Making a Transition into VC?

Hello everyone,

I've been working in commercial real estate tenant representation in NYC for about two years now, and I'm interested in making the transition into VC. I've spent my time focused on the tech industry, and have brought in two deals, having assisted a trading company, and a tech PR company grow. I also attend a ton a tech events, and interact with a large number of tech executives.

My passion is to assist companies grow, and I believe I'll have a greater impact at a VC firm. Does anyone have any experience making a transition to VC from a non-finance background?

What sort of skills are needed for an entry level position at a VC company?

What's the day to day like?

Any recommendations on which firms to look at?

I'm fully willing to do as much work as possible to learn, including weekends and nights.

Comments (45)

 
Best Response
Aug 9, 2017 - 7:49pm

I'll paste a portion of my reply from another similar thread about 15 below yours on the first page right now.

APAE:
(i) Put yourself on as many generic venture lists as you can manage. Good ones are Pro Rata (from Dan Primack, the don of tech newsletters), Term Sheet (what Dan spent six years editing at Fortune, now written by Erin Griffith after his departure), StrictlyVC, and Launch Ticker (from Jason Calcanis, arguably the most prominent angel, sort of this younger generation's Ron Conway).

You'll get daily emails (sometimes morning and night). If you read them thoroughly and start building any kind of tracking or bookmarking system of your own, this is 30-60 minutes daily that will keep you up to speed on what's happening. Over a couple years, you'll have an immediate grasp on useful things to know, like the rough intervals between certain hot companies' raising rounds, average round sizes in specific verticals, and updates on who is currently where (it's good to know when investors are changing shops).

(ii) Absorb as much quality long-form content as you can. At the beginning, the immediate value is that you simply know what some of the smartest minds in venture are thinking. Over the longer term, you will be able to critically evaluate someone's thesis in light of your own insight.

Top-notch ones to start with include the First Round Review, Benedict Evans' blog, Fred Wilson's blog (AVC), all of Paul Graham's essays, Bill Gurley's blog, Marc Andreessen / Ben Horowitz's (look at A16Z.com), and Stratechery.

(iii) Go talk to people. The best way to learn is from people doing what you want to do. VC operates religiously on warm intros, so figure out who in your immediate network can make an email introduction to someone at a fund where you'd have an interesting conversation. Make sure it's always a double opt-in, otherwise the person you're trying to reach will very likely file you away in the 'avoid please' box.

Ask smart questions. This means it's better to not ask for meetings or calls until you can participate meaningfully in a conversation. This is the difference between you asking "please tell me about your experience" and "I've enjoyed studying your portfolio, congrats on the Series B so-and-so raised; did you see any compression in SaaS unit economics as the company nailed down the model and enters the growth phase?"

For that latter one, you'd need to know a) what 'unit economics' means (for a quick primer, read this), b) what the current barometer for 'good' unit economics reads, and c) that a company raising a Series B is expected to have finalized its business model to the point that there aren't really unknown variables at play and an investor can expect X dollars to turn into Y revenue. (This is what "growth stage" refers to, in that the business has left the "early stage" (solving unknowns) and is now focused on market share capture.)

(i) and (ii) prepare you for (iii), and over time, (iii) starts informing how you view all that you learn in (i) and (ii); it becomes a self-reinforcing loop.

Good luck. Your goal is very doable, and if you work hard at getting smart, you shouldn't have trouble moving over. The problem I see from people trying to switch from finance to venture is that they remain stuck in the banking recruiting mindset. You can't grind your way through. Simply meeting a raw volume of people doesn't matter. You need to meet the right people and you need to interact with them in the right way.

This last paragraph really points at a piece of your mindset I think may be a bit wrong. It's not about the volume of people you meet or events you attend, it's the caliber of your interactions that matter.

You have three questions; let's break them each down.

  1. "What sort of skills are needed for an entry level position at a VC company?"
  2. "What's the day to day like?"

Both of these are addressed pretty well in another post I made in another thread:

APAE:
Is it an analyst or associate role?

The two are very different in VC. Analysts respond to partner requests for industry research, deal diligence, portfolio company support, and board meeting prep. Associates are primarily focused on sourcing: getting out into the community to advance the fund's brand and maintain/boost dealflow.

