Is HBS worth it for VC?
I did a few years at MBB and am now finishing up my Associate stint in PE. I applied to business school this fall and fortunately got into HBS, so now I have a decision to make: Should I go?
My goal is to transition ideally to late-stage VC at the likes of an Accel Growth, Sequoia Growth, Bessemer Venture Partners Growth, IVP, NEA, etc. I know for earlier-stage VC start-up experience is key, but it looks like the growth teams at these places are a bit more friendly to the IB/MBB -> PE background. So based on that, it looks like a job I could be competitive for now, which begs the question of why even get an MBA at all? Yes there's value in the HBS brand and the network I'd make there, however I'd argue the value of both those things is decreasing each year. I'm looking at ~$200K in savings / loans plus another ~$400K+ in opportunity cost and asking myself, is HBS really worth that much if I can go get the job I want now anyway?
Would love people's thoughts, especially those in VC / Growth already.
Correct but you need to work on branding a little bit - these guys are sensitive to "Why us". I interviewed semi-successfully at a few of these places (final rounds, companies you listed) so it's definitely possible. Also consulting --> PE.
What do you mean by working on branding? Are you saying the HBS brand is needed on top of MBB + UMM PE?
No I'm talking about interviewing in general, and personal branding. You need to have 100% laser-dialed in why their strategy and why growth technology. These guys look to make sure you have a deep curiosity about technology - that you like working with founders, you like getting to the bottom of why a piece of technology might win, etc. You need to have something to show for yourself other than "hey yea I like this stuff" because that's a bit fluffy to them. It's a screener for when you're talking to management teams to win deals - you need to be able to show you're into it in a way that's completely believable
Hey, me again, guy who posted below, do you have a full firm list? I'm mapping it out - will you trade notes w/ me?
FWIW, most of the shops you listed above haven't taken many (or any) ex-MBB folks. Most are ex-tech bankers, so might be worth going to HBS assuming your recruitment process will be easier
WTF are you talking about. I'm quite confident there are ex-MBB people at nearly all of those places. I know a couple personally. They don't take many ex-MBB folks in the sense that they don't take many folks in general.
I’m well aware that these firms take very few people in general, working at a firm that has co-invested/competed with the firms OP listed. I also have friends at the above as well. It’s simply a fact that there are firms that he’s listed that have absolutely 0 ex-MBB presence on the team. Zilch. Off the top of my head, Accel Growth and IVP; these firms do take many ex-tech bankers, however. Not to say it isn’t possible as I’m sure there’s a certain degree of self selection bias, but late stage venture and growth firms tend to hire out of banking because of their modeling skillset and technical reps. I’m not here to argue whether that should be the case — I personally find MBB folks to be smarter/more personable than bankers on average, but it’s just the way things are.
You can get into growth equity based on your current background. I'd recommend trying that before spending $$$ on the MBA.
The modeling is quite easy so you just need to show a strong fit and interest + an ability to source.
Earlier VC is a completely different animal
Most VCs pay horribly. Even the large ones. The economics are through being a partner and getting exits. If you can't suffer through the long term, don't do it.
Nothing is worse than getting paid $250k in SF and with taxes barely affording a studio and having $200k in debt.
Aren't post MBA VC salaries closer to 300k+?
Not for the 4 people I know. Maybe for you or for a Sequoia hire.
"Nothing is worse than getting paid $250k in SF and with taxes barely affording a studio and having $200k in debt."
Nothing is worse really? The phrase is overused but check your privilege bro. $250K is still plenty and far more than most post-MBA gigs pay. As for your point about SF, SF housing costs have actually not really rebounded from COVID while housing costs have risen in most other parts of the country so living in SF isn't that much more expensive than most other major coastal cities these days. It's actually way lower than in NY these days. If you want to live somewhere like Chicago or Atlanta, yeah you can still save a lot of money but good luck finding jobs paying more than $250K in those cities (at least immediately post-MBA).
ah yes, jump on a tongue-in-cheek phrase used out of context for a classic "holier than though" check your privilege aside to the main points discussed. beautiful lol. have a great weekend my friend!
So a few points.
In the broadest sense, getting into late-stage VC via HBS is a plan that makes sense. While you could try and recruit for these jobs now, going to HBS will give you the advantage of having more time to network into these firms and build out relevant investment theses. For the most part, Accel/Sequoia etc. do not recruit in the same way that PE firms do. It's a lengthy networking-based process where you will have to prove that not only are you intelligent enough to do the job but that you have unique networks/POVs that disproportionately add value to these firms. They don't need bodies to throw at diligence execution in the same way PE firms do so you have to bring more than that to the table.
So yes, you should be able to get into those firms via HBS (in a normal macro environment - we'll come back to this). But it's also no guarantee. You will have to roll up your sleeves and hustle to get these jobs, even from HBS. You can't just expect to get interviews based on your resume alone.
