This is my recent update after a while. I have been traveling lately and I was approached by serious entrepreneurs who had quite interesting business plans and ideas. I’m currently looking for an early stage investment opportunity somewhere between seed and series A funding. It was quite pleasant to talk with ambitious business founders in the various regions and industries. I am quite interested in digital interactive media and alternative energy space these days.
I recently talked with my business mentor, a senior VC who’s holding his office on Sand Hill road and it made me to think of potential VC career track. Fresh MBA grads are increasingly looking for a job in the venture capital (or private equity) industry even if hiring window is extremely small. Lucrative pay-checks and early exposure to an emerging business opportunity and passionate entrepreneur may sound quite compelling to young studs fresh out of business school. VC would make money by making other people succeed. VCs run extra miles to make portfolio companies stand out from the crowd and eventually become a crown jewel. Likewise, VCs make their partners (i.e. limited partners) generate handsome returns and they would eventually share profit. VC’s mission statement sounds very cool, doesn’t it? Though, what is a realistic picture of getting into a VC career and secret formula of becoming a successful venture capitalist in the long-run?
VC associates usually start their careers at the professional VC firm in their late 20s or early 30s. They are usually one of most important assets at typically small-scale (or even large) VC firms as they assist general partners in various ways when general partners’ agendas are fully booked with chainless meetings. VC associates handle numerous work assignments from investment assessment, monitoring, to advisory work for corporate & business development of portfolio companies. Like mentioned above, there are crucial skill-sets required for associates to help a VC firm’s new investment to succeed. Typically, VC firms love a go-getter type associate who is willing to help general partners and business founders no matter what. Though, after spending few years at the VC firm, what’s going to be next? Depending on the size of the firm, associates may join general partnership early-on after a few investments are realized. If associates’ track records are good enough, then they may even start a new firm with other top performers. That sounds like an ideal VC career track.
Like I found during my recent talk with a VC mentor, operating experience is a key for junior VC partner’s long-term success. Operating experience won’t be easily earned unless you are really in the entrepreneurs’ shoes for a certain amount of time. That is why many prominent VC firms look for people who have already gone through entrepreneurial process. It is not uncommon to see that VC firms even recruit talents from their past portfolio companies and send their best men to start a new company or encourage them to join a start-up company for more hands-on operating experiences. That way, associates may make money from equitable growth of business and get relevant experience to offer “serious” advice to start-up founders later.
When there are already over $30B venture capital commitments in the market, venture funding is becoming commodity. However, people with experience and right connection are scarce. These people are who really make difference. One of most challenging questions from a smart entrepreneur to a VC is whether VC does have a relevant experience and connection in the industry they’re playing. It is even more challenging when VCs are trying to make a new investment in the relatively untapped industry. It is also a very good check point for a VC to measure themselves before making investments whether they could really contribute to start-up founders as a sound business partner or not.
Sometimes, VCs can be quite opportunistic. Though, VC needs to be diligent helping hands to entrepreneurs, not only acting as a sound financial backer or cheer-leader. For my case, one of my early investments was a boot camp for my career development and that company helped me tremendosuly to gain operating experience and have in-depth insights of running a start-up business from scratch and achieving organic growth. Many long hours to come up with a compelling business plan, secure key initial customers, and hire experienced talents may sound fun, but, in reality, it can be a quite daunting process. However, you’d better enjoy it if you really want to make your own mark as a professional venture capitalist. Anyhow, young men, get some operating experience before you jump on the wagon!