If you're an associate, you shouldn't ever really have a concern over your career prospects if you're doing your job correctly. Why? Because you are so knit into the community that not only is your access to dealflow stellar, but your access to career opportunities is as well. You should be seeing (and being asked for help filling) job descriptions for your portfolio companies, your friends at other funds' portfolio companies, and even roles at other funds.

If that's true, then basically every two years, you know you can hop into a role at another fund or startup with more pay and the exact set of responsibilities you want. Switching between funds typically happens when someone doesn't see as clear a path to promotion as they want (i.e. after three years as an associate out of undergrad you might switch to another fund to gain the Principal title / or after five years as a Principal somewhere without getting a seat as a partner, you may switch to a firm about to announce a new fund as a partner there).

You shouldn't be too worried about the fund you're joining imploding as long as they're still in the investment period of their current fund. They have management fee income and will be able to pay you. The only time I'd be concerned is if the firm was in the harvest period of their latest fund and had either chosen not to raise a new fund or tried to and failed due to lack of investor interest.

In short, for skills (some of these are traits):

  • independent research (you need to be very self-directed and also efficient; it's like drinking from a firehose)
  • active listening (pulling out the heart of what someone's telling you, being able to ask successive questions that elucidate the truth or data that someone may not have stated explicitly)
  • communication (you need to be able to articulate your ideas or learnings succinctly and accurately)
  • project management (you will have an unending list of deliverables due, both internally and externally, and you have to balance the mini-crises that pop up that require immediate attention as well as the longer projects you're working on steadily)
  • pathos (it's hard to win in venture as a low-EQ person)
  • humility (you will be proven wrong time and time again, whether by one of your partners showing you how your entire analysis was wrong or a founder you're meeting for the second time discovering just how little you really know about his sector; you need resilience and low ego)
  • passion (if you aren't genuinely excited about how technology is reshaping the world, you won't wake up early and stay up late cramming as much into your head as you can; there literally are not enough hours in the day to do everything that needs to get done inside a fund, and if it isn't something you love, you'll get lapped by the people who have it)

For more on the day-to-day, I'd read pretty thoroughly on Medium. Tiffany Zhong (who essentially had a self-made Thiel Fellowship-type role at Binary Capital) wrote a long one. Here is a fairly thorough GSB case available for purchase. You can find more on this with cursory research on your own.

  1. "Any recommendations on which firms to look at?"

Anyone that will take you. I'm not being glib; it's a small industry. Your odds of getting into a First Round or GC or USV are comparatively lower (given that those are prominent firms with stellar track records who have their pick of strong college grads willing to take a $70k/year entry-level role in the industry, associate candidates who've spent 1-3 years in a fast-moving startup, or seasoned operators who've been managers at a mid/large-sized tech company and are looking to switch hats). That means you need to draw up a list of every fund you can identify that invests at the stage you're interested in.

Here are a couple other threads on venture I commented in that I found in my history:

Good luck.

I am permanently behind on PMs, it's not personal.

  • 11
 
Aug 10, 2017 - 1:56pm

123-123, shame nobody has responded. Maybe one of these topics will help:

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  • AMA: Venture Capital Co-Founding Partner point I instantly fell in love with the idea of venture capital. Analyzing the VCs to invest in showed ... gain knowledge on particular areas in finance, specifically IB, PE, and VC related. I believe it is ... numbers and wanted to get into something investing-related. The interview came quick and after a week of ...
  • i-banking: MBA w/out prior finance experience I'm going to start b-school in sept. but I have no finance experience (e.g., analyst with an ... i-bank). I'm guessing that the likelihood of getting an internship (in the summer before 2nd year) ... with an i-bank is quite low (assuming that I am competing with MBA students who've had analyst ...
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  • AMA: I've held Pre-MBA MM LBO, Growth Equity and Venture Capital investment roles for funds with $500M+ AUM to $5B+ AUM interests you most afterwards. Happy to answer questions on the following topics: Venture Capital vs. Growth ... but promise replies to everyone. Bambino AMA private equity growth equity venture capital buyside to ... in several major US cities. I've worked at one smaller regional firm with $500M- $1B AUM and ...
  • Venture Capital Associate Fielding Questions offering a Q and A on all VC related questions. As some of you know, I am a non-target graduate with ... prior to my current VC gig. Ask away nontarget hedgefund BB to VC east coast Clean technology ... those interested in VC. In following the solid threads of the 10x leverage, harvardgrad08...I am ...
  • More suggestions...

