✅ An actionable guide to getting into VC
for those who have been through a few unsuccessful interviews!!!
An actionable guide that will get you the job*
Getting a job in VC is easy when you already are one. What do I mean by that? I mean you are more valuable as an investor to any VC firm than an “aspiring investor”. You need to demonstrate that you like what you are doing — finding founders and solutions that will change the world — even before you can institutionally do that.
To demonstrate that you need to know what a VC typically does, figure excites you the most and try developing and strengthening that muscle.
Without much ado, these are a few steps you could (read must) take to become a VC inherently.
On a general note, before you start recruiting, pick the stage of the VC you are interested in. based on the stage, your strategy should change.
😎 Here is an updated 2024 version of some VC transition strategies.
Let’s get right into the strategies:
1. Source, source and source: This is the first advice or the job that you will see in any junior VC’s JD. This is also the most repeated piece of advice that is available on the internet. It is only reasonable that VCs source half of the time or in earlier stages that’s what they do 70% of the time. Because VC is all about avoiding type 2 errors — False negatives and reducing type 1 error false positive. There is data to validate this. Just google VC success rates and you will have plenty of graphs.
Now how can you do that and do that well? Well, you need to know people. you need to be connected or start forging these connections. (See why VCs love Stanford grads? Their network).
- Leverage your alumni and professional network to find out who are aspiring or current entrepreneurs.
- If you can’t, try attending events, demo days, pitch competitions. Events of any kind will give you a chance to understand the breadth of ideas and access to entrepreneurs.
- Keep a note of the ones you find interesting and the ones you don’t and have a framework that helps you revisit your decision later.
- Discuss these with your VC friends or mentor. This will help you understand their mental models for decision making.
- Better, if you can publish them in an orderly fashion, do that.
2. Develop your industry thesis: Well, this is a hard one personally. It is so hard to predict what is going to be the next big thing with 100% certainty. NO one can predict the future or the markets. But what we can do is look at a particular industry and analyze its development over time.
Some frameworks to follow:
Look at the value chain of the industry. This will help us understand the crowded part of it and help understand what the next valuable innovation must be and which part of the ecosystem it needs to be in.
- Example: With the rise of on-demand e-bikes and mobility solutions, new problems/opportunities emerged. Parking, charging, logistics of these bikes etc.
Look at an industry from a front end vs back end perspective.
- Example: The initial fintech disruptions were customer-facing. Access to banking in a digital format. Digitally enabled banking but the back ends stayed the same. Now newer innovations in technology — Computer vision, open API infrastructure enabled by advanced data mining capabilities are bringing the new wave of fintech disruption — easy KYC, AML, quick and cheap underwriting etc
- Here is a great post on this.
3. Reach out to investors and offer to help: This is a tricky one. Personally, it has been arduous to reach out to a stranger and offer to help, even ask for a conversation for that matter. You must be very confident and interesting to be able to pull off this conversation. But you must do it.
Few things that you could avoid while reaching out.
- Don’t ask them for a coffee chat. I read somewhere that VCs get asked for Coffee dates all the time and they are sick of it.
- Don’t ask for time to pick their brains. Don’t.
- Don’t send them a general email that wastes their time. This will do more bad than good.
What can you do to make the conversation interesting:
- After getting to know their industry focus, you can send them some articles they might find interesting.
- Pique their interest by showing them a snapshot of new developments in an industry — regulation, consumer trends, business needs, follow the money.
- Look at where the angels, family offices are investing to know where investor interests lie.
- Look at the MCK, BCG, and Bain (illustrative list only) reports and predict as a particular sector’.
(If you have a much more interesting way to crack this, please let me know. I might benefit from it).
4. Build your Venture / Community:
- Another powerful method that has always worked is bringing something valuable to the table that the VCs don’t already have. For example, if you are well connected in your college startup ecosystem, or particular geography is more valuable to the VCs. Again it’s all about sourcing for a VC and having access to a talent pool, community, and high calibre people to avoid adverse selection.
5. Lastly, Don’t f**k up the interview. It is a rare event that you get an interview call. When you do get it be prepared. It takes several rounds of practice to get your pitch right. So, practice out loud.
- Their JDs or job postings will have a lot of clues on what kind of candidates they are looking for.
- If you can speak with some employees, please do that to get a good perspective of what is the firm’s style of working.
- Read their blogs, news articles, recent investments to show them you care and have done your homework.
Here are some questions you should ask yourself to gauge how prepared you are to start your journey as a VC.
1. What VC/ investor-related books have you read? Does the list include: 1. Secrets of the Sandhill road, 2. The hard thing about hard things, 3. Zero to one 4. Lean Startup 5. Venture Deals
2. Do you attend pitch events? If yes, do you document your thoughts? If yes, How well? Have you created an actionable pipeline?
3. Do you have personal branding on your social media? LinkedIn, Twitter, Signal etc.
4. Do you follow up with your contacts regularly?
5. Do you follow VC news, podcast etc.?
6. Do you know the VC lingo?
7. Do you know how to work a term sheet, pitch deck, and cap table?
8. Do you know how much dilution is too much dilution at respective stages of a company?
9. Did you find and listen to an Associated podcast episode
(Please google for more and let me know some interesting ones as well)
There are so many other useful resources, which deserves a separate post. I’ll curate the resources and publish them here, soon.
Update 1: After 2 months of writing the original post and a few interviews later
I have interviewed for several VCs now. MMC, Seedcamp, Creandum, NJF Capital, Concentric VC, 2150 VC, Antler. All of them — learning experiences.
My takeaways from these interviews:
a. There is always a more experienced candidate than you applying to these jobs. So do your best to be prepared and pray to get lucky.
b. One insider told me, the crazier, the contrarian your views the better. Because no one likes a person who regurgitates a TechCrunch article or a Pitchbook brief. Apparently!
c. Don't talk too much in an interview. I completely miss understood this part. While it is one conversation for you, the interviewer is having multiple of these in a day. So make it easier for them and be brief.
d. Try doing some case studies? Yes, the MBB ones that your consulting friends were practising during interview season.
e. When you bring a new “proprietary” deal to the table, come prepared with the following answers
- How will this become a $100Mn ARR company?
- Why did you choose this sector vs others?
- How do you see the industry shaping up in the future?
- What makes up revenue?
- What was your DD on the founders?
- What are your top 3 concerns with the startup?
Here is a great template from Included VC that you can use for presenting your case study or a new deal opportunity.
f. I have made some very good conversations with multiple people over these interviews. I respect all of them and have so much more to learn.
Finally, life is too short to take yourself too seriously.
Find something you love and do it well. Not everyone’s path into VC is straightforward. if not as an associate, try getting in as a principal after a couple of years. Build your network, become a subject matter expert in your field, make a few angel investments if you can, or build an on-paper portfolio /an anti portfolio.
Rajan Anandan — Ex top shot at Google got into Sequoia as an MD through his conspicuous passion for entrepreneurs.
Gemma Bolemen — Ex operator, consultant got into Creandum as a principal after angel investing on the side.
😎 Here is an updated 2024 version of some VC transition strategies.
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👉🏼 Btw, there are no free lunches ❤
