Tuesday, July 22, 2008

Venture Capital: MBA's Dream Job?

(Broadcasting from a Volvo dealer in Brighton, MA. Why not spend this time to jot a few things?)

Having been involved with MIT VCPE Club along with over a year of working as a venture capitalist, I learned the gist of what VC is all about. I wasn't the GP with a pot of money to make my own investments, so I'm not even going to try saying that I really understand everything.

I'm constantly approached by eager MBA students asking me how they can get into venture capital industry. Here are some quotes from the conversations. I get these questions so often that I might as well just list these out to increase traffic in my blog.

Make your pick as to which ones are your own questions. My answers in parenthesis (my response)
  • "I know it's impossible to get into the industry, but I want to get in." (No, it's not impossible to get in. But do you REALLY want to get in? VC is one of the most interesting jobs out there. With the right background/advice/interest, you can reallly fuel the innovation economy, work with exciting technologies, work with super-duper entrepreneurs, and ...... perhaps change the world. You see all these high-profile venture investors hanging out at social events sourcing deals with a glass of cocktail/beer chatting about the next big thing. There's gotta be a flip side as well right? As a non-GP [I call them PWNM - people with no money], do you really understand what you would be doing?] As long as you understand this and love doing it, by any means, go for it.
  • "What do I need to do to prep for summer internship/full-time job at a VC firm?" (To be completely honest, I don't know. I feel happy about where I am and kind of things I was able to do in this cottage industry. Simply put, I got lucky. But it was "polished luck". If you force me to tell you what you need to do, I would say.... (1) attend social events where VCs hang out. Say hi, say something intelligent, prove that you are somewhat of a value to them. (2) Take some classes (if you are in school) or teach yourself what REALLY goes on behind the scene. For example, learn valuation, scenario analysis, strategic analysis, term sheets, psychology between investors and entrepreneurs, operations, become a master of specific vertical/technology/etc. )
  • "You must be super-smart to get a job in VC" (Many VCs are indeed very smart but not as smart as many others. If they are THAT smart, why's their industry batting average below 10%? It takes certain effort to become a successful VC. It's actually not a really brain power game.)
  • "I'll take any job at any VC firm and move onto the top-tier fund" (A lot to be said about this. Please don't, by all means. (1) just like any other jobs, love the people you work with/for. Say, you work for Sequoia. Your business card gives you confidence. You walk into the office, and you absolutely hate the people. Is that your dream job? Having said that, they probably would not have hired you if it were to happen in the future; (2) mobility from one firm to another ain't that easy, especially when the funds are not the best "friends"; (3) alll venture funds have different investment strategies from size of investment, type of technology, stage of company, etc. If you love the founders with PowerPoint and are absolutely passionate about building a company from scratch, a billion dollar current fund is just not going to fly. You will end up working, mostly likely, on very different set of strategic problems. Most importantly, you will NEVER see (actually end up investing in) founders with PPT.
  • "All VCs talk to each other" - Yes, many VCs talk got each other because they syndicate deals. At the end of the day, realize that many VCs actually compete against each other for high quality deals. Without going into gory details, realize that it's more of friends or foe situation.
The list is remote from comprehensive. If there are any other questions, please ask in comments. I'd be more than happy to answer.