Leaving VC at a Senior Level

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):

• do you have a single deal marked at over 10x
• do you have two or more marked at 5x
• have you personally led 10 or more in total?

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.

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.

Your track record works.

Two comments.

First is that senior roles rarely go through recruiters. Principal and partner hires are overwhelmingly relationship-driven. You've sat on boards with people, you've invested in later rounds in other firms' portfolios, other people have invested in a subsequent round in your own deals, and a lot of founders know you.

The majority of "We're excited to announce Joe Sixpack as the newest partner at our firm following a thorough search this past year" posts come without a position ever being formally created or marketed.

This means that you need to spend 20% or more of your time just talking to all the other investors you know with a keen eye for opportunities to subtly ask about their firm's long-term plans. You don't have to be on the nose about it. Just "how are you guys thinking about headcount" after someone talks about good performance allowing them to increase their target fund size on the next vehicle, or something similar any time you see a crack in the door. If there are people you trust, do mention that you'd be willing to move if the right opportunity existed.

Second is that you could choose to go the solo GP route.

You have enough of a network and track record that you could get it done if you're willing to stomach living off of savings for a year. 

I wouldn't recommend doing this immediately, I would use the two years of remaining dry powder to be exacting about what deals you personally get done.

Be political: try to get shared portfolio companies with the brand-name funds so those are references for your future. See if you can reclaim the board seats of the strong companies you sourced, or at least get added as an observer.

During the same period, work really hard to expand your capital network.

Go to family office vc events. Read every fundraise press release, a ton of Series B and later rounds mention these random names that turn out to be some $50m bucket of money from a family in Nashville or Chicago or San Diego doing venture. Reach out to them the same way you would to an actual venture firm. Learn what they like, and when you see something that fits, send it to them. Bring them into the later rounds your firm's portfolio companies raise. 

If you do all of this right, you can have pretty explicit conversations with people to see if they'd back you going on your own. I think critical mass is probably $10m. If you run a 3% management fee (and can still charge expenses to the fund), you're earning a basic survival six-figure salary. You can put that vehicle to work in 12-24 months and justify going out for something 3-5x the size. 

These are super different paths. I'm not hammering the table for the second, just illustrating that there's another route besides "go find another seat because I don't like the long-term prospects of this one".

I hope you had a good holiday break. Happy new year.

I'm having the same thoughts now as someone in banking considering entering the industry. I also see the bleak long-term outlook for the industry and realize the fact that most of today's GPs were in their seats 10+ years ago already... makes me wonder if I should just roll the dice and sell software at some good series B company, then at least my professional experience is guaranteed to become more monetizable as I continue to work. 

I would enjoy VC much more than sales, but I also don't want to be raising a family and worried about my finances with a skillset where I don't with have a very very high likelihood of being able to find another high paying job if things go south when I'm raising kids (high paying meaning it pays say $250-300k+ in today's money). I'm considering joining a startup now and doing bizOps, I think it'd be cool but I just don't think I'd ever get paid near $200k pa for 10 years unless my equity hits huge, that just doesn't like a great idea 

I think corp dev plays as a pretty reliable, interesting, relatively well-paying sr. VC exit op, but what other roles with corporates would give you credit for anything for than 4-6 years work experience if you had 2 years of consulting / banking and 10 years of VC? Head of partnerships? I think everything else "standard" like bizops and even FP&A you are taking a large experience / salary haircut. 

VC is a difficult career, one where it's hard to move up, and hard to make real $$. Plus even if you do end up generating wealth, it takes many years for companies to exit & to finally see the cash. It's not for the faint of heart, and generally I don't recommend it for those who need/desire stable income for long periods of time.

If you want to go the startup route, there is one benefit to doing a short term stint in VC, which is you'll get a lot of exposure to a range of companies, and have an insider view into which ones are actually doing well & best positioned. It also makes recruiting a lot easier since you'll be building direct relationships with founders. In particular, you should be a shoo-in to join any portfolio company of the firm you work for. So a stint at a decent VC firm is a good springboard to joining a good startup down the road.

As someone who works in VC, I can tell you you're right to be looking for a way out. It's a top-heavy pyramid that rewards only the top 2-3 partners (who get about 75% of the carry collectively, even more in some cases). Everyone else in the fund is better off somewhere else once they gain the skills and connections that the VC fund has given them. The best case scenario is being an absolute preternatural beast of an investor who can become one of the GPs at the top within 2-3 years. But those guys are one in a million, and even in that case you're still bound by the illiquid nature of VC and consequent long timeframes.

The best move is to find a job with a real technology business where you can gain real skills and boost your immediate, tangible income by getting liquid equity instead of carry. In many cases, such businesses can also outcompete VC funds when it comes to base salary. I've literally seen tech jobs where someone will net an income annually that they would've needed a 5x carry gain in VC to match, and 5-7 years sooner than the carry. 

Those are both private companies. Even though both of them are solid for base (not equity, which will still be indefinitely illiquid), I’d avoid private companies. I’d look for Magnificent 7 or other top companies on the Nasdaq. Promising recently IPO’d companies with a lot of hype can be good. Or crypto companies that have liquid tokens as part of a comp plan.

God I regret doing VC even at a tier 1