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Getting in the Game: An Insider’s Guide to Breaking into the Venture Capital World

March 10, 2017
Baiyin Zhou

Venture capital remains an unfamiliar world to many – but it’s not for lack of interest. For those following or involved in the tech space, it’s almost impossible not to wonder what happens in the VC world, since so many emerging companies depend on VC dollars.

Despite the air of mystery surrounding it, the VC world is far from an enigma. But it doesn’t take long to discover the lack of readily available information on it. This blog will shed light on and provide a behind-the-scenes look at the seemingly black box that is hiring in the VC world.

Open VC positions are few and far between. There are actually around the same number of open U.S. professional athlete positions as there are available VC positions nationwide. According to the 2016 NVCA Yearbook, there exist 798 VC firms and approximately 13,000 investment professionals in the U.S. Of these 13,000 or so, approximately 8,000 are partners. That leaves 5,000 non-partner, or junior investment professional roles. These include analysts, associates, senior associates, principals, and VPs. For perspective, Apple has 115,000 employees and it’s only the eleventh largest tech company based on employee count.

Not only are open VC positions scarce, but the competition is fierce for those limited spots. Ascent’s 2016 search for a new senior associate surfaced 605 applicants – that’s A LOT of resumes for one position. Other VC firms report similar numbers; for example Lightbank received over 700 applications during its search for a new associate, and Union Square Ventures had approximately 350 applicants for its open position. Furthermore, a VC recruiter recently told me that he evaluates more than 1,500 resumes for any given junior investment position. That means candidates have less than a 0.1 percent chance of landing the role. Think about it this way: Harvard’s acceptance rate is 5.2 percent. Those are some tough odds!

There are lots of other factors for VC candidates to take into consideration as well. For example: do you have an MBA? Approximately 50 to 80 percent of VCs do. What about gender bias? Women only account for about six percent of senior VCs. But don’t let these statistics discourage you from pursuing your dream – in fact, I am both a woman VC and I never got my MBA!

Below are a few proactive ways to gain a competitive edge in the recruiting process and become the ideal VC candidate.

1. Build a network – get a warm intro to a partner

Like any competitive job, it’s all about who you know. In venture capital, leveraging your network for a direct line to a partner increases your chances of securing that first conversation. In fact, some firms consider an applicant’s ability to network as a pre-qualifier to participate in the hiring process. According to Work-Bench, “VC is a relationship driven business” and that’s why the company requires all of its associate candidates to find a warm intro to the firm as a first step. At Ascent, 83 percent of candidates who had warm intros were offered a first interview, versus only one percent of the applicants who applied via LinkedIn.

2. How to reach that partner when you don’t have a connection

Regardless of your particular career path, networking remains a valuable ingredient for success. But it’s impossible to have a connection into every company or VC firm. So how exactly do you reach those “untouchables”? Again, it’s a numbers game. Pro tip: Manage your recruiting process like a sales funnel. Create an excel spreadsheet of VC firms and include investment team members for each firm complete with whatever professional (and even personal) details you can find.

Before initiating contact, it’s important to keep in mind that VC partners are busy people, and your inquiry might not be a top priority. Pro tip: Keep cold emails short, but substantial. Track which firms have responded and which have not, and determine a cadence of follow-up for those who haven’t responded.

3. Be(come) an expert

Passion and expertise will get you far in life – and in your VC career. From an insider’s perspective, the one thing that will truly set you apart from the competition is to become an expert within a specific industry. This entails forming an investment thesis, picking winners in the industry, understanding the competitive landscape and differentiators, making contacts and writing relevant blogs or tweets. Most successful VCs have an industry focus, such as cybersecurity, artificial intelligence, payments or infrastructure software.

Take it from me, the most effective way to impress your interviewer is to act like a VC before actually being one. Fake it ’til you make it! Let your prospective employer see your potential. Show them what you bring to the table and how your expertise and industry knowledge make you an asset to their team.

4. Focus on your strengths and tell a story

Half the battle is how you tell your story. Identify your strengths and become a marketer of your product: you! What are your customers’ needs and how does your product address those needs in a way that others don’t? Interview questions such as “tell me about yourself” or “walk me through your resume” are often the most important (and empowering) questions asked. It’s a chance to tell your story and steer the conversation in whatever direction you choose. Pro tip: These questions are not an invitation to list every role and responsibility you’ve ever had. Instead, use this opportunity to convey your knowledge and differentiator.

The VC recruiting process can often be long and grueling. But it’s important to remember that although the odds are lean, the job search is a two-way street. Just as the firm is getting to know you, take the same opportunity to familiarize yourself with the person sitting across the table from you and the firm they represent. Do you share similar values? What are their aspirations for the firm? What are their expectations of you? What is their leadership style? How do they react to negative situations? Think of yourself as interviewing your prospective employer, too. After all, you spend more time at your job than anywhere else, so you want to make sure your employer is as good a fit for you as you are for them.

Good luck!

If you have any questions on breaking into the venture capital world, you can reach me at bzhou@ascentvp.com or find me on Twitter at @BaiyinVC.

 

 

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