Leaving VC at a Senior Level
The industry is going to contract over the next few years, and I wanted to post this as I imagine many folks are silently asking similar questions.
I've been in VC for 5-10 years now and am a Principal/Junior Partner at an early stage (Seed-Series B) firm. Not a brand name shop, but respected and with a good amount of AUM across several funds.
I've enjoyed my time in VC and done ok. On a positive note, we are one of the few funds that has dry powder and can deploy capital for the next ~2 years. However, my wife and I are looking to start a family soon and my senior partners have a stranglehold on the carry/economics of the fund. I also am not sure fund performance is good enough for us to continue to raise a successive fund.
What roles to folks exit to from Principal/Partner levels in VC and Growth Equity? I used to work in consulting and feel like a lot of my skillset has atrophied. I do have time to network, etc. as we have another 1-2 years to deploy capital and can look for a job. Any advice on how to approach this?
I obviously have a strategy in place myself, but am wondering if there are individuals here who have strong advice like @APAE or other active VCs/GE investors on this forum. Frankly it is hard to find mentors who have gone this route that I can talk openly to about this decision.
Caveat: No, I am not wealthy and uber connected. I entered the industry with a ton of student loan debt and did not get a lot of carry as an associate, so I am probably less well off than if I had just stuck on in regular finance or consulting, tbh.
The good news is you're not alone. There are a *lot* of mid level and senior VC professionals who will have to find alternate career paths in the next several years. In that sense, it won't be viewed particularly negatively by anyone.
A few options for alternate paths:
1) Lateral-ing to another firm: really difficult in this environment TBH. Most VC firms are on hiring freezes, or laying off people themselves. And many newer funds will be shutting down. Also, wasn't clear from your post that you want to continue in VC.
2) Going to a corporate VC/investing role: more doable. Corporate VCs can have more stability in that they aren't reliant on external fundraising, and often aren't returns driven (so the hit from 2021 doesn't leave as big of a burn). Comp is lower, especially carry, but the tradeoff might be worth it to be in a less volatile situation.
3) Some other corporate role: strategy, BD, etc. Harder, since you don't necessarily develop tangible skills as a VC. But I've seen it happen. Some big companies like Google have random teams that do things like strategy for new markets, new technologies, innovation labs, etc.
4) Joining a startup or founding your own: this is actually the most common path I've seen. You have direct exposure to startups, and have a leg up in helping position them to get funded. Have seen many VCs join startups in some kind of business role: biz ops, finance, etc.
Thank you. You know how small this industry and how tough it is to have these conversations openly with mentors/senior people. Everyone seems to see the writing on the wall, few people seem to be giving honest feedback and guidance
On your advice - This is helpful and aligns with my thinking. I still have basically 2-3 years left on this fund (2.5 years investing period, probably 1 year of harvest afterwards) - does the below approach sound sensible to you?
1) Build corporate relationships: I have a few years of product experience so plan to aggressively network within a list of 50-60 companies I want to lateral to in a corporate capacity (Google, Deepmind, Rippling, etc). Build authentic relationships over 18-24 months and then let folks know I want to go into a new role after ~10 years of investing
2) Re-recruit for venture in 2 years time: I don't think it makes sense to chat with folks now. I'll probably refresh recruiter relationships in 6-9 months and tell them I'd be looking to move for the right thing. Part of the issue is I have had limited luck with recruiters despite having a good track record - they seem very brand/prestige focused for the firms I am targeting
3) Build list of emerging growth startups: Think Harvey AI, EvenUp, etc and target them as a head of strategy or some entry level role. We know the best companies. Why not try and join these as a Director in some capacity. Would take cold emailing, networking but that feels like a job I am familiar with.
Is there any other things you would suggest folks in my place do? Following up because my hope is others see this and get real career value and a safe landing from it.
Based on the most helpful WSO content, it's not uncommon for individuals at the Principal or Junior Partner level in VC to consider their exit options, especially when facing uncertainties about fund performance and carry distribution. Here are some potential paths and strategies you might consider:
Corporate Development: Leveraging your VC experience, you could transition into a corporate development role within an industry that interests you. This could involve working on acquisitions, investments, and strategic partnerships for a corporation.
Operational Roles: Some individuals move into operational roles within portfolio companies, such as 'Head of Growth' or 'CFO'. Your experience in VC could be valuable in helping these companies scale and navigate growth challenges.
Consulting: Returning to consulting could be an option, especially if you focus on areas where your VC experience provides a unique perspective, such as advising on corporate innovation or startup growth strategies.
Angel Investing/Advisory Roles: If you have built a strong network, you might consider angel investing or taking on advisory board seats. This could also include working with incubators/accelerators to mentor early-stage startups.
Further Education: Some choose to go back to school, such as pursuing an MBA, to refresh their skillset and pivot their career direction.
Networking: Continue to network within the industry. Engage with peers, attend industry events, and perhaps seek out a mentor who has navigated a similar transition.
Specialized Firms: Look for roles at specialized firms that value your VC experience, such as growth equity firms or later-stage investment firms.
