How Difficult Actually Is It to Get Into VC?
I've been seeing a lot online recently about how you need to be truly amazing to get into VC. It feels like I've read hundreds of Twitter threads suggesting you need a successful podcast, Twitter account with 20k+ followers where you post regular industry deep dives, tech experience, an incredible network, potential deals already lined up and so on.
Obviously anyone with the above would be an ideal candidate but do these people really exist in great numbers? For the rest of us, is it still possible to break in with 'normal' credentials?
Particularly interested in Europe vs. the US, if relevant.
Don't want to get too specific to hopefully keep the discussion useful for others, but I'm looking to make a move into VC from a fairly standard background of non-technical degree at target university (Oxbridge) then straight into IB (GS/MS/JPM). I wouldn't say my background jumps out compared to any other IB analyst. Appreciate VC roles are sparse compared to PE but I've had some recruiters reach out with opportunities and suggest their clients are looking at former bankers & consultants. Would be great to know whether I actually have a shot at these roles.
I have zero knowledge/experience about Europe. But for US and Asia, I don't think getting into VC is THAT hard. But, getting into a Tier I/II VC is very hard. There are so many funds out there, so many different strategies at different locations.
The only problem though is that I'd argue the variance/spread of Tier I/II shops and Tier III/IV shops is VERY large, wider than any other asset class or the sell-side. What spread? Large in what sense? I mean a large spread in everything (eg. sourcing, network, quality of deals, access, etc.). Success begets success. I think the skillsets are more transferrable in other asset classes (traditional PE/HF/Credit/RE), meaning many people can move up or down the ladder within their asset class, as long as they can convince people that they are solid (and actually have a certain degree technical/execution skills). But, I find it to be quite different in VC. Very rarely do you see someone at a Tier III/IV VC fund move up to a Tier I/II fund. The quality of thinking and the caliber of people that you are working with at Tier I/II firm is just very different. This is my personal take.
So, I think breaking into VC is very doable, but it's just a matter of what caliber firm you are joining.
If you did BB IB, you certainly have a shot.
I think in some Bloomberg MIB podcast it was mentioned that the spread between the returns of top funds and the rest is astronomical - much larger than in most other alt investment asset classes i.e. the absolute top VC funds are responsible for a large part of the overall returns in the VC space and majority of funds are either neutral or negative. So breaking into top firms like sequoia, a16z, kleiner perkins is extremely hard, but getting into smaller and worse performing funds is certainly much easier
This is fairly spot on. I went through the process of trying to land a tier 1 / tier 2 VC gig out of undergrad about five years back from a non-target school and it was an (expectedly) uphill battle from day 1. Created and ran a startup accelerator, interned at multiple Y Combinator companies, even spent my last summer internship at a VC firm (tier 2.5ish, and no full time role available from the start). You have to give it 110% and get lucky somewhere along the way. I did make it to the final round (1,200+ applicants) of an analyst role at a top 10 firm but they ended up going with the other candidate. At the time, I felt it was all over... especially after chasing this singular goal for the 2 years prior. I ended up joining a seed stage SF-based startup and doing quite well in the years following.
If I were to look back and give advice to my younger self I'd have doubled down on the startup years earlier. VC is a truly fascinating career but unless you have the operating experience to "put your money where your mouth is", it's going to be a small stepping stone at the start of your career. This was advice I received from some of the best VCs from day 1, but young me thought I knew better. In hindsight, there's very little value add as an analyst to top entrepreneurs until you've gone out and done it yourself. I hated hearing this and know it can still be done, but you likely have the best odds diving into the deep end first.
Feel free to ping me if you have any questions on the VC world in general. I'm a year in to starting my next company and quite in tune with the market these days. Happy to give (likely biased) advice to anyone trying to break in :)
I have worked in IB/M&A, PE, VCs, CVCs, accelerators, and also served as "entrepreneur-in-residence (EIR)" multiple times for spin-offs. Have spent years across multiple countries and I am currently based in NYC and London (but up to 100% WFH - tested the Elizabeth line this week and probably won't go back).
Across my roles, every unit was very different. They had different investment themes, cultures, risk levels, different personalities/egos, varying attitudes towards the portcos, ticket sizes, rules re: rounds, some were always lead, some never, and so on. The list is almost endless. Despite really good experience in my life, it was quite a big challenge adapting to all these factors in every shop.
The people you mentioned above do exist and I have met them in various VCs, both at my side of the table and across:
1) One guy knew literally every other VC - we suddenly need to connect with someone from an obscure country around the world? This dude picks up the phone and we have a meeting lined up.
2) Another lady comes from a really high-profile family in Europe and can open doors we didn't even know existed. On one deal the investors were short a few millions because an angel dropped out due to a family emergency. She makes one phone call and a check over 5M $US was signed the next day - her own family office covered this as part of "their diversification strategy". Unbelievable.
3) Then there is a guy who is a serial entrepreneur-turned-VC; had 4 successful exits in his life already but is barely 30 years old.
An incredible amount of people I worked with had their own PR firm who curated "their public image" and arranged "speaking engagements" and "event appearances". They don't even answer their own emails any longer...
Then there is a guy like me, who had zero internships during my college years because I didn't know a single soul in any industry. I was selling used cellphones on ebay at a profit so I could pay for dinner dates.
