There are way too many shitty VCs and joining one is a really bad idea
Having spent most of my career in the tech/VC world, I have to say there are still a lot of terrible VCs, especially emerging fund managers, that have little chance of raising subsequent funds and a non-existent future. They write tiny checks and often don't even have enough dry powder to do follow-on funding. They almost never lead rounds, even in the pre-seed stage.
Why am I saying all of this, because a lot of my classmates and friends who actually have very strong backgrounds get duped into joining these shitty funds because they're desperate to work in VC. They think that all they need to do is get their foot in the door.
However, VC is unique in the sense that the type of fund you're working at is extremely critical. It's not like IB or PE, where even if you're working at a no-name boutique, you still gain transferable skills and can fairly easily lateral to a better firm. Conversely, it's insanely difficult to lateral from a shitty VC to a more established name, and you're not even developing a technical skillset.
So for all people looking to work in VC, please be careful about the fund you join
You've hit the nail on the head! Venture Capital is indeed a unique field where the reputation and success of the fund you're working at can significantly impact your career trajectory. It's not like other areas of finance where you can gain transferable skills even in smaller firms.
In VC, your role is more about understanding what makes a business a good business, spotting opportunities, and networking. It's less about hard skills like valuation or deal structuring, and more about softer skills like empathy towards founders and guiding them.
So, if you're considering a career in VC, it's crucial to do your homework on the fund you're planning to join. Look at their track record, their ability to raise subsequent funds, and their reputation in the industry.
Remember, in VC, it's not just about getting your foot in the door. It's about where that door leads. So choose wisely!
Sources: Private Equity vs. Venture Capital in 2018, 20 Most Frequently Asked Questions - London Edition, https://www.wallstreetoasis.com/forum/venture-capital/corporate-venture-capital-vs-independent-venture-capital-firms?customgpt=1, https://www.wallstreetoasis.com/forum/venture-capital/career-in-vc?customgpt=1
What are some example shitty funds? Would you say “TCV-cub” or “Sequoia-cub” where an established GP goes to start their own fund would fall under this category?
Personally, I would advise against joining a first-time fund, even if they're a spinout from a tier-1 VC. These fund managers usually have no problem raising the first fund and getting initial dealflow because of their LP/founder contacts. However, as that list dries up, a lot of them fall flat on their face and struggle to raise subsequent funds, ultimately becoming zombie VCs. I would only consider joining a first-time fund if I know the partners well and am fully confident that they're absolute rockstars based on track record and reputation
It really depends. If by "TCV-cub" you mean Tidemark, if you can get an offer there I'd join every day of the week. I'd only join a first time fund if it's a tenured GP with a strong track record and LP relationships (which was the case with Dave Yuan and Tidemark) - which is super different than joining a fund ran by a former principal or junior partner-type at Sequoia/a16z/pick-your-name-brand-fund (yes I know Sequoia doesn't have "principals", but there's a big diff between a partner who's been there for 15 years with multiple meaningful exits vs. a junior partner who's never had a liquidity event).
I'll take the other side here. It's much harder to build your career at an established VC firm. There are going to a circle of entrenched partners, and multiple layers of people all clawing their way up. Those firms are super political. It's harder to get deals done because 1) you're competing with others internally for capital and 2) people tend to be forced into narrow coverage areas. Newer firms can afford new hires to have a lot more responsibility and autonomy. That being said, it is true that you have be careful about the survivability of the firm. The fund's LP base matters a lot. If it's solidly institutional, it's much more likely to survive for a long time. If it's not (friends & family money, or just family offices), the capital base might be much more fickle, so beware. Generally speaking, a Tier 1 spinout - think something like Theory Ventures (Tom Tunguz from Redpoint), Footwork (Nikhil Trivedi from Shasta), Conviction (Sarah Guo from Greylock), Katie Haun, Addition (Lee Fixel from Tiger), etc. are quite stable because they have large institutions on board from Day 1. They are virtually guaranteed to have at least 3 funds no matter what, and the rest will come as long as they have half decent performance.
Yeah, there are cons with joining an established fund, and joining a rising VC is definitely the most ideal option. However, that's not really what I'm arguing against. My main point is that a lot of people knowingly join shitty funds because they're desperate to break into VC and have the mistaken belief that they can easily lateral from said shitty fund to a better one. However, VC isn't like IB where you can lateral from a tiny no-name boutique to a BB. In VC, moving upstream is way more difficult, and reputation matters a lot, so having a shitty fund on your resume is actually detrimental
Maybe, but if you build a strong individual track record, it doesn't really matter. Even if you're at a no name fund, but source the next Canva, you will be able to leverage that forever. And it's arguably easier to do that at a new fund than an established one. Don't get me wrong - I advise people to start out at the best firms they can to maximize their learning, network, and brand. But practically, if you can't (which hardly anyone is able to do in this market), it's fine to break in however you can and start sourcing deals. I know a number of people who will become Midas listers but started at no name funds.