Or maybe the following WSO members have something to say: Hyon-Soo-Park kilo fox GoW

You're welcome.

 
Aug 10, 2017 - 1:57pm

Changing your attitude in the first place?! VC is somehow entrepreneurship at the highest level and if you need someone to tell you how to reach your goal instead of finding out your own way, you'd be doomed as entrepreneur and hence in the VC.

Anyway, try to study the more profiles of the VC analysts, associates, and so on you find on the web (e.g. VCs, LinkedIn, interviews). Find the common traits, do a HAVE/HAVE NOT comparison and understand what you lack.

Generally speaking, VC is providing companies capital and skills. As junior hire, you will requested to do a first analysis of the investment opportunities and to work on the invested companies. As for the first, you require:

critical thinking
knowledge of what's going on in the industry. While you'll hopefully develop the first at HBS, the second one is something you have to work on your own. Re the second one, I think it's more a matter of dedicating time and energies to study the specific situation and find similar cases to solve issues.

 
Aug 10, 2017 - 1:58pm

So first off, congrats on HBS. That should open up a lot of networking opportunities in VC.

Second - it's generally quite difficult. Buyside post-mba in general is difficult because it's highly desired but a lot of places run lean and only hire as needed (ad-hoc) vs. classes like IB or consulting. Just like with PE, it's ideal to have come from a VC background pre-mba. And even then, it's tough. Also, roles available in the summer may not translate to FT opportunities because the VC shop doesn't actually have a need for analysts / associates / sr assoc (some are probably just providing a summer slot to keep a good relationship going with top bschools for future hiring needs, or really just to get some summer labor/help).

That said, while I didn't speak with HBS alum specifically, I was previously contemplating b-school as a way into VC (without prior VC background going in) and spoke to some people that were successful in landing offers. The people that do have to REALLY hustle. They had to do their own homework and understand the industry and trends (read TechCrunch or CB insights or Fred Wilson's blog, and podcasts daily), network their ass off so they make their own connections with VCs in the area, get involved with the local startup ecosystem and scene (e.g. volunteer their time as advisors for university run accelerator programs or local accelerator or incubator programs), and so on. One guy I spoke with said he offered to provide a VC a lot of free research and work (in the form of industry summaries, forming his own investment thesis, identifying interesting companies that fit that VC's stage and interests).

They essentially had to demonstrate how serious they are to wanting to be in VC. While not having prior VC backgrounds, it also helps when they come from some finance, ops, startup type background. Tech consulting could work. You just need to talk to how you add value.

The folks I spoke with were at a M7 or similar type school, so I imagine HBS would be "easier" in that it could provide more opportunities. But I don't think it would be any different in terms of there being limited VC spots for FT. I think you'll have to really network with the startup and VC scene in Boston, and get involved so that when you DO get an audience with interested VCs, you can talk the talk.

 
Aug 10, 2017 - 1:59pm

the secret sauce is using the search function

 
Aug 10, 2017 - 2:00pm

I get offered positions with VCs all the time but I'm an entrepreneur with a few successful (and now automated) companies. I don't really get why entrepreneurs go to VCs when you can make way more money owning your own portfolio of companies with good management.

 
Aug 10, 2017 - 2:05pm

What do you want to know about getting a VC job? (Originally Posted: 07/07/2015)

Hey guys and gals, I'm going through the VC interview process now and working on documenting what I'm learning. May end up putting out an ebook or something (ideally co-written with someone with more experience). It seems like there aren't a ton of great resources out there (I'm thinking Case in Point for consulting interviews).

Anyway, what sort of stuff would you be interested in knowing about the process to getting a VC job? I'm happy to provide my perspective directly wherever I can.

 
Aug 10, 2017 - 2:07pm
  1. Have you finished your MBA or do you still only have undergrad?

  2. Is it possible to break into early stage funds or is it later stage funds that do the lion's share of recruiting?

  3. What was your game plan as far as networking?

 
Aug 10, 2017 - 2:15pm

How to get VC-level knowledge of an industry? (Originally Posted: 04/14/2013)

I'm interested in pursuing a career in entrepreneurship, and with most companies looking to become large, venture capital funding is necessary. So, it obviously helps to know an industry inside and out before diving in.

