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May 21, 2005

How to join the VC/PE industry

Seth Levine of Mobius VC has a few tips for MBAs and wannabee MBAs keen to join the Venture Capital/Private Equity industry:
Understand the math. The partners are quite literally taking money out of their own pockets and giving it to you. Rationally, they will only do this for one of two reasons – either you are significantly impacting their lives in a positive way that makes the trade-off worthwhile for them (you cost less than the marginal life benefit they get from having you around) and/or you will help create more carry (i.e., they can manage more deals with you around and therefore deploy more capital; you have a skill set that will positively affects the portfolio, etc.). If you fail to do these things you are just eating up management fees. There is a grey area here for Principals (called VP’s or SVP’s at some shops, junior partners at others) who are managing their own deals as well as supporting partners’ deals.

Get close to VC’s.The road to becoming a VC follows many different paths, but fundamentally your first step in landing a VC gig is likely to be figuring out who the VCs are in your area and trying to get close to them. If you’re still in college, consider a job in an investment bank or other financial services firm (even VC analyst jobs are hard to come by straight out of college – VCs tend to hire people with at least some financial training at those levels) to get the best possible training for an entry level job in VC. If you are in business school, look for internships that will allow you to meet venture capitalists (either at a VC directly or for a portfolio company of a VC). If you don’t fit any of those categories, take a job at a company backed by venture money and try to get exposure to the venture capitalists on the company’s board. In short do what you can to get to know VCs in your area so that when a position opens up you can be both top of mind and a known commodity. Take a longer term view of your approach and remember that many VCs got there not by following a traditional path (banking --> b-school --> VC) but have years of operating experience, were entrepreneurs themselves, or were somehow else involved in the business of building and growing companies.

While on the topic of "Getting close to VC’s", we at TSJ Media, are looking for MBA-Finance grads whose job description is something like this:
Interact with Venture Capital and Private Equity firms, Investment Banks, VC-backed firms and other hi-tech companies on a regular basis to track deal information - including on VC and PE investments and exits, M&A deals, IPOs, etc.
Going by Levin's post, this sounds like as good as a pretty decent stepping stone for aspirants who want to eventually join the world of VCs, right? Interested candidates can send their resume to info(at)tsjmedia.com.

UPDATE: Fred Wilson of Union Square Ventures seconds Levin's thoughts:
How do you get a job in VC?

It's the second most common thing people ask me (after how do I get a VC to invest in my business?).

The truth is the odds of both are about the same. Very long.

And as hard as I try, I really can't help most of the smart, capable young people who come to my office asking me that question. The demand for VC jobs is way in excess of the supply and probably always will be.


Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.