors are much more qualitative in their approach and don’t do much financial modelling.
Angel investing as a side hustle is a network game. It seems very daunting to get into but the reality is that you just need to pick an area you're interested in and start talking to people. I like starting with people who run the best newsletters because they're pretty good air traffic control guys. From there you find good meetups, and at meetups you find people who are doing stuff in the space and trade ideas, and from there you get routed to emerging founders. You can also meet people on Discord servers or other internet forums, local university pitch nights, local university lab expos, etc. You just need to get creative and keep asking people for intros to other people you think you should talk to.
Series C to Pre-IPO are often businesses that are still losing money but are growing 50-100% YoY, so essentially have the profile of a venture investment but are much larger. The scale of the markets in which they operate is such that they will eventually need capital from public markets in order to continue to grow sufficiently. The day to day work is much more like private equity in the sense that you are completing and can complete full business diligence given the scale. You are often taking minority stakes, sometimes with a board seat and sometimes without, but with much less direct oversight than a private equity board has into leadership management. Your diligence timelines can be compressed (although this has moderated given the funding environment and the fact that this asset class is basically dead). Most of these deals are unbanked so you need to be able to find the right management teams to invest behind, but it is not a difficult networking game like angel investing insofar as if you are doing Series C deals, your universe of coverage is all Series B deals (and so on).
Thank you very much!! Clarified a lot for me!
Cheers
My two cents on angel investing and where I have found success is getting close with top family offices, the serial entrepreneurs who you invest in regardless of their idea because they continuously make investors money, as well as coverage bankers who work in areas where they may get deal flow that isn't actionable for their day job at a BB but may be as a personal investment. I know one specific MD at a BB who has made more angel investing than he has and likely will at his banking job. This is not the norm because a lot of those profits were earned by monetizing at the peak of the last bull market but I think the point stands, these guys have serious flow because they know all the important CEOs in their area of expertise.
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