Playing “fake VC” (or the portfolio approach to getting a job in venture capital)

How does one get a VC job?

Method 1:  Start a tech company, drive it a multi-billion dollar success. Drop a few bon mots on Twitter to your robust group of followers, make visionary statements during your TechCrunch Disrupt fireside chat, and build a reputation as a helpful mentor to entrepreneurs.  Then wait by your phone as major firms call you with General Partner offers.  Or start your own firm.

Method 2: Welcome to the long hard slog.  And read on.

The good news is that it’s a great time to get into venture capital.  While venture capital remains a small industry with comparatively few openings, many VC firms have raised a lot of money lately, so they need more people to help them deploy it.  A number of investment analyst/associate positions are advertised (or were recently) – for example, we just posted a new opening at FirstMark, see here.  I’m also aware of several General Partner-level searches being conducted right now.

Ok, but how do you get those jobs?  Ask any VC, and they will tell you that they get that question all the time, and I’m no exception — in fact, I’m not-so-secretly hoping that this (long) blog post will help cover 80% or so of the content discussed in the frequent conversations I have on the topic, so I can focus on the 20% that’s specific to each person’s circumstances.

It’s not just the odds that make the topic complicated – it’s also that that there’s no single or sure-fire path to the job.

Structured vs unstructured

First key thing to understand:  the startup world is very unstructured. This makes things often befuddling to people looking for a clear, structured path to a VC job.   In the professional services world, the right college and major gets you the right analyst job that gets you to the right MBA that gets you the right associate or VP job.  There are recruiting seasons, classes, reviews, “up or out” policies, defined paths to “making partner”.

Much less so in the VC world.  There’s all sorts of variations.  At the junior level, some firms (not many) hire right after college  while others hire candidates with 1-4 years of experience.  Some VC firms have 2-3 year analyst/associate programs (upon completion of which people tend to join portfolio companies, start their own company or go to grad school), while others will promote to higher levels like principal, leading eventually to partner opportunities.  Most firms recruit on an as-needed basis, and there’s no “recruiting season”, which means that you should be on the lookout throughout the year for new position openings, as those may happen at any time.

If you’re at a more senior level (principal or partner), it’s even trickier because there’s generally no public application process (although some firms have tried that approach) – you typically get recruited or co-opted.  So a lot has to do with having an appropriate professional background, positioning yourself adequately… and then “hanging around the hoop”, hoping someone will pass you the ball.  More on this positioning exercise in a minute.

Covering the basics

The fact that there is no structured path to VC doesn’t mean that there is no “common core” of things that VC firms like.   All firms basically look for indicators of overall excellence and relevant experience.

For more junior positions (analyst/associate), as for many other jobs, great grades and/or a great school will certainly help, everything else being equal.  In terms of majors, VC firms increasingly like candidates with computer science, engineering or design degrees, although my guess is that the vast majority of analysts and associates have an economics or liberal arts background still.  In terms of professional experience, there’s a wide range of criteria depending on the firm, but one thing is clear:  every firm loves a candidate who has worked at a startup (particularly a recognizable name) at one point or another, at a minimum as an internship.  So… go work for a startup.  On top of that, there’s again a fairly wide variation of preferences, depending on the firm.  At FirstMark, for our associates, we tend to like (but certainly not require) a couple of years after college in a top bank, consulting firm or equivalent — the main benefit from our perspective being that candidates have been thoroughly “professionally trained” and come equipped with the right level of work ethic, reliability and thoroughness.  Note that there’s one big thing missing from the list: an MBA.  It’s a topic for another blog post, but in my opinion the MBA has gone from being an absolute must in venture capital 10-15 years ago (especially Harvard, Stanford and Wharton) to being on the verge of irrelevance (at least as an entry point into VC).

For more senior positions (principal/partner), the core principle remains: VC firms look for overall excellence and for people who have been “in and around” startups a lot.   What that means exactly is where it gets complicated.  The big trend over the last few years has been that investment partners in VC firms should be former successful startup founders, and perhaps, if you fast forward 10 or so years, most of the top VCs will have that background, although by definition there’s a limited supply of such candidates.   But in the meantime, a bunch of VCs (including many on the Midas list, and not just the older ones) were never founders, or even early employees of startups: some are career VCs (with stints at a couple of firms), some come from consulting/banking with a focus on technology (analysts covering TMT, for example), while others (including many of the younger ones) come from Internet franchises like Google, Facebook, Twitter or LinkedIn, or well-known enterprise software companies like VMWare, where they held roles like product management, mobile, engineering, business development or corporate development.   I’ll leave aside the debate on the best background for a VC partner for future blog post (as a preview, I think picking great companies is a largely different skill than being an expert at operating them).  For purposes of this post, the key conclusion is that there’s a variety of possible paths to a partner-level job in venture capital, that all have in common a deep involvement in technology and startups.

Playing “fake VC”

But the basics are just that – basics.  Because there’s no linear career progression, you need to do more than just getting the next job that will eventually get you into VC.  And because it’s a smaller industry with fewer openings, you need to do more to differentiate vs other potential candidates.

