PS#069: How to choose a VC firm?
Continuing on the “recruiting season” theme, I wanted to discuss a relatively big question…
How do you choose a VC firm?
I’m a big believer that fit matters. I think with the right combination of work ethic, skills, and fit, the sky's the limit. One firm may be a better fit than another, so it’s important to take that into account as you decide where you’d like to be in the venture world.
Of course, that decision is not solely up to you. It needs to be a fit for the firm as well. But, there are several things that you can consider as you go through the recruiting process to help increase the chance that you end up in the right place.
Over the next few issues, I’m going to dive into this in detail. We’ll discuss the aspects that I think are most important when choosing a firm, including…
Investment Stage
Roles and responsibilities
Specialization (i.e., industry, tech, etc.)
Individual firm (i.e., opportunity, reputation, capital, etc.)
As you think about the firms you’re applying to, keep these items in mind.
Two paths.
Before we dive in, there are two main paths that I’ve seen in venture.
First, taking a long-term perspective.
This means that you’ve decided that this is the career path for you. You’re committed and you’re in it for the long haul. You see yourself investing in companies and partnering with them over the long-term. You want to build funds that will take 10+ years to be fully realized.
Second, you’re here for a bird’s eye view.
This means that you’re likely not in it for the long haul. You’re using your time in venture to find your next operating role. You want to see how this side of the industry works so that you can be better prepared for the operating side.
Either one of these paths works.
But, it means that you should be viewing the “right fit” a bit differently. As we walk through the different aspects of choosing a firm, I’ll point out how each path should be viewing it.
And, as with everything in this industry, you reserve the right to change your opinion.
The reality of the situation.
Now that we know the two paths, let’s layer in some realities that come along with making this decision.
1. You might not know what you want to invest in (yet).
As with any career, there’s a lot of things you just won’t know or understand until you’re actually in the role or firm. It just is what it is. Your initial hypothesis on what you’d like to do or invest in may completely change when you enter the space.
That’s exactly what happened to me.
When I started in venture, I thought I wanted to specialize. But, I quickly learned that I was much more interested in the “game” of venture capital. Specializing sounded great in theory, but did not work for me in practice. It just wasn’t a good fit.
So much of my success in this industry can be tied back to this decision, something I would’ve never guessed when I was initially recruiting.
2. The first firm might not be the right one.
Again, like many careers, your first firm might not be the right fit for you. It might just be your ticket into the game, but you’ll need to keep looking for that long-term home.
That’s totally OK.
I’ve watched many peers explore the venture ecosystem before finding their long-term firm. As with anything, it delays some of the compounding interest (i.e., carry, partnership paths, etc.) tied to staying in one place, but I think it's an important part of being able to do this job over the long haul.
Venture capital is a game of endurance. To be successful, you’ll need to be able to stick with this for years (most likely decades).
The 4 key aspects.
Alright, with that context in mind, we can start discussing the 4 key aspects of choosing the right venture capital firm for you. Over the next few issues, we’ll walk through how each aspect can impact your overall experience and development in the industry.
As I mentioned at the beginning, I believe this really does matter.
When thinking about these aspects, I leveraged my own experience, peers in the industry, as well as alumni of the Sand Hill Prep and Preferred Shares community.
My hope is that this will help you find the right situation for your individual goals and desired career path. I’m excited to walk through this with you. If you have any questions along the way (especially as you’re making these decisions), please don’t hesitate to reach out.
