HOW DO YOUR START IN VENTURE CAPITAL

Im very interested in private equity and am trying to one day break into Venture Capital. Any ideas, thoughts, or general rhetoric? Is VC the superior form of PE? Please let me know what you think

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Technically - private equity is an umbrella term that encapsulates a number of strategies including buyouts/LBOs (often simply referred to as private equity), growth equity, and venture capital. They’re not better or worse than each other. Like most interesting things in life they involve trade offs. Working hours are much better in venture and (personally) I find the work fascinating - but buyouts strategies pay significantly more and, crucially, are highly scalable.

Breaking into VC is tough. It's significantly more competitive than any other area of finance. Not because the calibre is people is necessary higher - but because the model isn't scalable and there are consequently very, very few entry level positions. Broadly there are 2 ways to break into VC at entry level: 1) Startup experience route: generally founder or co-founder of a venture backed startup or senior employee of a well funded growth company (or corp dev at FAANG). You'll need to show that the firm is credible and generated some traction and should have a deep network that you can leverage for deal sourcing - particularly in your vertical. 2) IB/consulting route: a few years at BB/EB or MBB - almost certainly with a TMT focus. These people almost invariably have built networks with startups. To that end some people on this track do an MBA - but its increasingly seen as irrelevant in the industry. Given that the value for VC is brand & network - if it's not Harvard/Stanford/Wharton (or your regional equivalent) I wouldn't bother. Ultimately, VC is a relationship business: if you have VCs in your network (so you can actually find out when firms are recruiting - most VCs have no standard hiring cycle and probably won't even publicly post open positions) and can show your ability to source quality deals - you can probably find a role.

 

Hey I'm pretty involved with the VC community because of my startup job. Basically there's no one way to get in. You'll see the classic IB/PE/MBB people working in some well known funds like Kleiner Perkins/Accel/Bessemer/Sequoia. You'll also see people with no finance or Consulting background who have had a career full of successful startups and exits at the same funds. I've seen several friends try to break in young and it usually turns into a dead end job with no room for upward growth. VC relies heavily on niche expertise in something and large networks to help with bizdev for your portfolio companies. I'd consider it less financial engineering like the PE/Growth Equity, and more rolling up your sleeves and talking GTM and other strategy with your portfolio companies then connecting them with the right people to help them succeed. It's a big reason why so many startup exit-CEOs join the same VC fund that had once invested in them. Also most VCs are already affluent individuals when they join. You don't just show up, make partner, and get a slice of the cake. You typically have to buy into the fund ($1M ~ish) to get real carry. Another reason why it's a dead end job going in as an analyst/associate. If you're serious I'd say specialize in something niche in the technology sector and then join a startup in that space (seed-A series) and ride out the journey. Otherwise stick with IB/PE until you're a seasoned associate/principal and try to exit to a VC fund but don't be a generalist because you won't be all that useful to the fund because once again (VC is less finance and more relationship building/problem solving). For what it's worth 3 of my close friends have exited VC to join startups in a space they were interested in and plan to return to VC but not for a while.

 

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