The last point I'll make, which should be CRITICALLY important in your consideration, is that the venture capital asset class, particularly the growth-stage sector, is in a very precarious position right now. The asset class saw historically high returns over 2020-21 which led to historically high inflows. This led to every growth fund raising record-large funds, which led to more promotions and hiring across the sector. In 2022, the bottom has fallen out. The public markets have cratered, evaporating most of those returns and now every LP is dramatically overallocated to VC. Even the best firms are going to struggle to fundraise over the next 2 years (rumor has it that Blackstone growth missed their fund target). That's going to inevitably lead to a shakeout. A lot of firms are pulling back on hiring right now and there are even talks of layoffs (especially from the crossovers - know at least one person at Tiger who got canned and they apparently got margin-called so more on the way).
So if you want to go into late-stage venture, now is probably the worst time to do it so going to business school and trying in a couple years is almost undoubtedly a better plan than trying to lateral now. But things may still be in a shitty place in 2 years, so I'd come up with a backup plan.
Would it not make more sense to go join a rocketship and get 2-3 years of operating experience (+salary +equity) rather than blowing so much money on HBS?
Also isn't junior pay awful <200k up to principal and no guarantees to become a GP
Any firm that requires HBS on the resume isn't worth your time in the long run. Tell those guys to suck it and forge your own path
probably not true but I like the gumption
Incredibly true from my experience and AFAIK none of the tier 1 VC funds have this sort of requirement for new hires
VCs usually don't recruit at top MBA programs, and unlike PE and HF, they are not as pedigree driven, at least with respect to school brand. Having worked on deals or being an operator at a unicorn startup are far more valuable than going to HBS.
This is so true!! If you’re a super star in sales at a startup or tech driven company you’re more valuable than a big 4 worker who went to hbs after working for example. Depends on the VC strategy too but just an example.
I am bias because I ended up in the HC/Biotech space. Mostly PhD/MD types here. The knowledge you gain from cases and the degree is completely worthless. The only thing with value is the brand. It is impossible to value if the brand will produce a ROI or if your career would end up in a direction where you wouldn't have needed that MBA.
Have a close friend that was in VC prior to going to HBS, he ended up founding a software company pretty recently.
No. Not unless it’s a guarantee or for some reason what you currently do is unappealing.
I am on the LP side and we invest a lot in VC. From the top VCs we invest with, non are impressed by top MBAs; they’re much more impressed by experience.
They’ve also been struggling *hard* to find talent. So yes the market is in a downturn, but firms are hungry for talent so if you were able to get into a firm that just raised a fund, it could be the start of a nice track record. Just my $0.02.
When do you need to decide?
+1 on the new fund approach, though they'll likely be looking to cut costs in the short term given the current market
I think that’s true for their port cos. But at the VC firm-level, I don’t think that’s the case—they’ll be receiving same management fees. In fact, it’s been their explicit message that they’re hungry to hire
This isn’t the play anymore given the current market conditions. It seemed hot for the last 24 months but trust me it’s cooling off reeeeeeeal quick.
I faced a similar equation at one point in my life. And I regret not investing in myself in a top tier MBA. I’ve still done just fine but I see how a HBS MBA is forever (like a diamond lol). You may be interested in VC now- but as others have pointed out there have been some shifts. A HBS MBA will keep opening doors for you to make as many switches in your career as you want. You’re already considering one switch here. Doubtful you will be done and stay until you’re done at your next career choice. It’s a lot of money yes- and the opportunity cost is also very high- I agree. Maybe defer for a year if possible and see how it goes for you? As the years get on it gets harder to get a top tier MBA with mortgages, kids, spouses as well.
Would you say the same for a Wharton MBA (if you could go back and have the chance again)? Of course, not as strong a brand as HBS, but I am facing this decision now and finding it difficult to weigh up...
If you're dead set on venture as a career, going to b-school doesn't really make sense, even HBS. The financial & opportunity cost (spending 2 years in Boston grinding on case studies) isn't worth it. Of course you can still have a great career in growth/VC; HBS won't hurt for that. But with your background there should be opportunities to break in now, or at the very least spend a few years working at a later stage startup where 1) you'll learn much more relevant skills, 2) easier to build your network assuming you're in SF/NYC/a VC hot spot, and 3) having an operating stint makes your profile more impressive to VCs than business school. Just my 2 cents
Late-Stage VC here who came literally from the other side of the world and managed to finagle himself into a Bay Area firm.
VC, like all segments of finance, does have an aristocracy which likes to see people like them. The firms you mentioned are some of the most aristocratic, given that they have some of the largest AUM's in the business, and some of the highest-quality LP bases in the world.
However, I do find that Venture is still fairly open minded to people of different backgrounds, of different geographic origins, different educational backgrounds, etc. If you have deal experience in important geographies (especially on deals that have been exited successfully), relevant network, and LP relationships, you can get into these firms. However, that is mostly an edge case, and should be taken more of as an exception to the rule.
