About
After taking a relatively non-traditional path (broken out below), I'm now in my second year at a well-regarded corporate fund focused on that invests in healthcare (HCIT / Devices / Services) companies across the full life-cycle (seed => LBOs alongside PE megafunds). Happy to share thoughts on the space in general, my day-to-day, or the lessons I learned making the journey to this point.
My Background
Undergrad @ top 50 public school (non-target) => MSF at a semi-target => Sponsors at a MM IB => top-tier HF FOF => Current VC fund
Ask me anything
I will do my best to respond to all questions but there could (probably will) be some lag here in there. If your questions are specific to your background or recruiting situation, I am also a mentor through WSO's service and would recommend you go through that channel (it's a great resource in general).
WSO Mentors
Do you want a 1 on 1 mentoring session with me? Here's my mentor profile - click here.
WSO Podcast:
Member @The Stranger explains why he has always been in a rush. From finishing college in just 20 months, to landing a key internship before his MSF in order to position himself to break into IB, to prepping for buyside interviews -- he was always moving fast until the unexpected happened. Some great advice in the podcast on positioning yourself for your next career jump and life in general.
Right, I'm going to try and answer in a general way (for the benefit of the community), though I will answer your specific question as well. I think there are two relative areas of consideration when you're evaluating the value of switching jobs to get into VC (or any other specific endpoint) - 1) what is the value of your current role vis-a-vis VC and 2) What kind of exposure will you get at the new gig?
For me, #1 was easy - I was not in a geographic hot spot for VC and Sponsor coverage banking is of almost zero value in the VC recruiting market.
For #2 - what made this role exciting for me was that it offered me the option of moving to a bigger market (NYC), comp was good (needed this as a hedge since VC associate roles are lower paying), and this FOF had a VERY significant PE co-investment practice. I was in board rooms for multiple $500mm+ global private companies during my time there. This is hard to replicate and I would include this as a key piece of diligence if I were in your shoes.
We can speak specifically to your situation via DM but I probably wouldn't leave an operating role (at a start-up / high growth public company) for a FoF unless I had reasonable confidence around my ability to do at least some direct investing. The only other thing that might be of similar value that I can think of is if the FoF has an in-house, quant-heavy hedging strategy (you could probably parlay this as domain expertise for a fin-tech or enterprise tech VC).
Hope this helps!
1) From a hard skills perspective, the key skill at the associate level is liquidation modeling. That is, you need to be able to do waterfall modeling across several different scenarios and translate that into returns. You also need to be able to build a functional 3 statement operating model (these tend to be MUCH less complicated than anything you would see in IB). Even though it's not that applicable, the other big one people screen for is coding / data science skills.
2) I don't know if it counts as hard, but I would love to know more about growth / marketing analytics. It's not critical as a VC associate but it's critical to being to drive growth post-investment (for more senior deal makers) and it helps you speak in the same language as founders.
3) Cash comp for VC associates tends to be in the $150-$200 range in top tier markets (SF/NY). Nobody's getting rich at the lower levels of the VC pyramid.
4) It's a 2-3 year and out program at my current firm. As far as next steps go, I'm looking at either senior associate / VP level roles at a bigger fund or a mid-level manager role at a Series A / Series B start-up. I tend to think the latter will do more to improve my investing skills, while the former is lower risk.
Let me know if any of the above is unclear.
1) So, it will vary depending on a lot of factors but I don't think it puts you at a disadvantage per se. Having those skills does two great things - 1) it is probably the most concrete way to show a differentiated level of interest in tech and 2) it can be helpful when building out your personal brand as an investor (founders love being able to rap about the technical aspects of their business with investors). I should really highlight that the same can be said of other technical skills, like being an MD / PHD in the HC / life sciences spaces. At the end of the day, the 'financial' technical skills are not the big driver of value in VC and it's REALLY hard to demonstrate that you're a fast learner / naturally curious via a resume.
2) Hours are not bad at most VCs - I personally work something like 50-60 hours a week on average.
