Typical VC General Partner Backgrounds
I read in a tweet from a reputable general partner at a VC firm (forget who) that many VC firms are looking to hire more female partners/POC partners. Which brings me to ask, what are the typical backgrounds of general partners at VC firms work experience wise? Is becoming a general partner a pipe dream for people that want to break into the industry? Or is it very much possible? I feel like maybe it may be wrong to start out in high finance and maybe tech is the best route. Correct me if I am wrong however.
There are 3 primary archetypes: 1) Successful entrepreneurs: have founded and built a company from the ground up to a successful exit (IPO or substantial M&A) 2) Senior execs from industry, generally VP+ level at either a big startup (think Uber, Airbnb, etc) or a big incumbent tech company (Google, Facebook, Salesforce, Cisco) 3) Promoted internally from associate level. This is becoming increasingly rare, as more VCs nowadays are looking for former operators.
It used to be the case that most VC firms were filled with career investors who joined out of MBA programs and stayed with the firm over many years. Nowadays, there are increasingly more operators who can add substantially more value through relevant industry experience, and can emphasize better with founders. After all, if you're slaving away building a startup, would you rather have someone on your board who's been in your shoes and successfully guided a company, or some finance douche who's never been inside a company and made PPT slides and Excel sheets his whole life?
Also, the whole movement around female VCs is a bit overblown. More VCs nowadays are actually staying away from female hires because they think it's a lawsuit waiting to happen (I don't agree with this btw), and don't want to deal with any potential drama at their firms. The last thing they want is a sexual harassment suit or wrongful discrimination suit.
"Promoted internally from associate level. This is becoming increasingly rare, as more VCs nowadays are looking for former operators."
This one is interesting and something I was never aware of. Because most people say that once you a post-MBA associate at a good firm, you will be on the partner track for sure.
Would you agree that if you truly want a career in VC at the GP level, it's probably best to just head straight to startups or a big tech company?
You could be "On Partner Track" but that doesn't necessarily mean you'll ever get there. I've known post MBA guys who will join as a senior associate bump up to VP after a few years, but that last jump to partner is a significant one.
That's why if you do some scans of PE/VC guys on linkedin you'll see a lot plateau at the VP level and bounce around for a while there.
Great insight!
Comps varies so wildly among firms that it's very difficult to benchmark. Even among the firms you listed as "bulge bracket", which is a ridiculous term to apply to venture btw, comp is all over the place. Once you hit the principal/partner level, you shouldn't care about cash comp, as carry is what's going to make or break your net worth. If you have significant carry in a top performing fund (think KP's Google fund or Accel's FB fund or some of Benchmark's funds), you will be a billionaire. If you suck, you'll be broke and out of a job. Most decent partners that survive long enough are somewhere in between.
That's why I put bulge bracket in quotes, I was just using it as a descriptor for the biggest VC firms. But do principals even receive significant carry at all? Correct me if i'm wrong but as far as I am aware of, they receive don't receive such a large amount as that goes to the partners (the ones that actually can become billionaires). Is it even possible to become a millionaire at the principal level?
The concept of carry is a very appealing one. It seems that much can be made. Especially if you are a general partner. Not only can you make a ton from carry but also management fees that you charge LP's (2 and 20 structure or whatever).
The billionaire example applies to senior partners, not junior partners. That was an extreme scenario but my point is if you decide to stay in venture and are even a moderately strong investor, you will be very well rewarded down the road. As it stands, even junior partners at a decent fund can earn high single digit millions - low tens of millions per fund in carry, so it's still good money.
Imo if you are making millions in whatever job you do (not even taking into account other assets such as stocks, bonds, commodities, real estate, etc) then you are successful.
I'm an associate at a VC so maybe I can provide some clarity. The three main types of people I see operating in VC roles are -
1) Ex-Entrepreneurs (Usually successful with an exit or two, but not always the case) 2) I-Bankers with those from TMT desks usually better represented. 3) Socially / Culturally impactful people. Think Ashton Kutcher, Troy Carter, Nas, Bono etc;
Interestingly enough, I have been seeing a lot more people come into the industry over the last year or two who don't really have much of a relevant financial background. While this is not representative of the whole industry per se, I think those with constant access to deal flow as well as capital to invest will always rise to the top, regardless of their understanding of P/E etc.
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