There’s no one true path to becoming a venture capitalist. Some successful VC professionals join the industry straight out of school, others after long careers. Some have technical backgrounds, others have liberal arts degrees. Some come from Silicon Valley “royal families,” others from Midwestern middle-class homes. Some previously worked in the tech sector, others in banking, consulting, or law.
That said, successful venture capitalists share an intellectual curiosity and drive to know what’s likely to happen next. They also share a passion for getting others’ talents to shine, so unproven entrepreneurs can thrive and veteran executives can collaborate.
Location, location, location
If VC sounds like it might be for you, the first thing you should know is the most prominent and traditional venture firms are located in San Francisco, Boston, and New York. But note that New York tends to have later-stage, lower-technology firms with more capital deployed per transaction, and, as a venture capital city, follows behind San Francisco and Boston.
Also, don’t overlook the less prominent, less competitive states with high entrepreneurial growth such as Virginia, Georgia, Maryland, Utah, Hawaii, North Dakota, Nevada, and New Hampshire. The growth of these venture capital communities is not far behind the rise of the entrepreneurs, and you can get in on the ground floor.
Other reasons to check these locations out include:
1. It might be easier to get a job.
2. The day-to-day job is the same or better (because you’ll end up having more responsibility).
3. Quality of life will be better because of lower pressure, fewer constraints on lifestyle, and lower cost of living.
The big players
At the end of 2017, there were 970 venture firms in existence, managing 1,722 active venture funds. These firms had approximately $359 billion in assets under management. According to PitchBook, a data and tech provider for the global venture capital and private equity markets, the following firms invested the largest amount of capital in seed and/or early-stage deals completed in the U.S. in 2015 and 2016:
1. New Enterprise Associates (Menlo Park, Calif.)
2. GV (Mountain View, Calif.)
3. Khosla Ventures (Menlo Park, Calif.)
4. 500 Startups (San Francisco, Calif.)
5. Greycroft Partners (Los Angeles, Calif.)
6. First Round Capital (San Francisco, Calif.)
7. Andreessen Horowitz (Menlo Park, Calif.)
8. General Catalyst Partners (Palo Alto, Calif.)
9. Kleiner Perkins Caufield & Byers (Menlo Park, Calif.)
10. Accel (Palo Alto, Calif.)
Don’t just target the large, prestigious, private funds. Look at university funds, Small Business Investment Company program companies, and venture capital divisions of corporations. If your ultimate goal is to work for the big better-known firms, your best bet might be to pursue a job at one of the lower profile firms first, prove yourself for a few years, and then make the move to the big leagues.
On the other hand, working at the most prestigious firms gives you:
1. More job opportunities down the road.
2. Higher name recognition.
3. A better platform from which to meet people in the industries you follow.
4. A front row seat on how the best minds in the business think.
East Coast vs. West Coast
In meeting venture capitalists from around the country, you will quickly come to realize that East Coast venture capitalists place a high degree of value on financial acuity and experience, while investors further west have a much stronger bias toward operational proficiency.
This should come as little surprise, since many Silicon Valley venture capitalists tend to be former operators (founders and C-level management) of extremely successful startups from days gone by, while many Boston and New York investors got their start as investment bankers and money managers.
While there are no hard and fast rules, bankers will probably have an easier time breaking into venture capital on the East Coast, whereas seasoned executive managers with deep industry experience and technical know-how will likely enjoy better odds in California.
First steps to breaking in
Venture capital remains a hot field and so, aspiring venture capitalists have their work cut out for them. But it’s not impossible to get hired in this dynamic area.
Some of the best ways to begin searching for jobs in the VC industry include networking (VC is definitely a “who you know” type of field), contacting recruiters (e.g., MatchStar Venture Search) and general partners directly, using the networking and job-search resources of professional associations, visiting industry and social-media job sites, attending industry conferences and events (such as those held by the National Venture Capital Association), and participating in information interviews.
As you search, keep in mind that it’s no easy task to break into the VC industry. The industry is small, made up of only several hundred small firms (each consisting of between two and 40 people). Also, the "old boys’ network" is in full force in this corner of the economy. The portion of partners with degrees from Harvard and Stanford is very high. This is changing (slowly), but many VC firms still remain predominantly comprised of white males.
Finally, know that the demand for positions is so great that openings are often filled through networking, and are rarely publicly advertised.
This post was adapted from the newly updated Vault Career Guide to Venture Capital.
Jennifer Carolan, co-founder and general partner at Reach Newschools Capital, is also a former managing partner at NewSchools Venture Fund.
VAULT: Can you tell us a little about yourself? What made you want to enter this career?
CAROLAN: Growing up in Chicago, I didn’t know about venture capital.