3) Off the top of my head, the biggest value drivers for a particular individual in venture are 1) their ability to recognize patterns and identify winners early, 2) their ability to get access to differentiated deal flow, and 3) their ability to provide high-quality advice in the boardroom post-investment. Having experience on the operating side (as long as you have an idea of what vertical you want to play in) obviously helps with #3 and indirectly helps with #2 (see my comments about about how understanding the technical/ops side can help build brand). I also have experience on the investing side, so it's diversifying to my skill set.
1 & 2. I think having been able to be in the board room for large businesses was a big part of it - very few people under the age of 25 are getting to do that as part of their regular day-to-day. The other thing I did was pitch the parallels between investing in external fund managers (who are super smart subject matter experts) and start-up managers (who are super smart subject matter experts). It also helped that my FoF placed a ton of importance on understanding the operational risk for each of our managers (so I would actively deal with things like hiring / retention, controls, etc. etc.) 3. The interviews will range a ton. I had some that were almost entirely open ended conversations about the space and others where I had to do real modeling tests. I take all interviews as an opportunity to demonstrate exactly what I think is important in investing - do extensive homework, show up and get the person on the other side of the table to do most of the talking (bonus points if you can get them to do most of the talking AND drive the flow of the conversation) without being obvious about it. 4. We have a ton of deal flow due to the reputation and nature of our fund, so sourcing is not something I spend a crazy amount of time on. Also, healthcare entrepreneurs tend to be more geographically dispersed, so we do more initial meetings by phone than a tech vc probably would do. That said, networking at industry conferences is big for us and something everybody who wants to be in VC should get comfortable with. 5. I think the biggest difference is that founders are basically interviewing you to be a mentor. Capital is pretty commoditized and, in this market, the really good ideas / founders can raise money pretty easily. So, this creates a weird dynamic where the founders many times want you to help them appreciate what they're missing / getting wrong, while showing a ton of enthusiasm for what they are getting right! This is sort of the opposite of the networking you do as a student / job hunter - in that venue, you're really just in learning mode and asking probing questions is sort of a high risk strategy.
Thanks for the AMA!
Can you talk about what the day to day work was like at your FoF HF and now your VC firm?
Things you liked and didn’t like about each of your past experiences?
How did you pivot yourself from HF to VC? Do you think it’s a common move?
What are skills you’ve gained in these experiences?
What’s next for you? What are your medium and long term goals?
Most important aspects to focus on when trying to transition roles (e.g. networking, learning about the industry)?
Aspects where you think you’ve done well in your career? Aspects where you feel you should have done better?
The day to day at my FoF was about 30-50% prepping for and processing meetings (we had to create equity research type notes with summary + analysis) for existing and prospective managers. Another 20-30% was spent on analysis and reporting for the funds I covered. The balance was typically spent on some pretty interesting special projects - for example, I spent a lot of time with our CIO doing an intensive statistical analysis of the risk factors that predicted success for our co-investments. At my current fund, I would say about a third of my work is related to process new, low probability meetings with companies - we are inundated with in-bound deal flow just like every other VC. Another third is spent on diligence etc. for live deals (new opptys + current port co acquisitions / fundraisings). The rest is typically high level industry analysis - taking a look at a new space, evaluating its attractiveness, and identifying the best players in it, etc.
At my FoF, the best part was exposure to some super smart people (people managing 15bn+ funds) and the flexibility on my hours (as well as being encouraged to pursue almost academic levels of independent research). My chief complaint was around the fact that we actually invested in new managers pretty rarely - maybe 2 a year? This is not to say we wouldn't be working to launch new funds with existing managers or take a lot of meetings, but with a portfolio of $20bn that's been around for 15 years, the opportunity set and our needs didn't overlap all that often. Oh, and our sole LP had some ridiculous processes that created a ton of work (despite our effectively having total discretion for the portfolio).
