How to Break Into Venture Capital

Investment Banking to venture Capital

Banking Investment / November 13, 2019

“I’m an engineer with a 3.6 GPA at a top university. I have a full-time investment banking offer lined up at Credit Suisse, and I’ll be working in their tech M&A group. Do you think I can I break into venture capital?”

While venture capital receives less attention than private equity and hedge funds, I’ve gotten many, many VC-related questions over the years.

In part 1 – focused on recruiting – you’re going to learn:

  • How to make the move from investment banking to venture capital
  • What types of people VC firms look for and the 3 entry points into VC
  • The role of headhunters in the VC recruitment process
  • How resumes and interviews for VC differ from banking and PE
  • How to position yourself to break into the industry

How It All Got Started

Q: Can you tell us about your background and how you got into finance in the first place?

A: Sure. I studied engineering at a top university in the US – I wasn’t sure what I wanted to do afterward, so I applied to Master’s programs and took a combination of math, finance, and engineering classes once I got into my top choice.

Since it was a target school and the market was much better back then, banks and consulting firms came to recruit at my school and I interviewed for everything from engineering jobs at companies like Google to consulting and finance positions.

Ultimately I had become more interested in business, so I went to a well-known tech banking group.

about 597 times before, so let’s skip over that and talk more about getting into VC.

Did you know you wanted to get into the industry in the beginning, when you first started out in banking?

A: No, I barely knew anything about the buy-side and exit opportunities in the beginning. At bulge bracket banks you get exposed to this early on because headhunters start calling you 6 months into your time on the job, but at smaller and regional places you don’t get as much exposure.

By the time I started thinking about exit opportunities, I had been working for a few years and had already been promoted to Associate – so I didn’t want to leave right away.

Q: You mentioned job posting sites and headhunters – don’t you have to network a lot to break into VC?

I always thought that networking was even more important there because the firms are so small and they have less money to spend on recruiting compared PE firms or banks.

A: Networking and cold-calling Partners yourself can be helpful – and especially when it’s a bad market you need to do more of it.

But a lot of it depends on what type of firm you want to work at. The biggest and most well-known VC firms – think Sequoia – use headhunters, as do many late-stage VCs. The smaller the firm and the less capital they manage, the less likely they are to use headhunters.

I didn’t network that much because I had a brand-name school on my resume, I was already in banking, and I was aiming for late-stage funds that actually used headhunters.

Venture Headhunters

A: SG Partners doesn’t do much early stage VC recruitment, CPI had a good number of VC openings, and Oxbridge I can’t speak to because I didn’t work with them too much.

Glocap had a good number of VC openings across different types of funds, and I used them quite a bit – I’m not sure how good they are for PE or hedge funds, but for VC they were helpful in my search.

but I guess it’s different for venture capital.

What do recruiters look for when you apply to VC jobs? I’m assuming they act as the “initial screen” and then recommend you for interviews depending on their impressions of you?

A: Yeah, that’s accurate. What they look for is not too much different from what headhunters in private equity or investment banking look for: they want people who are well-spoken, have good deal experience, and show the potential to source investments themselves.

The last point in particular is really important for the buy-side because even at the Associate level, you’ll be expected to cold-call executives and find interesting companies yourself.

Q: Are they looking for any particular type of person? For example, do VC headhunters value banking experience more than consulting or business development experience?

A: I would frame it a little differently. There are 3 entry points into venture capital:

  1. Pre-MBA: You’ve done banking, consulting, business development, or product management before and now you want to apply what you’ve learned to invest in tech companies.
  2. Post-MBA: You’ve done any of the above or maybe you’ve been an engineer or marketer or anything else, and you’ve gone to business school to re-brand yourself.
  3. Operating Partner: You’ve been a VP of Sales at Oracle or another tech company for 10 years, and you’ve had a lot of success and risen to a senior level. Your boss or another colleague knows a VC, and you get a referral like that.