A year ago, I started business school at HBS. Since then, I’ve been talking to a lot of classmates about my experience working in venture capital. I thought it’d be useful to share the highlights of some of those conversations for other people interested in landing a job in venture capital. As a disclaimer, what follows is highly colored by my experience as a pre-MBA sourcing analyst at Bessemer Venture Partners.
There are two main roles for junior people at venture capital firms. You are either focused on sourcing new investment opportunities, or supporting more senior professionals in screening their inbound deal flow, executing transactions, and helping existing portfolio companies. I’ll focus on the sourcing role as that’s what I know best.
Sourcing involves splitting time between researching interesting areas of innovation where there may be hidden gems (great companies that people don’t know about yet, typically outside of hot sectors and geographies. Think enterprise SaaS based in Nebraska and focused on dog food manufacturers, as opposed to consumer internet in silicon valley). You may read a blog post about the Turkish eCommerce market, and develop a list of the best companies there. Or, you may hear a lot of buzz about a silicon valley company that is “crushing it.” Chances are, you can find a company in Virginia, or Berlin, or Sao Paolo that is doing the same thing and a lot further along, that no one knows about yet. Or, maybe you meet a really dynamic entrepreneur at a party who just happens to be raising a round. There are lots of ways to find great companies!
Beyond research, you’re also spending time getting to know companies either through meeting in person, or talking to entrepreneurs over the phone in hopes of building a relationship, and understanding where an opportunity to invest in the firm is. Having 4-5 one on one conversations each day is an amazing way to grow your network, develop pattern recognition, and learn about all the areas of innovation around the globe. It’s an addicting flow of information, and comes with insights into how companies succeed in changing markets.
At the beginning of each week, expect to pitch 2-5 of your best ideas to your firm’s partners. In an interesting twist, you are now an agent of sorts for the entrepreneurs you’ve talked to the previous week, trying to get your colleagues’ interest in follow up meetings. Of course, while every sourcer is incented to drum up interest for your deals (typically there is a bonus if a deal you sourced is invested in), you have to maintain objectivity in order to gain credibility within your firm, and grow as an investor.
It’s an incredibly entrepreneurial job where you are constantly trying to figure out new ways to source deals, determine which are the best companies, and then get internal buy-in for a deal. The last part of the job is the diligence of new investments including some light modeling, writing up investment memos for internal use, talking to customers, and doing anything else needed to make the investment. This is where you work in a small team to dig into a company over the course of a few months to figure out whether it’d be an interesting investment or not.
Overall, it’s very hard to think of a better job. It’s rewarding, fun, and stimulating. It gives you a lot of insight into the bleeding edge of innovation across lots of sectors. And, you literally have to pinch yourself when you’re talking to CEOs all day long. Plus you get to learn from great investors in a culture that is typically 100x better than PE/hedge funds. There’s just one catch, it can be a tough job to land!