Remember, transitions at a senior level can be complex and may require a strategic approach. It's important to assess your own strengths, preferences, and the market demand for your skillset. Additionally, consider reaching out to individuals like @APAE or other active VCs/GE investors on the forum for more personalized advice.
Sources: Q&A: VC General Partner at Top Fund, Q&A: VP in Private Equity (Growth Equity + LBO)...Post-MBA...Formerly IB Analyst, How much travel is there in Venture Capital?, Difference between late stage VC and growth equity, What is so hard about staying on (and moving up) in private equity?
Work in the industry, think more investors will have to start making this transition.
Some pivots I have seen and wider thoughts below.
1) Boutique IB, particularly if you have a specialism somewhere (eg climate), they will value the network. Know some investors who have had some traction with this route.
2) Can you spend time in the portfolio now? May help to de-risk a corporate/start-up move if you can go get some operational experience (and test the water to see if you like it), allows you to build experience also.
3) Consulting. Also know some investors that have pivoted into this with some landing MBB roles, also a challenged industry right now from what I hear (layoffs, lots of people on the bench etc).
Two questions: How much do you like tech investing? What proof-points do you have that you are good at it?
Imo a LOT of people joined this industry for the wrong reasons “I want to be close to innovation/like talking to founders”. It’s a job, not a lifestyle, and the people without that intrinsic motivation/ability are now having a particularly tough time.
If you can answer both those questions then why not wait out the next 2 years, do some careful networking and then try for the lateral? If you are targeted in who you like as a fund you can probably even source / work with relevant PortCos / do deals in relevant areas.
More of a Sr Asso but made the jump to a CVC not too long ago. Rationale was that CVCs in many cases will find creative ways to deploy capital and aren't purely beholden on an IRR/DPI basis... yes investments still have to return cash, but the horizon may be flexible and strategic relevance can be factored in. Felt like with a decent corporate brand on the resume as well, there was some downside protection in filtering into some corporate BD / partnerships esque job as well. Upside is that you ride out the storm and end up with a continued track record, perhaps a 'partner' seat, or at least opportunity to lateral in a better market.
The other route I seriously considered was joining a portco / interesting startup. My background prior was banking / PE, so frankly operating was never an interest or strong suit and honestly would be OK ending up as a partner at random family office / fund vs. bouncing around startups. But if you have the chops or desire, did feel like joining the right company could be in some ways even a career progressing move - built early decent track record in venture, wanted to get operating chops so joined interesting co at Series A and scaled team towards X outcome (late-stage fundraise, exit, even just double digits ARR). That could be (and has been) a not too bad profile to recruit at some of the tier 1 funds.
Sorry to go off-topic but do you think it's a bad time to enter the industry right now? Thinking about joining VC or growth equity in the next year or so. Is there a permutation that you think is more resilient (e.g., name brand early stage, general late stage) or is the issue more around there's just too many people?
Before launching into a lengthy response, a single question: have your personally attributable deals performed well?
(Sub-bullets if helpful):
FYI, OP replied to you below
Yes. Ignore my anon VP title, I'm a young partner at a firm deals/track record are below. No breakout deals (10x+), but to be honest I'm at a smaller platform where we don't really play the game of investing in super-hyped companies and invest outside the valley mostly. If I had to guess, I think my portfolio of bets would conservatively generate at least a 3.5x gross, even with potential markdowns, etc.
Maybe this track record for being in venture for 5-10 years is just not good enough. My hypothesis is that I just have zero brand names on my resume and hence I get zero recruiter reach outs because of this. I find this industry super prestige oriented and more interested in hiring the latest/greatest partner from a brand name firm or greatest new unicorn. I also have an issue where my partners are pushing me to source and put other venture partners on boards (which may affect my track record, but honestly the founders, firm and I know who sourced these so not sure it is a big issue). I feel like I'm missing some sort of way to 'play the game' and lateral and don't know if I'm just not connecting to the right recruiters or positioning myself well.
This is an impressive track record, hope you get what you’re looking for
That track record is fine - early-ish still but good enough. I think the main issue here is what I'm reading to be a heavy reliance on recruiters & in-bound looks. A lot of principal and partner-level hiring is network based. Firms bring in folks they know well, have co-invested with, generally known entities. That doesn't mean you have to be super famous. But at this point in your career, you should have built networks of peers, mentors, etc across many different firms to pull you in and get you warm intros or backchannels. Hope you've been doing that. The next gig is much more likely to come from left field through a partner you know well another firm and is looping you in, rather than a formal process through a recruiter.
Thank you. This tracks with my experience. I was approached 2-3 times seriously to lateral at a Principal level by firms that I knew well. If I reflect on it, last one to two years have been a tough market and I'm probably not getting as many looks because of that.
Regardless, the one thing in my control is being well networked. I have relationships with some firms, but the vast majority of firms I'd want to lateral to I do NOT have relationships with. I'm going to work on a list and build those relationships over the next two years.
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