What do people who work at VC firms that specialize in certain industries do to gain an in-depth knowledge of those entire industries?

Array
 
Aug 10, 2017 - 2:16pm

I would advise against this approach. The current "en vogue" thinking in the startup world is lean methodology. Assume you don't know **** because, no matter how much experience you have, that's the reality. Ship as much as you can as fast as you can and iterate on your business model until you get some traction. Then, when you have something more than an idea, go raise money.

Also, don't expect VCs to know anything or add any value to your business. Even if they're former entrepreneurs the market changes so fast that if you're not in the game for even a few months, you're experience is outdated. They're there to give you capital, not run your business.

 
Aug 10, 2017 - 2:17pm

So basically, just create and sell as much product as possible, then, when needed, raise capital through VCs?

Is the Lean Methodology book worth reading? About how often does the "en vogue" thinking change?

Array
 
Aug 10, 2017 - 2:18pm

Talk to customers, figure out what they want and what they will pay you for (bonus points if you get them to pay you real money in advance). Then build it as quickly and cheaply as possible. Most of what you try will fail. It's better to find that out in 2 weeks than 2 months or, God forbid, 2 years. Once you hit on something with some meat behind it, you can make the product better, raise a bunch of money and take over the world.

Ries' Lean Startup is probably worth reading but be careful not to get bogged down in reading/preparation. You will never be ready and there's always more for you to learn. While you were doing market research your competitor just built that awesome idea you had and sold it to Yahoo for $100MM. (If you insist on doing prep work you'd be far better served by becoming technically competent than becoming an industry expert)

The natural tendency for a lot of us Wall Street types is to overanalyze and overprepare. That's something I'm constantly working to overcome as an entrepreneur. I'm not saying be undisciplined and sloppy, but you need to get comfortable with experimentation, uncertainty, and failure.

The world has come a long way in understanding how startups work and the "lean" approach seems both intuitively correct and empirically sound so I'm inclined to think it has some staying power. Of course, you'll find your own way and reach your own conclusions.

One final note of caution: there are a lot of people running around doing "lean startups" on the side and using it to justify releasing shitty, half-finished products. Don't be one of them.

 
Aug 10, 2017 - 2:19pm

Brilliant post, and for that, a silver banana. Thank you very much for the detail. Both the 2nd and 3rd paragraphs resonated especially well with me and made a lot of sense.

With the lean approach, do you still go through the formal business plan strategy (like the in-depth ones that are usually estimated to take about 50hrs to put together) or do you just put one together as you go?

Array
 
Aug 10, 2017 - 2:20pm

Breaking into VC with my background (Originally Posted: 03/08/2009)

I have about 6 months of full time IB experience (also 8 months internship experience) and about 14 months of experience at a Long/Short Equity hedge fund.
I've gotten a glimpse of what the VC world is like and I'm really eager to break into it. Problem is, with my background, applying through online job boards (Doostang, School etc) or through recruiters (Glocap) isn't working out. I understand because they prefer investment bankers or consultants with 2-3 years of real deal experience.
I've tried emailing firms and alumni, and even offered to work for free if necessary for a while, but I'm still waiting to see how that works out.

Anyone have any advice on what's the best way to go about this ? I feel like I'm being pigeonholed because of my hedge fund background. I don't even mind working in a strategy role at a F500 firm for a while if it helps me accomplish my goal but even that seems like an uphill battle right now.

 
Aug 10, 2017 - 2:21pm

most VCs aren't hiring right now. VC is a net negative busienss..given the economy, their portfolio companies must be doing horribly (well, most). many of them are getting blown up as a result. Some VCs aren't even getting committed capital from their limited partners. it's messy.

note that VCs usually hire when they raise capital for a new fund. as you can imagine, i don't think any vc's raising a new fund right now.

 
Aug 10, 2017 - 2:23pm

I understand hiring has been scaled back but some VCs are hiring, I've applied for about a dozen Pre-MBA VC jobs over the past 2-3 months. I guess I'm just wondering how to position myself best for when the VC market does come back because right now, my approach is obviously not working.

 
Aug 10, 2017 - 2:24pm

Need to know everything about Venture Capital (Originally Posted: 12/11/2011)

Hey all,

I posted a similar thread about Private Equity, but the shop where I will have my discussion next week is also specializes in Venture Capital

Same story, through networking I have been invited to speak to a very small, but realtively big and successful, private equity and venture capital shop. They focus on secondary investing. Had a phone conversation with a manager and he liked me and I do not want to disappoint him.