At my current fund, I find the whole venture process and exposure to bleeding edge innovators to be super addictive. We run lean teams so it's great a great learning environment for me. My chief complaint has to do with our being a corporate fund - while we have full discretion to chase what deals we want, having a dual mandate around finding things of strategic importance to our LPs as well as generating attractive returns sometimes compresses our focus more than I would prefer.
It is not a common move. As I noted above, the co-investment experience was a big factor in helping me make the switch. I also was coming from a personal place of passion about the sector (healthcare) we focus on, which is differentiating in a market filled with purely prestige focused people.
I think the biggest skill I've gained is how to ask the right questions of smart people. Whether it's a blue chip fund manager or a double Ph.D founder, I've gotten comfortable being on the other side of the table of someone who has both a general intelligence + subject matter advantage on me and conducting myself in a way that gets answers to the tough questions without being combative. I personally think this is an underappreciated part of the business and am working all the time to get better at it.
See my response to you above.
I'm going to say networking but I want to condition this a little bit. If you're doing it right, networking should also be a learning experience - if you're prepared (have read about the industry, that person's experience etc.), it should be relatively easy to ask open-ended questions that demonstrate this and give them an opportunity to teach / correct you. This may be my personal bias, but I love it when people trying to break into VC call me and are invested enough to actually learn. An example was someone on WSO (who was trying to break in from a Midwestern FoF) who sent me a mock VC portfolio they had been using as a leave behind in their networking efforts. It gave me something concrete to help with and we were able to skip a lot of the tedious BS networking and chat about our views on the ecosystem.
Probably the best thing I’ve done in my career is select for groups / roles where I was guaranteed to be surrounded by people smarter than I am, and in a position to learn from them. I think this makes some people uncomfortable but it’s invaluable. My big learning from all this is that there is no rush. I’m far from where I thought I would be ten years ago, but it’s also worked out (for the most part) for me.
Cheers!
Thanks!
Was it a tough decision to leave your FoF for this role? How exactly did you come upon it?
HH send out so many opportunities now - was your strategy to talk to many firms to get a feel of what you wanted to do?
How important was geography to you (e.g. being in the Bay area for the VC edge)?
Realized I should have asked this earlier, but by a "corporate fund" do you mean something like GE Ventures? Where a big focus is on finding investments that directly aid the main business as opposed to a complete free-for-all VC fund?
How often is your team making investments? What is your IC process like and your role in it?
How important is firm prestige / brand name, in your view? I'm deliberating over some offers between potentially learning more staying where I am now and a better name elsewhere but with much worse culture.
I actually left the role due to personal reasons (my mother, who is fine now, was diagnosed with cancer) in addition to professional ones (we had begun winding down our co-investment program so I was already looking to leave). The partners went above and beyond to be supportive so it was less tricky a decision for me than it might have been for others.
I actually got my current role by directly emailing the firm. I had heard they were running a process but sent a small dissertation about why they should hire me (and thus cut out the recruiters).
This is probably the one thing I wish I'd been more patient about. Who knows if I could have swung it, but I sort of wish I had stuck it out to make it to the bay. That said, I get hit up by recruiters for roles there now, so I may make it there soon enough anyway.
So we started as a Corporate Fund (like GE Ventures) but have raised money through a typical fund structure from additional outside LPs for our last three funds. We do focus on finding things that are strategic to our LPs (i.e. have some sort of impact on health systems, even if indirectly), we do not obligate or promise a direct customer relationship between our portfolio companies and our LPs. Happy to explain more if that's not clear.
We have done 6 new investments and probably 10 or so follow-on deals since I joined about 18 months ago. I closed 3 of those 6 investments. Our process two stage - a 'synopsis' that goes up after initial diligence and then a final recommendation. Our hit rate on recommendations after the first stage is 90%+. I'm involved in drafting the memo and help the partner on the deal present / field questions.
VC is inherently a prestige driven business, it's clearly important. That said, it's less important than being in a position to learn - if the totality of your role will be cold calling CEOs and doing some basic excel modeling, I wouldn't recommend joining for the prestige alone. Hard to say more without context on what you mean by bad culture haha.