You mention IVP for example. If you look at their junior investment staff, you have some people who graduated from Stanford (Joanne Shang and Bryce Marion) and some who graduated from Princeton (Shreyas Garg and Youri Lee). You'll find one interesting guy, Jared Rosener, who graduated from UC Berkeley (which often gets trashed here on WSO)... but with a triple major in Comp Sci, Business and Data Science. And by the way, before he got to IVP, he was an engineer at GoDaddy, an Associate at Human Capital, a product manager at DocuSign, and then an Associate at Bain on their team that does outsourced DD for Growth Equity deals.
You also mentioned other firms like Accel Sequoia, Bessemer Venture Partners, and NEA. Those firms are multi stage, and also do a lot of very early-stage investing. There's specific PEOPLE in those firms who do that growth / late stage stuff (honestly, the word "Growth" gets used so loosely and I've heard it used to refer to Series C, which I believe should not be "Growth"), as opposed to the likes of IVP, who are much more focused on the "Growth" stage (which I take to mean everything outside of early nowadays). So you may want to try and meet those specific General Partners, or their (current and former) team, and figure out what those specific General Partners want in their hires.
These firms are may or may not be as well known but are some of the best at growth-stage:
... now that I think about it, there's actually a lot of really good firms doing growth-stage which don't get mentioned enough.
Pattern recognition is very important in venture -- I would suggest looking at the junior staff (usually called "Investor" so they're not Analyst/Associate i.e. they won't get that much attention) as an indication of what these firms look for when they hire, to see if going to HBS is worth it.
Re: Entrepreneur / Operational Experience -> Growth-Stage VC route, because no discussion of paths into VC / "should I get the [fancy degree] then go into VC" is complete without a discussion of this route, especially because you mentioned that the cost is a point of consideration. This route used to be reserved for founders that start a company and exit, or for early employees at companies that end up getting exited. Given the massive headcount growth of the last few years, many founders have pulled a mini-Alexis Ohanian, leaving a company they founded pre-exit and then going into VC. Same with people who have 10+ yrs of operational experience at companies large tech companies (or were early employees at companies which ended up getting very large). I am not sure that route is still viable now that headcounts have been getting reduced rapidly... And I also would NOT recommend leaving the operational side without exiting the company you founded (unless you are removed, in that case, fine) or without getting to a somewhat mid-senior level in the biz. You will have so much more of an investment edge that will help you generate alpha from the industry expertise, industry network (not just among investors), and general knowledge of how to operate a tech company, if you put in the time. The advantages are huge, plus you get paid while you "go to finishing school" before you become an investor -- the disadvantage is that you will be spending 7-10 yrs in that finishing school. You would probably lateral into VC at a much more senior level, and maybe even at General Partner level of a smaller firm. You're ex-MBB so you have the numbers side down (as much as WSO likes to pile onto you guys for supposedly having less hard skills), combining that with operational experience would be very powerful as an investor.
Hopefully this helps you figure out what angles might be a viable path to where you want to get to.
Rare mentioning of WestCap on WSO. You really know what you are talking about! Would love to hear more about your background.
School on the other side of the world --> Local venture firm on the other side of the world --> Randomly met a guy who became a close friend --> His buddy from school in the US had a VC firm in the bay area that needed someone, and I got put up for the job
Unfortunately can't give advice on my experience "breaking into VC" that someone can repeat... I myself have no idea how I got here! I can just share what I see in the industry from people who actually got in the legit way
Thanks for this!
- Do you know who the big growth players in Europe are?
- Aren't most of the growth funds you listed having a difficult time, or even underwater, at the moment?
- You mentioned TCV perfected the Tiger strategy 10 years ago - surely this has not ended well for them in the current environment. Do you know how the fund is doing?
- Which growth funds do you think will be most successful going forward, based on strategy, approach etc.?
Which growth funds are known to do the most rigorous DD? Seems like over the last few years everyone has (had to) paid very high valuations and taken a more lax approach to investing.
Crossover in Europe
Late-stage/crossover funds in Europe? Dunno any specialists except for Revaia (formerly Gaia Capital Partners). Probably EQT and Baillie Gifford are the most active and look like they have headline exits. I dunno how their returns are.
TCV
On TCV -- TCV is doing just fine. They pivoted to doing earlier rounds (Series C's, D's, etc.) over the pandemic as the Pre-IPO stage got overheated -- as per Crunchbase Data, they were doing mostly Series D's and Series C's.
Like I mentioned, they perfected the Tiger strategy before Tiger was doing it... including knowing when to adjust their entry point. TCV's founder Jay Hoag is a student of Dave Bellet and Chet Siuda at Citi, the people who invented Crossover investing in the late 60's at Citibank Institutional Investment Division -- at the time, they were doing mostly Series B's, trying to own things before the large, less price-sensitive buyers (Asset Managers, Index Funds, etc.) can buy them.
Growth-Stage Funds I'm Excited About
Last one is a curveball: Aregence Capital -- Brand new Crossover firm in Singapore founded by one former Sequoia guy and one former Blackstone guy, to invest in both private and public companies in India.
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