Similar to the Sell Side and Buyside there are clear and concrete ways to break in. For Venture Capital, depending on your background you must search out and find the right story to preach, which should involve five pieces. 1) Work Ethic, 2) Appetite for Risk, 3) Innovation, 4) Salesmanship and 5) Sector Knowledge. If you can get 3/5 on this five point checklist and you have an obsessive work ethic it is achievable. Cutting to the chase lets look at the five points.
1) Work Ethic. If you have Wall Street Experience for 2+ years, you pass. If not you’re going to want to show you have work ethic by stacking your resume starting.. today. This would involve working your regular job while actively pursuing a job closer to the field of Venture Capital which would include Sell-Side or Buyside Wall Street Experience, Start Ups, Entrepreneur or Low Market Cap Tech or Medical Technology Companies as most Venture Capital is established in Technology.
2) Appetite for Risk. From the above you can discern quickly that if you’re trying to break into VC with no experience the best three alternatives will be Start Ups, Entrepreneur or risky technology company. Why? This is the best story to pitch for your initial break in if you’re unable to land interviews with Wall Street.
3) Innovation. Working on the Street hurts you in this category. Venture Capital has more to do with passion and innovation rather than numbers as the majority of the companies you invest in report low to negative earnings. Instead VC’s want to spot candidates with an ability to sniff out guys who are Entrepreneur’s for “the money” versus for “passion”, if they can’t sell you their own product they are likely in it for cash which has a higher failure rate. Fixing a business financially to become profitable at a large scale is done by private equity firms.
4) Salesmanship. If you can sell someone on an idea get ready to break into Venture Capital as well. An interesting high risk alternative way into VC is to be in charge of bringing in clients to a high end Mutual Fund. If you can convince high net worth clients to put their money into your account you should be a fairly good candidate for finding significant equity investments as well.
5) Sector Knowledge. If you can carve out a niche, similar to our advice on investing you can begin targeting specific Venture Capital firms. An interesting angle could be Clean Tech/Solar work as many government programs actually invest in these firms to give them additional capital. Similarly, as stated previously most VC work is done in technology so you’d want to stay on top of that specific sector be it hardware/software/networking/semiconductors etc.
Conclusion: This is a relatively simple post however one thing should stand out dramatically after reading this. There are roughly five jobs to enter Venture Capital, Sell-side, Buyside, Start-ups, Entrepreneur or Knowledgeable Technology Hire. If you are not in one of these fields it is best to make a two-hop jump into Venture Capital. Move from your current position to one of the five above. If you’re extremely ambitious and want to do the full on business jump we suggest you check this out.