In high profile VCs, the staff are as relevant as the startups they look after. A high profile startup can go with any VC they like and you need a unique combination of charisma, skills, network, and "brand" to make a deal work.
The other challenge is the culture, the egos, and missions within each VC. Sometimes they even vary significantly within one firm. The most opinionated, antagonistic and independent managers can be found in VC. Fitting in is not necessarily easy in every firm.
Breaking into VC
- First of all, there aren't many VC firms compared to banking units, so ultimately there are fewer roles.
- VC firms are much smaller than banks, I worked in teams where the entire group had less than 50 people. People tend to stick around longer also and they don't tend to have the structured hiring programs like banks. Again, fewer opportunities.
- VCs have vastly different attitudes towards investments and their returns. Most traditional bankers don't adapt well to this scenario unless they had some unique exposure to a spin-off they worked on, some larger IP portfolio they filed, or some internal project they managed, i.e. crypto/blockchain, big data, etc.
- VC is often very tech focused - it may make more sense to hire someone from Google, Apple or other big brand tech shop and see how much they are missing in finance. The devil in tech investments is hidden in lines of code. Not balance statements. It might be easier to learn the VC ropes (and many seasoned managers in tech shops already know the VC process anyway) than learn how to do a code review for a finance dude with an MBA.
- Dealing with and leading startups is very different from managing client expectations in a bank. Founders and their management can be crazy, unpredictable, very young/immature, and change their minds often. You have to be "part of the cool crowd" and not "the traditional investment banker". Very different cultures. It is not just about dropping names and jargon - these people are smart and can sniff out fakes easily.
- Internal politics are different from banking. When pitching your deal, you have to persuade the partners that this will fly and will fit the overall mission. Closing deals can also be tricky. Not as straight-forward like other deals in banking. Lots of strong egos involved here.
I believe you can break in without having any magic sauce. It might just not be a Tier I VC. Like the post above me mentioned it already, there is a huge variance between the best and "just good" VC shops.
Good prospects of breaking in..:
- Entrepreneur with exits, turned investor who fits VCs investment themes
- Extensive VC experience through previous stints in CVC, VC, accelerator, incubators, ..
- Diverse in industry placements with very good product focused management
- Technology specialist in "hot areas", i.e. sustainability/net zero/battery chemistry/energy, crypto/blockchain, web3, big data/analysis, ..
Almost all people I met/worked with in VC were sourced through their own network.
VC is the one area where you will really grow your network on the job. You will meet hundreds of people around the world, a perfect role for intelligent, open-minded, extrovert people with charisma. It also helps enormously if you have a large enough network that will help you when you need them.
So far, VC was the craziest part of my finance career. If there is something like a circus in finance, it would be VC.
Had a similar question I was going to post, but this post is spot-on for what I needed to know. tnx
The above comment details it extremely well. To add a bit from what I noticed, the best way to get into a very good tier 2 fund is be an entrepreneur yourself. Ideally raised at least series B and ideally exited successfully.
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bro the answer is the one in green
It was just in case someone else adds something else otherwise I saw the post above and it was very detailed. Thanks though
I have read through The Business of Venture Capital by Mahendra Ramsinghani.
In his book, writes about John Doerr one of the most outstanding contemporary VCs.
"John Doerr of Kleiner Perkins Caufield & Byers (KPCB) once remarked, “I cold-called Silicon Valley’s venture groups, hoping to apprentice myself to one.” His cold-calling efforts did not get him a job at KPCB, but eventually, after five years at Intel, John would land at this firm. Brooks Byers, who had asked John to get some experience, famously invited John Doerr for a 5:30 a.m. jog to see how motivated he was. John was at the track the next morning and landed the role" - The business of Venture Capital
He also uses Bill Gurley as an example.
"When Bill Gurley graduated, he wanted to be a venture capitalist. He went to New York for the first time in his life to beg for meetings with venture capitalists and was told, “Don’t even think about it, kid. Go work for 20 years and then come back.” Gurley went on to become one of the biggest sell-side analysts on Wall Street, quickly narrowing his focus to “this thing called the internet, which no one knew anything about at the time.” Microsoft founder Bill Gates recommended Gurley for his first venture job with Hummer Winblad. Gurley jumped at the opportunity and said yes before even hearing the entire offer. Soon Benchmark would come knocking and recruit him away." - The business of venture capital.
As you can see from these examples some of the biggest names in the industry could not even break into VC out of undergrad or master's programs. They needed experience in the industry and built up a network to get themselves in.
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I honestly think tier-1 VCs are harder to get in than MF PE for bankers. Getting an interview with MF PE would require school prestige, brand name, deal exp, solid technicals, and a bit of schoomzing with HH, whereas you would need everything I just mentioned plus a ton of hustle (coldemail / networking) and a ton of luck (stumbling on the opportunity where there is one) to even land an interview with tier 1 VC. That's not even the hardest part. To do well in an MF PE interview, there are probably a set of axioms you can follow to pretend you already think like an investor. For VC interview, in order to show your value-add, you really have to think creatively, cultivate your own unique thesis, tailor your pitch to each fund's strategies accordingly, and have a few under-the-radar investment ideas. Getting that tier-1 VC offer is no cakewalk.
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