How to get Venture Capital jobs

In our mini-series on venture capital jobs, we covered the basics of VC (What is Venture Capital?) and the money involved (read – Venture Capitalist salary range in India & USA). You might be wondering how you could get a venture capital job. Unfortunately, given the attractive nature of the industry & the fantastic perks at stake, thousands of extremely capable folks like you are doing the same. In fact, many have gone beyond just pondering about it. They have been exploring all possible avenues to break into the best venture capital firms in India and abroad. And they’ve been doing this for years.

So what is it that makes getting venture capital jobs so damn difficult? For that let’s first look at the various ways in which you can break into the VC industry.

How to get Venture Capital jobs

There are essentially two ways to become a Venture Capitalist. For lack of an industry standard terminology, let’s call them the academic route and the practical route.

1. The Academic route:

This is where you use the strength of your undergrad or graduate degree (and the reputation of the awarding university) to get junior venture capital jobs. Many analysts and associates join in this manner.

How it works:
You crack the toughest entrance exams to get into the best possible university. Then through the university resources and alumni connections, you get your resume in front the movers and shakers of the venture capital industry. Once you get the opportunity of a 1-on-1 tete-a-tete with your dream venture capital firm, based on the phenomenal research you’ve done (about how the industry works, the most recent deals, the potential investment avenues) and your very own ‘elevator pitch’ (a popular term in the VC industry), you get invited to join the elite team of venture capitalists.

Pros of this approach: The entry process is standard and (relatively) predictable.

Cons of this approach: You’ll probably reach a glass ceiling after a few years. It’ll be difficult to manage the next jump from being a foot-soldier to taking an active role in the actual investment (i.e. signing the cheque, taking a board seat)

2. The Practical route:

This is the option that most entrepreneurs adopt to break into the venture capital industry. The important differentiator from the academic route is that the entrepreneur has gone through the grind before. So when he moves to the other side of the table, there’s a better understanding of what makes a startup click.

How it works: Start a venture of your own – come up with an idea that has the potential to disrupt the current models. Launch it, run it, get venture capital funding for it, scale it up and find a way for your investors to exit. Many entrepreneurs will not be successful. There’ll be problems along the way and they might even have to fold up their start-ups. Though not as ideal as the earlier scenario, that’s fine too. At least you know of several things that don’t work. You still be able to look at other start-ups to see if they are making the same mistakes you did.

If you don’t have an earth-shattering idea yet, you don’t need to wait for the eureka moment. Join another startup where you can play a pivotal role. It could be a technical position or a business development role. Help the startup grow and go through the same cycle as explained in the previous paragraph. And we’d still have a shot at the best venture capital jobs.

Pros of this approach: The most important USP about this approach is your been-there-done-that status. There are many other growth options you can explore (moving into the decision making roles faster, or joining a portfolio company with very favourable compensation & exit terms).

Cons of this approach: As in the case of the academic approach, there are too many entrepreneurs already in the fray. If you don’t have any entrepreneurial experience, it’ll be several years before you can even think about this option or make an impact in another startup.

Why is it difficult to break into the venture capital industry?

The biggest issue with venture capital recruiting is the manpower requirements within any venture capital fund. It’s not a ‘people-heavy’ industry and the attrition rate is probably the lowest compared to the high-churn industries (like consulting, investment banking, technology). The need to keep recruiting on a regular basis isn’t there.

Most venture capital firms general recruit when they are raising a new fund. Once the funds have been deployed, the wait and watch phase starts. Of course, there are administrative tasks involved to track the investments or take an advisory role (if needed). But nothing that would necessitate a mass hiring exercise.

How can you improve your odds at winning venture capital jobs?

Start off with an honest evaluation of whether you’d be a good fit for the venture capital industry. Is it just the money? Are you willing to be in it for the long run? Which if the two routes listed above works best for you?

Beyond that we’ve just covered the theoretical process that you’d need to follow.

Have you been trying to get VC roles? What challenges have you faced so far? If you are already working as a Venture Capitalist, any to tips that you can share?

Also read Private Equity vs Venture Capital vs Hedge Funds and Private Equity or Venture Capital jobs after MBA