How to Break into Venture Capital
What is Venture Capital?
According to Investopedia, Venture capital is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions.
In simpler terms a firm which invests in startups is called as VC or venture capital. One of the most sought-after question is how do you land up a job into a venture capital?
Why venture Capital?
Venture capital is a job where the potential upside lies a long time ahead into the future. Junior-level VC jobs infrequently lead to Partner-track positions, so you will most likely not move gradually up into a senior job. So there stands only one reason to go for the VC roles at the junior positions, i.e., you are really passionate about working with startups and you really want to look for the new ideas every day, build your network in the industry strong. This can be one of the possible reasons to go for a VC but since there are different individuals with different prospective in their mind so this may vary.
How do you get a job at a VC?
The most important part before landing into any job is to know your strengths and weaknesses beforehand. You should be able to analyze them to know where do you stand and which areas are there which need to be worked upon. Venture capital operates in an ecosystem, and you need to understand the companies you invest in and their business models.
According to Hajen Jan Kamps, Venture capital is like any other job; ultimately, to get hired you need to:
1. Get noticed.
2. Stand out as someone who might add value to the organization.
3. Add something to the team that wasn’t there before.
There are mainly 3 entry points to get into a VC-
1. Pre-MBA – In this entry point you graduate from a university then you worked for some investment banking, management consulting or some product management startup and then you switched into a VC.
2. Post - MBA - In this after graduating from your bachelor’s you did gain some expertise in the field of tech, healthcare, urban-tech and then you went onto do your MBA and switched to a venture capital firm.
3. Senior Level/Operating Partner – In this situation, you successfully founded a startup and exited it at a later stage, or you were at a higher position like vice president in a company whose interests were in the industry related to VCs. Getting a job into a VC isn’t limited to these entry points. But, it’s very difficult to break into a VC when you are just an undergrad. To be useful to a VC firm, one needs to be an expert in their area as well as have some full-time real life work experience. Overall the VC firms willin general inclined towards the applicants with brand-name firms and colleges on their resumes.
There is actually no hard and fast rule to get into a VC firm. In general, you should know your industry well as VC firms tend to invest in different industries which are startups. It’s really difficult for freshers to get into a VC as they have a very little or no knowledge about their area which they will be working in the real world. Generally, you should read a lot about how VCs work and look upon to the different business models of the different startups of a particular VC which they are investing in their portfolio.
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