All Roads Lead To VC?
The debate rages in VC circles about the best path to become a top investor.
Their experience with semiconductors companies helped them not only build an investment thesis for the upcoming computer revolution but also build networks that would refer deal flow and guide them in picking the winners.
But not all highly performing Venture Capitalists have an operational or entrepreneurial background.
Michael Moritz was, famously, a journalist before joining the ranks of Sequoia in the mid-1980s. He’s now one of the two Managing Partners there.
Bill Gurley, a leading voice at Silicon Valley’s darling VC firm Benchmark Capital, was a financial analyst on Wall Street.
“Go Work For Twenty Years First”
Inquiring about a job at a local VC firm in Austin, where he was finishing his business school, Gurley was told to go work for twenty years first.
He took a different path, which did include a stint as a design engineer. However, the door-opener to his VC career was a financial analyst position covering public tech companies.
How representative is Gurley’s story?
Being an IPO specialist with a deep Rolodex on Wall Street and among large tech companies comes handy when it’s time to exit. Influential VCs are of great help in an IPO or sales process.
But most entrepreneurs-come-VCs will argue that there’s nothing like having been through the grind to be able to help startup Founders after you invest in their company.
Likewise, a top job at Apple or Google will not only provide with a vision for where technology is going, or how to create a world-class product offering. It also is an excellent way to build a network with talented engineers, designers, and tech professionals who may one day leave and found their successful startup.
Andrew Chen, the longtime Uber growth leader who joined Andreessen Horowitz a few years ago, is a case in point. In a recent post on a16z’s website, he explains why he decided to invest in the food tech marketplace Virtual Kitchen Co., making no secrets that he had prior relationships with the startup’s Founders.
Analyzing The Top 100 VCs’ Backgrounds
Every year since 2001, Forbes puts together a list of the Top 100 VCs in the world, which is principally based on the success of investments they made. They call it the Midas List, after the Greek Mythology king who was cursed with turning everything he touched in gold (spoiler alert: he dies of hunger.)
👀 We analyzed the professional backgrounds of all 100 VCs on the 2019 Midas List.
Our main findings are listed below.
Perhaps surprising to most, former entrepreneurs make up just a fraction of the Midas List VCs: 27 out of 100 laureates.
Noteworthy mentions include Neil Shen, who’s topped the Midas list since 2018. Shen is Sequoia Capital China’s co-founder and has built an impressive pedigree over the years. Before joining Sequoia, Shen founded the travel website Ctrip.com and the budget hotel group Homeinns (both listed on the Nasdaq.)
Other famous VCs with prior entrepreneurial experience include Jim Goetz (#4), the future VC Hall-of-Famer who’s led investments in Whatsapp, AdMob, and GitHub, among others. And Eric Paley (#10), the Managing Partner at Founder Collective and one of our favorite voices on Venture Capital.
From where did the rest of them come to VC?
37% of the 2019 Midas List VCs had no prior operational experience at all.
They have a mix of backgrounds, working in capital markets like Bill Gurley (#3) or Mary Meeker (#8), who was the most followed Internet analyst before she joined Kleiner Perkins, and later founded Bond Capital.
Others came from consulting, or straight into investing like Tiger Global’s Scott Shleifer (#13) and Lee Fixel (#16, who left Tiger to launch his own fund in 2019).
Having operational experience, either at a tech giant or by founding and exiting a successful startup, definitely opens doors to a VC career. But it’s by no means the only path.
We choose to see the glass half full. While it remains true that many VCs are still largely Ivy-league educated, almost half of the Midas List investors have no MBA.
Other non-MBA backgrounds include statistics, economics, electrical engineering, and law.
Degrees, as well as backgrounds, are attractive to some VC firms and less to others.
If you browse the profile of junior partners at Andreessen Horowitz, you’ll find impeccable pedigrees involving elite consulting firms and investment banks, as well as data-related jobs.
But other heavy-hitters like Sequoia Capital pride themselves in hiring partners not based on their curriculum, but on who they are and what they’ve done. Nobody embodies this culture better than current Managing Partner Doug Leone (#29).
An Italian immigrant who arrived in the US at 11, Leone rose through corporate America thanks to extraordinary salesmanship skills, but above all, an unparalleled hunger for continuous, sustainable success. And a splash of paranoia, too.
Getting A VC Job in 2020 and Beyond
One common mistake done when analyzing data such as the Midas List is continuity.
The average age of the Top 10 VCs on the list is 51.
What was true two or three decades ago, when these professionals were trained, and eventually got into VC, doesn’t necessarily hold right now.
As we explain in our live stream dedicated to Getting A VC Job, aspiring VCs today should browse the profiles of professionals their age who recently got into VC.
Advice commonly given by investors on how to get into a career with a Venture Capital firm includes:
- Become a specialist about a vertical that will be hot for VC in a couple of years (Gartner Hype Cycle anyone?);
- Publish blog posts or air podcasts about it;
- Found a startup, if possible a successful one; or
- Join a startup pre-Series A and go for the ride.
It is all common sense, and anybody can read those tips online. The trick is succeeding in making it happen. As usual, it’s all about execution.
Venture Capital positions are so scarce and sought after that you need to stand out.
The most frequent requirement hiring VCs mention to candidates is that you should be “combat-ready,” meaning you need to know what the role is about, so you can hit the ground running from your first day on the job.
How well do you know about what VCs do? How their funds work, how they make money? Which clauses to negotiate in a term sheet, and why? What impact preferred shares or SAFEs have on the cap table? How you should act to become a valued Board member?
We’ve gathered a unique set of real-life knowledge and practical advice on these topics to create our VC Investing Track. Leveraging our e-mentoring platform, we train Aspiring VCs and teach them not only how to get, but also nail their VC interviews.
We also help Junior VCs accelerate their career by accessing the knowledge needed to get promoted faster.
We are currently taking applications to access the first module of this unparalleled online training anywhere in the world. Only highly motivated candidates will be considered.
If you are interested, apply now for our Ambassador Trial program, a two-week trial that will let you discover our Startup Funding and Venture Capital content and help us evaluate your motivation.
Conclusion: Your Checklist To Become A (Successful) Venture Capitalist
As you will quickly find out when you start on your journey to learn all you can about Venture Capital, there’s too much information out there.
In the last decade, VC has become so popular that firms host podcasts, and renowned investors appear on TV shows.
1/ An excellent way to start to make sense of it all is our blog post: “What You Should Read If You Want A Job, or Money, From VCs.” We’ve ranked our top VC sources by format and learning type.
2/ Our live streams are an obvious next step.
3/ Those who are looking for guidance on the path to becoming successful investors can apply to our e-mentoring programs.
Note: our proprietary analysis on the Forbes 2019 Midas List was put together by Arvind Vairavan, a space engineer with a solid, global education in science, and a keen interest for Venture Capital.