I know about Venture Capital and what it is, but thats as far as my knowledge goes. I want to know about the venture capital market and the secondary venture capital market. I really want to impress this guy.

What resources can I use to best increase my knowledge about venture capital, the venture capital market and the secondary market.
Also would like to know about famous venture capital firms which made famous investments. ex. facebook, google etc.

I really need to ace this fellas, any help would be appreciated. Thank you.

 
Aug 10, 2017 - 2:29pm

Best Position for VC entry (Originally Posted: 10/15/2014)

Hi Monkeys,
I'm currently working for a MM IBD firm in a relationship heavy Sponsors group (FWIW, hours aren't bad and I generally like the people/location). Long term, I'm interested in going down a VC path, although not necessarily at a huge shop. Anyhow, I'm considering potential intermediary steps that are available based on an initial pass at networking (will continue, obviously) and am interested what you guys think makes most sense:

1) Work for an accelerator (think StartX as far as quality/location goes)
2) Lateral to a boutique tech IB firm that works with early stage companies
3) Corp. Development at a big tech firm
4) MM PE firm
5) Stay where I'm at

Also, let's assume I'm willing to do any of the above for 2-3 years, after which I would pursue a start-up idea full time, assuming I find a worthwhile idea, am in the appropriate financial position, and haven't landed some sweet VC gig.
Thanks guys!

Life's is a tale told by an idiot, full of sound and fury, signifying nothing.
  • 2
 
Aug 10, 2017 - 2:31pm

I would suggest targeting tech-focused growth equity firms or the growth equity groups of firms that are traditionally known as VC firms. It's going to be very tough to get into a top notch VC firm as a VC associate (these positions are extremely rare), but getting experience in mid to later stage tech investing would allow you to utilize your banking skills while getting exposure to the tech environment.

My background: previously worked in the tech group at a top tier MM firm, now am in the growth equity group of a northeast VC firm with between $3B - $6B AUM.

Firms to consider... not an exhaustive list or ranked in any way: Battery, Spectrum, Bain Cap Ventures, North Bridge, Polaris, Redpoint, TA, Summit, Volition, Norwest, Insight, TCV, General Atlantic, Bregal Sagemount, ABS, General Catalyst, Highland, JMI, LLR, Mainsail, Accel-KKR, Primus, Susquehanna, Vista, Westview, Openview, etc.

 
Aug 10, 2017 - 2:32pm

Road towards Venture Capital (Originally Posted: 03/30/2012)

I am in high school , no sure what college I want to go to. DOn't know how to start. I am reading books on long term investing.

CAn anyone help?

The Four E's of investment "The greatest Enemies of the Equity investor are Expenses and Emotions."- Warren Buffet
 
Aug 10, 2017 - 2:33pm

Read these forums. Partiularly, read the VC Vernacular forum. Specifically, read Jimmy Dormandy's thread. When you've read everything on the VC forum and JD's thread, and when you've read everything those threads have told you to read, then you should be asking these questions. Really, you need to do a lot of reading and a lot less asking questions for probably the next 3-6 months.

Also, here you say you want to do HF: //www.wallstreetoasis.com/forums/hs-college-financing

I have a feeling you don't know what you want to do, so you're looking at the most prestigious/sexy industries. Get over that high school bullshit. For one, it's obnoxious. Two, you're going to spend a lot of time cleaning up after yourself if you convince yourself you want to do something you don't.

So... start reading, stop asking questions. :)

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 
Aug 10, 2017 - 2:34pm

Take what DM wrote, tattoo it your forehead and proceed to attach a mirror to your skull such that you can read the words for the rest of your natural prebubescent existence.

Oh and dont go editing your initial post after someone has already replied to some of the less intelligent stuff you've said.

You should also try this weird thing called "studying what you enjoy". As long as its not "david beckham studies" or some other liberal arts bullshit, you'll be just fine.

Sorry for the rough tone but that edit of yours just riled up the bile

__________
 
Aug 10, 2017 - 2:35pm
I'm gonna get that bish some binary Bishes love binary --------- Kind Regards, Bin_Ban
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