When you look closely, you find that a lot of people who ultimately become VCs tend to do a bunch of startup-related things on top of their day jobs.  Note how, in my somewhat caricatural “Method 1” example above, even a CEO with a great background has other activities (building a personal brand and being helpful to others). Some of them do those things to deliberately  position themselves for a VC job (or a senior job in a large startup).  Many do it instinctively, and/or out of passion for the subject matter.

That was very much the case for me.  In my previous couple of jobs,  I found myself involved in a variety of largely extra-curricular activities, like making angel investments, being a mentor at several incubators, organizing large tech events, blogging about tech… A friend of mine once had a great way of describing it, saying that I was playing “fake VC” – essentially I was doing a bunch of things that a VC would do… except that I wasn’t one.  In retrospect, this turned out to be hugely influential in getting me on the radar for jobs in VCs, including in particular at FirstMark.

Another way of describing the “playing fake VC” approach is that you want to be building a personal “portfolio” of venture-related activities and projects (and the knowledge and network you build as a result) that are related to the startup and VC world and demonstrate deep passion for it.

This is how a personal portfolio can help. When evaluating possible recruits, especially at a senior level, VCs try to figure out a number of things, including in particular whether that person would make great investments on behalf of the firm (other aspects, such as cultural fit, are also very important as in most firms being part of a partnership is a very close/intimate relationship).   When a person already has an investing track record as a VC, it’s a fairly straightforward exercise.  However, many (most?) candidates don’t have that track record.  So VCs default to the nearest approximation, and try to figure out whether that person possesses the skills and attitude that make great venture investors.  There will be variations depending on the firm, but on the whole, they’ll want to answer questions such as: Are you particularly analytical and thoughtful? Do you have a deep knowledge of the startup world? Do you have a relevant network that will surface interesting opportunities and candidates? Do entrepreneurs want to work with you? Can you sell? Do you have the right work ethic, drive and tenacity? What are you an expert at, and what kind of areas would you invest in? What’s your overall reputation – do people in the VC’s network know you and think you’re great? The goal of your personal portfolio should be to help them check those various boxes, and get them excited about your potential.

Building your personal portfolio

There’s a long list of things you can do as part of this portfolio approach.   What’s on that list is no big secret, you may have heard it all before, or seen VCs do those things (which is exactly the point).  What’s more interesting is to think about those activities strategically and holistically, as they tend to be mutually reinforcing.  Put yourself in the shoes of a possible employer – how does your portfolio of activities position you? Do they give them comfort that you have what it takes?

Before we get into it, one important caveat: this list is meant to be inspiring, not discouraging.  If you work 90 hours a week at an investment bank (or anywhere else), it’s much less likely you’ll be able to do a lot of those activities (or any of them, for that matter).  Some employers will actively discourage you from engaging in external activities.  There are radical solutions to this: I have heard of at least one case of an associate-level person who quit her financial services job and transformed herself into an almost full time tech blogger for a few months to catch the attention of VCs (it worked) – but obviously that’s one extreme example. Bottom line, you don’t need to do all the things on the list (except #1, probably), and you can certainly put more focus on a subset of activities that feel more natural or fun to you. But in any case, it’s key to commit to whatever you chose, and to do those things deliberately and consistently over a significant period of time (could be years!).  The goal should be to excel at them.

Also, if you’re junior, there’s going to be less of an expectation that you have done a bunch of the things on this list (although we do come across college students who are already extremely active in the startup world, and that’s who you’ll be competing with).  The more senior you are, the more you’ll be expected to have a richer and more interesting personal portfolio.  And if your day job or background to date doesn’t scream “partner material” for a VC firm, then you definitely want to do a lot of the things on this list, and do them really well.

In no particular order, here’s that list:

1) Build a knowledge base:  You should be a relentless student of technology, business models and startups in general. Are you reading and learning every day? All good VCs are voracious learners.  There are  4 or 5 industry publications everyone reads (TechCrunch, etc.), and perhaps 20-30 blogs (VCs, founders) that have good content.  Read them every day. Subscribe to newsletters like CB Insights, Mattermark, Term Sheet, VentureWire and those published by the top VC firms.  Follow all the tech influencers on Twitter, in particular as many VCs as you can.  Go to local meetups. Live and breathe the space. Also, make sure your knowledge gets increasingly precise over time – master the concepts, know the metrics and industry stats, and pick a few companies that you know just everything about (this will also come in handy in interviews as “tell me about a couple of startups you’re excited about” has to be the most widely used question in VC interviews).

2) Be an expert at something (especially if you’re senior):  marketplaces, Big Data, design, scala programming, it doesn’t really matter – having deep knowledge in something specific, on top of the type of broad general knowledge mentioned in #1 above, will help position and differentiate you.  Obviously it’s better if your day job is congruent with your area of expertise, but that’s not an absolute must.  Don’t have a core area? Just pick a fun emerging domain (VR, space tech, etc.) with comparatively fewer experts, get passionate about it, and learn the hell out of it.

