Over my career as a VC at Bay Partners, I’ve had many people ask me how to become a venture capitalist. In fact, my son has a great career in the field. Although it appears that all you need to do is give money away to companies, this type of work requires finesse and strategic partnerships to be successful.
It is not an easy area to tackle. Here are some of my tips for entering into this world:
Although a lot of people assume that you need an MBA from a good school, at Bay Partners, we often hire former founders or managers of companies. Whether they were successful or not, they tend to have a better sense of the real issues a company is facing. Hires need to have experience running a project or group and we rarely hire out of school. Having an MBA is a bonus, but real life experience is king.
When I started my career, it was alongside three other first time, venture capitalist associates. They all had degrees from brand name schools. I did not. But what I had was the understanding that we are in the business of people.
Interviewing and hiring a new employee is always a big task, but it can be even more so for a VC Firm. You may convince one partner that you are the right hire, but then you will need to talk to the rest of the partners and convince them. This can take another six months. Stick with it!
Candidates that hang around will be top priority when we finally get around to hiring someone. It is such a daunting task to go through the process that it often doesn’t get the priority it should - but it’s important.
Partners don’t often bring on “young people” - they may cost them money in the future or you may be better than them. Don’t take it personal.
When you get the job, you can’t be active enough. You have to look at every resource to find the opportunity. It’s very competitive, you have to work your tail off to find a deal that makes sense.
You have to get out on the road have breakfasts, lunches, and dinners, attend conferences, go to all kinds of events, interface with your fellow venture capitalists, so you are basically working night and day to find deals. Then when you find that hot deal, you need to convince them that you are the right firm to give them money.
When I started, it was competitive so I just had to work hard convincing people on what we could do. I did all kinds of crazy things to get people to take my money or get involved in the firm. I had to rollerblade through downtown Cambridge, Massachusetts for my first deal, even though I had never rollerbladed before. I put the skates on and I went from lamppost to lamppost without falling. At the end, the young entrepreneurs said, “Okay, you win. We’ll let you invest in our firm.”
Entrepreneurs have a lot of choices - so what are your strategy, sales, tech, and people skills? Finding your strengths, seeing the landscape and having a clear idea of what to do from here is key to winning an investment opportunity.
There’s a million stories about how you ultimately get the deal. Most of the time you get the job or the investment because they like you. My superpower was that I was friendly and I was often called in to win an investment because I get along with people. Not all partners can do this. Some will source a deal but maybe don’t have the close. Always be thinking about how you make people feel.
Once you get an entrepreneurs confidence, you will likely need to get a senior partner’s approval for the deal. Make sure they know the opportunity, and also all of the resources that will be required to make it a good deal. Do not take something to a partner’s meeting that hasn’t been vetted by at least one partner plus respected outside sources. This may be your only shot to get the deal approved.
Use this opportunity to learn from people with more experience than you. Watch how partners handle their deal flow. Learn from them and ask all the questions. Above all, be open, honest, friendly and people-oriented.
I often say this business is kind of like the US election, you have a six year term that is hard but you have to have success to get re-elected. That’s what it is like. Keep finding the deals, working the right processes within your firm and make sure you are always closing. It’s a tough business but if you do a good job, the returns are worth it.
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