As one ex-Goldman Sachs associate pointed out a few years ago, venture capital (VC) jobs have become "very trendy." That was, of course, before interest rates were hiked, banks like SVB collapsed and funding for startups fell significantly... 😬
Still, working in VC remains the dream for some. Many try, and many fail. It can take over a year to find a VC job, even if you have good banking experience, says the ex-Goldman associate.
"If you want to work in venture capital, it helps to understand what VC funds do," said Henrik Grim, CEO of payments fintech Mimo, whose background is in private equity "They fundamentally are engaged in four things - trying to find new investments (sourcing), analyzing potential investments, trying to win investments over other venture capital funds, and then trying to support companies once they've invested in them. To work in venture capital, you will need to be good at least one of these things."
Speaking at today's London School of Economics' Alternative Investments Conference, a number of senior venture capitalists discussed what's now required to get a VC job, though their advice may be bad news for some.
You may want to wait until 2025
This is especially true if you're a graduate looking for your first job. Shmuel Chafets, general partner at Target Global says his advice to students on joining VC out of university "would probably be don't." The path to VC is usually a "long and winding road."
There could be some benefits to this, however. Chafets describes 2024 as a "lost year." He says the industry is "still processing" the events of the past few years, with geopolitical developments to come this year further complicating matters.
This gives those set on joining VC a bit of a grace period to accrue experience beforehand. There are plenty of paths in, but they're not all equal...
Don't choose "Template Paths" for the sake of it.
Perhaps the reason the aforementioned Goldman Associate had such trouble breaking into VC is because banking experience matters much less to VCs than you might think. Mish Mashkautsan, a general partner at VC firm LocalGlobe, said "template paths" like banking or consulting are "uninspiring" as routes into VC. Instead, he said "the best thing you can do is take a bet on yourself."
VCs are looking for people who are willing to take risks and pursue their passions. Ramin Niroumand, partner of fintech VC Motive Ventures, said "if someone says consulting or banking is their passion, they might need to see a doctor."
But don't join a start-up simply for CV points. Mashkautsan said "the notion of joining a startup to have something on your CV so you can apply for a VC feels like a lose-lose."
Where to work to impress VCs
Unexpectedly, VCs seem to have a lot of love for people who've worked in the public sector.
Chafets said a public sector background gives you a better understanding of real-world problems portfolio companies often address, and give you "more exposure than you'd get in a decade working for a bank." Mashkautsen, who spent a decade working for the Israeli government, said he was "very grateful on multiple fronts" for his time there.
A public sector background is particular pertinent if you want to be a healthcare investor. Many people from the UKs National Health Service transition well into VCs investing in HealthTech due to their boots-on-the-ground exposure to the industry.
Alternatively, you could try an executive assistant role to the CEO or another senior figure. Niroumand said you "see a lot" that you otherwise wouldn't in an entry level startup job, and get a taste of the "high intensity" work founders face.
The skills you'll need for venture capital jobs
While plenty of people go into venture capital from banks and consulting firms, what really differentiates VC candidates is an ability to talk to founders, said Grim.
When you start out in venture capital, you will spend a lot of time sourcingcompanies for the fund to invest in, said Grim. For this, you will need to be a person who likes talking to people rather than simply crunching numbers. "You will essentially be speaking to a very high volume of entrepreneurs about their ideas, and out there in the market trying to find the next big thing that's coming up through the grapevine."
Venture capital is not a calling for people who like desk work. If you want to stand out as an applicant, it will help if you can demonstrate an ability to talk to and understand entrepreneurs. Do you attend meet-ups for technology start-ups? Do you have an existing network that can inform you of emergent technologies? Both will help.
You also need to be able to identify the right kinds of founders for your portfolio. Niroumand said, "The best founders are the ones who pull resources. If you have to push the resources on them, that’s mistake number one."
Alternative routes into venture capital jobs
If you're from a minority background, and you want to work in venture capital in the UK,another alternative is the Newton Venture Program, which has a mission to diversify the VC industry. Applicants need two years' work experience, which can be from any sector. Speaking at theBlack Tech Fest, Newton Venture executive Lisa Shu said they're focused on "overlooked and underestimated groups." Newton's participants become part of a community which enables them to thrive and not just survive in the VC industry, Shu said.
Ladi Greenstreet, head of strategic investments at Natwest, previously said that if you have a thesis about the next big thing, thendevelop it and pitch it to potential employers. "Write it down, collect the evidence and prove that the thesis is real," he said. You could be right, and even if you're not, your evidence-based conviction couldhelp you to get a venture capital job.
Contact:sbutcher@efinancialcareers.comin the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)
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