I completely agree with this take.
(I'm way less frequent a flyer on this website now, so it's really nice to see you still on here and active.)
The proof is in the pudding. Sourcing tells all. As long as you're at a place that (a) has actual dry power to do deals and (b) has an internal process not-fucked-up such that you can actually get a good one through, you'll be okay if you back good companies.
Also, individual brand matters in venture more than any other asset class. This is eminently obvious to experienced people on this forum, but for the benefit of anyone trying to break in, I'll unpack it.
How much you know about a space, how generous with your time and resources you are with founders (making intros to qualified candidates for open roles at their startup; sharing a resource like a dossier on funds at the next stage focused on their industry, or a list of worthwhile conferences in a sector, or a how-to manual on standing up a specific function within a new company; hopping on a phone call at short notice to listen to a problem; sharing intel on funds who have asked that founder for a meeting; etc.), how much you help a founder whose deal you sourced prep for the formal pitch at committee, how much you step in to help prep board materials ... all these things and more are what you come to be known by.
This is why people blog and tweet so much. They're trying to burnish their brand. If you just buckle down and do really good work with a really good attitude, enough people know you simply for who and what you are. Pair that with having done rounds in companies that go on to succeed, and it's pretty easy and natural to upgrade firms whenever you want or need to.
Great comment and the right take.
VC across stages has always been extremely difficult to get into and you do what you gotta do to break in. I think moving is hands down easier once you're in the club. I also don't think brand name matters as much as you think. The industry in general attracts less finance hardos who care about such stuff. People who want to move do move across 'tiers' all the time
On one hand I agree with you in the sense that you can make a move if you are an extraordinary person but I think the notion that prestige doesn’t matter is a little overblown in Silicon Valley. VCs love to perpetuate this idea but at the same time give higher valuations in seed rounds to MIT/Stanford grads. Moreover, in the broader ecosystem, the prestige of the VC/incubator definitely impacts hiring and the overall initial growth motion for any startup.
The counter argument against all this is that these examples are driven by an intrinsic network value. Sure there is something to that but on a practical level, if I have to pick between working at a Sequoia company vs. random VC, all things otherwise equal, I’m going with the former. And if I’m being honest, the first thought is simply around a positive affiliation signal and not anything deeper than that.
maybe MIT/harvard CS grads are of a higher quality thus demanding higher valuations?
I would actually say VC is way more elitist than IB. Most banks nowadays are open to recruiting from semi-targets and accepting laterals from no-name boutiques, but VCs still heavily focus on prestige. Think there was a stat that 50% of people who work in VC come from either Stanford or Harvard. That's why it's so difficult to break into the industry, and even when you do break in, reputation matters a lot. This doesn't just apply to other VCs. Even good founders don't really want to talk with you unless you're at a top-tier VC
All good points and agree. Although I do think it makes a marginal difference for sourcing though. They know the 3-4 top names but just won't know the difference between say Insight and Eurazeo. Used to work for years in a legit tier 2/3 fund and we had the same access as everyone else. I just think the discussion here overindexes way too much brand name and prestige compared to how I've seen things work in real life (caveating I'm europe). If you have the luxury to choose between a brand name or no brand name, whether it's recruiting or fundraising, then makes sense to pick the former but the contrast is not as life or death as these posts make it look like.
You should never join a fund lead by a bunch of mid level VPs from tech companeis. These people are morons that don't know shit about founding a company nor about investing them.
Care to elaborate? Is it because the VP's didn't rise bottom up in the industry and don't know the "first principles?"
It's because they never buitl anything, they don't understand capital risk, and have little ability to identify good ideas or talent let alone both.
Aut magnam omnis blanditiis quas tempora eius quia. Accusantium non voluptate accusantium delectus debitis nam totam. Dolor maxime est quia quia non veritatis soluta.
Explicabo aut consequuntur qui pariatur. Ab est fugit vitae. Optio autem accusamus quo nesciunt dignissimos consequatur. Minima molestias recusandae asperiores omnis necessitatibus.
Reiciendis nesciunt magni corporis praesentium quia quia adipisci. Vel facilis minus eaque ullam dolor voluptas. Natus temporibus occaecati dolorem aliquid. Quod non nihil deleniti vel deleniti hic. Voluptatum rerum et ut cupiditate porro. Et dolor voluptatum fuga inventore culpa quos ullam. Architecto fugit adipisci harum.
Non et molestiae dolorem molestias facere ut consectetur. Omnis quibusdam dolorem perferendis. Ut dolor atque quidem deserunt sit dignissimos. Quia veniam tempore aut et accusantium dolores.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...