How to get into Venture Capital

November 11, 2010
Last night, I participated in a Girls in Tech panel, talking about how I got into venture capital and what junior folks do at NYC venture firms. I get these questions sufficiently often I figure they're worth addressing here. Caveat that I'm only going to talk about the "young kid" jobs -- analyst and associate -- because I'm not a principal, haven't been a principal, and don't have any insight into partner-track positions.

First, on the personal side: I love my job, but I didn't set out to work in venture capital. Instead, I got it by responding to a blog post with five links: this blog, my Twitter account, my LinkedIn profile, my Dopplr account, and my delicious bookmarks. I didn't think I'd make it past the first phone screen at USV. And then, somehow, I did -- and I had two more interviews, and after the second, I had a job offer. I hadn't met Brad, Fred, Albert, Andrew, or Eric before I applied. I got lucky.

My story is more idiosyncratic than helpful to others looking to get into VC, as most firms hire only through in-person networks -- despite these "magic of the internet" and "technology bringing people together" ideas we love.

If you don't know any VCs, and want a job in venture capital, are you out of luck? Of course not. Yet you must introduce yourself to VCs before you expect to be hired by one of them. Moreover, you need to show partners at venture capital firms -- your potential employers and bosses -- that you'd be great at the analyst/associate role. Concentrate on these three areas:

Identify interesting companies and people

Venture firms hire young people, in part, to keep an ear to the ground and an eye to potential investments. For seed- and early-stage VCs, that means new companies being formed and gaining early traction. For later-stage VCs, that means companies that aren't yet profitable but have made progress in developing a core product idea, figuring out a business model, and/or scaling a service.

Attending Meetups, conferences, talks, and events are a means to becoming knowledgeable about companies, not the end. That is important. If you spend your time going to events, you better have something to show for all that time. At least some of the other applicants for that VC job will.

If you find an interesting site or service, send a short (< 4 sentence) note to a VC, explaining why you find the idea so compelling. Young people are great entry points -- we'd love help in knowing what's going on. As email-overloaded as venture capitalists are, most appreciate notes about companies when they are accompanied by well-formed opinions. If you don't know anyone in VC or don't want to attach yourself to a single firm, blog or Quora-post your thoughts rather than email them.

Understand and have well-formed opinons on what is happening in tech

The most important task of a "young kid" in VC is expressing consistent, well-thought-through opinions of what is happening with specific companies, in the industry, and in society. It sounds hyperbolic, but I am not kidding.

How to get your thoughts out there? Start a blog. Curate news on a Twitter account. Jump into the Hacker News comment threads. Talk to friends, colleagues, and role models. Offer to help out compelling companies or entrepreneurs. People will not remember the first or second time they see you, your avatar, or your writing, but they will surely remember the fourteenth time. Reputations are built by putting ideas out and shaping them through back-and-forths in comment threads, Twitter, email, coffee chats, etc.

Navigate some venture math in your head and cap tables in Excel

This is the easiest skill and the most teach-able/learn-able of the three. I'd recommend spending very little time on it before you're employed: you'll figure things out when/if you have to. I learned cap tables and venture math from Michael Dearing at Stanford, Andrew during my first week at USV, and turn to VentureHacks and Brad Feld's blog when I need direction.

Charlie O'Donnell cites a statistic about there being more MLB players than non-partner "investment professionals" in American venture capital firms. I don't know if it's true, but it's a great cocktail comment. If you want to be one of them because you love the work, fantastic; but if you want to be one because it's elite and cool-seeming, remember that it's still a junior finance job. (A much better one than most others, but still: you're a junior kid working with investment managers in a specific asset class.) There's tons of other, exciting things to do with your early- to mid-twenties.

The very best way for you to know if you want to be a VC analyst/associate is to act in the role. Work with great entrepreneurs, read tech news and determine what's important and what's fluff, or form and test hypotheses about the industry or specific companies. Doing the work is really the only way to decide if this is what you want for 2+ years of your life -- and 2+ years when you're young, flexible, and likely have all sorts of other opportunities.