3) Develop a strong professional digital presence: first, yes, you absolutely need to be active on social media.  Especially if you’re junior, it’s almost weird if you are not – most VC firms are interested in “digital natives”.  When I look at potential recruits, I almost go to Twitter first – I’m not particularly interested in how many followers they have, but I’m interested in what topics they tweet about.  I also occasionally check out on LinkedIn who we know in common to get a sense of their network (particularly for more senior people).   Twitter (for now) is the preferred social media of many founders and VCs:  use it professionally,  tweet about some of the stuff covered in #1 and #2. Twitter can be also a great way to engage in online conversations with VCs online (and help with #6), as long at it’s done right (which largely means not spamming and genuinely engaging in discussions with something to contribute).

4)  Start a blog (or publish some long form pieces on Medium):  It’s easy to talk yourself out of blogging. First, it’s a big effort, especially if you do it often.  Second, what if nobody cares or reads it?  On the former, there’s no real way around it, and at the end of the day, it’s a question of how driven you are.  On the latter: Blogging is less scary once you start thinking of it less as a popularity contest, and more as a “thought resume”: an ongoing work that demonstrates what you think about and how you think about it.  Write with a VC partner audience in mind.  A VC candidate with a thoughtful blog scores major points in my book.

5) Build a network:  Many top candidates these days start building a founder/VC network while in college by being involved in entrepreneurial activities there.  As a young professional, you can build a strong network of young founders and up and coming startup execs – VC firms will love that.  If you’re more senior, you simply won’t get a VC job without a deep and broad network.

6) Meet a lot of VCs: a key part of your networking should be focused on meeting VCs.   The best time to meet VCs is when you’re not looking for a job (and when they’re not actively recruiting). The ideal context to meet VCs is to work with them one way or another — for example, if you work at a VC backed startup, try to meet the company’s investors.  Short of that, you want to meet VCs in a context where you’re doing something that they might find interesting — for example, you could be running (or involved with) an event where they’re speaking (see #7 below) or an incubator where they’re doing office hours (see #8 below).  Conversely, while it’s better than nothing, it’s typically much less efficient to line up to say hi to a VC after they speak at a conference that you’re just attending – you’ll be more likely to be just a face in the crowd.   Alternatively, I have seen people successfully “pound the pavement”: build a list of firms of interest, and then systematically try to establish lines of communication with as many of those as possible.  For example, you could look to see if there are any alums of your college, people who had worked at the same companies as you, people from the same hometown as you, etc., and then just reach out cold, with a nice and thoughtful note.  Response rates will vary, but that method tends to work and will allow you to engage in conversations with principals / partners at a few firms, to have informal interviews, and to get the scoop on projected hiring processes.  Note that you need to prepare very carefully for each interaction/conversation with a VC – you should do your homework and know as much as you can about that firm and that specific person (this applies to all levels!).

7) Run tech events: This one really worked for me.  The events I started (Data Driven NYC and Hardwired NYC) have been a core part of my personal portfolio.  Amazing way of building a network, going deep in a domain and gaining some visibility.  So, start an event! Or help organize one.  You can do this in any context, starting in college.

8) Be a mentor or advisor:  if you want to position yourself for a career in VC, you should work with a lot of startups.  If you’re junior, volunteer at one of the many incubators.  If you’re more senior, become a mentor and perhaps continue on as advisor post-program.  The founders you work with will become essential components of your portfolio – you want VCs employers to be able to call them and ask “what that person truly helpful and insightful?”

9) Consider angel investing: careful with this one as obviously there’s financial risk involved and you need to be legally allowed to do it (accredited investor). But if you can afford it, a good angel portfolio is a great way of signaling to future VC employers that you mean business and what kind of investor you’d be.  It also helps you to meet VCs (see #5) and certainly helps with #1 and #2 as well. When I did angel investing, I essentially considered the money to be an investment in the next step of my  career, with the potential financial returns as an upside.  If you have limited resources, the trick is to invest small amounts ($10k) per company – often you’ll need to convince the founders to take your money, which by the way is not the worst training for being an actual VC.

10) Side projects: try all sorts of things.  This could be create simple apps, learning to code, playing with drones, becoming familiar with Arduino, etc.  You don’t want to get too dispersed, but all those things stimulate your learning and make you a more interesting candidate.

Closing thoughts

If all of this sounds like hard work, particularly combined, it’s because it is –  all of this is typically stuff you do (or learn) on top of your day job, and hours do add up quickly.  Again, this list is meant to be a source of inspiration, you don’t need to do all of this.  But it’s also a good test  – if you don’t do some of those things largely out of passion, then maybe VC isn’t a great long term career choice for you.

On the flip side, for the right people, the really cool thing is that, by engaging consistently and deliberately in those activities, not only will you be better positioned for a VC job (from an external perception standpoint), but you will actually be much better prepared for that career (from a skill set and background standpoint).


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