The Venture Capital Career Path

October 2, 2009 by Andrew Shriner · Leave a Comment
Filed under: Venture Capital 

Its back to school time for MBA students and, for many, jobs and career plans are at the top of mind. Though there may not be as many opportunities in the venture capital industry today as there were in my graduating year (2007), those interested in working in the field should have an understanding of how venture capital firms view careers and career paths at the associate and senior associate levels.

I have already written about what backgrounds and prior experience are the best for success in the venture capital industry (the answer: it doesn’t really matter), but once you are in the door, where you go from there greatly depends on the culture of the firm you join and your ability to add value to the partnership.

At a high level, venture firms need two things: quality deal flow and limited partner dollars. Your success at a venture firm is determined by your ability to bring in one or the other. Let’s assume that you, a new associate, do not have deep LP connections that will help the firm raise its next fund (at your level this is a pretty safe bet). This means that your only play is to become very active in bringing new opportunities to the firm.

Excelling in the deal sourcing side of the business is critical, however your opportunity for upward mobility in the firm depends just as much on your sourcing successes as it does on how the firm thinks about associate career paths.

For the majority of venture firms, role compartmentalization is by far the most widely used model and offers little upward mobility from the associate or senior associate level. A quick look around the firm at the partner level will give you a good idea about how the firm views the role of junior level talent. The key question is: are there current partners and general partners who have worked their way up the upside-down pyramid of the firm?

For most the answer is no. At these shops, the associate is viewed largely as support staff for the partners and may involve very little sourcing responsibility at all, whereby mitigating the long-term impact an associate can have on fund performance and essentially creating a self-fulfilling prophecy of minimal associate-level impact.

But this isn’t always the case. Some firms, New Enterprise Associates, Bessemer and Battery Ventures to name a few, spend a great deal of time nurturing the young talent in their firms. Generational transition is a big issue that venture firms are dealing with at the moment, and the up or out model is becoming more popular, especially with the larger, more established shops keen to pass on institutional knowledge as the older generations retire.

There is little question that venture capital is a challenging industry to break into, and if you are passionate about the work, you should jump on any opportunity to enter the profession, regardless of the situation–you will find a way to make it work. But be aware the downside is that the skills you are developing as an associate are investment skills, not operational skills, and should you decide the life is not for you, there aren’t going to be many opportunities back in the corporate world that map to the skillset you’ve developed. Having a keen understanding of the expectations of the role and the opportunities for growth within the firm will go a long way to establishing a successful and sustainable venture capital career.

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