I’m often asked what is the best way to get into Venture Capital (VC). Although VC is a small industry, it gets disproportionate amount of attention. This leads to high demand from many qualified candidates: College graduates, MBAs, startup employees, bankers and consultants often inquire about the best way to break into the industry.
Until recently a commonly held wisdom was the best way to get a VC job was to first be a successful entrepreneur or a senior executive at a startup. Candidates were often told to first launch a startup or become an operator in one, and then after a celebrated career they can move to VC. Obviously, this is silly advice. It’s crazy to think that the only reason someone would launch a startup or work for one would be to one day, hopefully, get into VC.
In truth, many of today’s most successful VCs were never entrepreneurs-turned-investors. This includes Fred Wilson, Jim Breyer, Bill Gurley, our own Jeremy Levine, and many others. Furthermore, if you look at the top 10 investors on the Forbes Midas List, a ranking of the world’s best Venture Capitalists, the vast majority do not have operational backgrounds. There are multiple reasons why over the past decades VC has become a real profession instead of a hobby for retired entrepreneurs, but that’s worth another blog post.
So then, how do you breakthrough?
The hard truth is there is no good answer. A lot of it involves luck and being at the right place at the right time (which is also true BTW of investing)! However, there are things you can do to increase your luck. A few tips being: Follow the industry very closely to both understand the ins-and-outs and hear about potential career opportunities. Become a thought leader in a particular space which interests you and get acknowledged for it by publicly sharing your researched POV on blog posts or other public channels. Network with VCs and executives from startups you admire to increase your exposure and learn.
However, an important but often overlooked question you should first ask is not “How do I get into VC?”, but rather “Is getting into VC even worth it?”
Unless you are joining a top fund, the answer is most likely “no.” It is well known that Venture Capital is an underperforming asset class. There are only a handful of firms which are consistently successful. If you are going to bet your career on the industry, then it is important to make sure you are joining a firm with high potential.
Further, it’s not just the specific firm that is important, but also the amount of exposure you will get in a non-partner role at that firm. The only way to truly “learn” VC is an apprenticeship model. You can read all the blog posts in the world, study industries in depth, and become a financial wizard, but it still won’t be enough to learn how it’s done. The single best way to learn VC is to observe seasoned, successful investors very closely. It is during this time that you’ll understand how they evaluate investments, work with entrepreneurs, negotiate deal terms, and manage board meetings. From there, you’ll be able to take this knowledge and adapt it to create your style. Getting access to great investors who can act as role models is imperative to becoming a good investor yourself.
Many firms, for whatever reason, don’t provide junior investment professionals with this luxury. Junior investment professionals are often hired to build investment models, manage deal pipeline, or support partners only on an ad-hoc basis. I was extremely lucky to join a firm which grows talent from within and therefore does everything possible to mentor and build a new generation of investment professionals. Like other investors at Bessemer Venture Partners, I had the luxury of following incredible partners from deal evaluation to large exits (and failures) and observe closely how they think and act.
There is no doubt getting into VC is difficult, but if you are betting your career on the space, it’s also important that you make sure to increase your chances of success in this very competitive industry. Otherwise, it’s likely not even worth the effort.