Getting a Venture Capital Job: Fighting Upstream

(This was originally written in 2002-03, but still relevant today.)

Getting a VC job: fighting upstream By Mark Cicirelli Mcicirelli(at)mba2002.hbs.edu I have compiled what I hope are helpful observations from my job search since finishing my MBA this June.

 Be warned that my advice is most relevant to those at the same stage of career and training.

 I’m very much a generalist. I received my undergrad degree in economics and government from Dartmouth, spent three years at an investment bank, one year founding and fundraising for two startups, and then received my MBA from Harvard.

While I am very familiar with the private equity process, I am not an engineer, a biochemist, or a war-weary, metal-bending “operations guy.”

Those who have that sort of background will face different obstacles and opportunities in seeking a VC job.

The environment; no rush, very particular: Pundits predict a 30% to 75% reduction in VC personnel.

Venture funds are shrinking, and with them the fee income available to support salaries.

Aggressive boom-years hiring, and reluctance to layoff, has resulted in excess junior staff.

Above all else, this means VC are in no rush to hire. Layoffs in banking, consulting, and VC have also resulted in an ever growing supply of highly qualified candidates.

 Additionally, since post-MBAs usually fill partner-track positions with an eventual claim on fund profits, VC have little incentive to hire.

This environment has given them the luxury of being extraordinarily particular. Why hire someone that requires training when there is an abundance of candidates who already possess buy-side experience, a scientific degree, an MBA, were strategy consultants and started several successful ventures? 

What to do?:

But even as the industry contracts, particular circumstances do create openings, and some people are being hired. Given the bad environment, what can improve your odds?

Proprietary “deal flow” As in the VC business itself, creating proprietary deal flow is key. With so much competition, you need to uncover openings before they are widely known.

 Usually positions will never be advertised. In an environment of few openings and long odds, it’s a numbers game. Certain sources of leads may be more productive, but you cannot afford to neglect any.

One approach is to follow industry news and anticipate hiring. Monitor electronic newsletters like VentureWire.com and TheDeal.com, and the site Privateequitycentral.org, and look for announcements of new fund closings, or organizational shakeups, or shifts in strategy that might result in a firm staffing up around a new initiative.

 Better yet, if you know fund-of-fund investors or private equity lawyers, ask them who is in the market raising not-yet-announced funds.

 Work the network Once you’ve identified a likely target, both as a way to improve your chances, and as a source of new leads, you must shamelessly work your network.

You cannot hesitate to lead with your “in” and then ask for what you want. Ideally you know someone well who can personally introduce you to the firm.

 Personal references are easily the single best way to approach a firm. Lacking that, look for some point of commonality in background between you and the fund’s management.

 Often this will be a university or a common prior employer. Bluntly highlight this common connection, in the subject line of the email, and make sure the first paragraph unambiguously communicates what you want of them (a meeting or a phone call).

 Where you think a firm is hiring, but you don’t have a contact, or where you have a contact, but their firm isn’t hiring still try. Circumstances might eventually change, and your contact can point you in productive directions and make introductions.

Speaking of contacts, don’t make the mistake of only networking towards the most senior people.

While they may have the most sway in their organization, they are hardest to reach, most burned-out on networking, and probably know the least about junior hiring at other firms.

Counter-intuitively, some of my best networking has been when I’ve networked down in the organization.

Junior people are more generous with their time, are often more open, can give you valuable scoop about their firm, and have friends at other firms who know about the junior staffing situation.

 Getting them to talk It also takes practice to get useful information from contacts. Only after fifteen minutes of conversation, once they have had time to dwell on your situation, and once they have decided you are a quality candidate, will they begin to offer you leads and introductions.

 Best of all is to push for an in-person meeting, where you are most likely to have a lengthy conversation. Ask to grab a coffee or meet them at their offices.

 Less effective but the vast majority of your conversations will be by phone. Email is only useful to send your resume, introduce yourself, and set up a time to talk or meet.

 Once you’re talking you need to persuade them to take ownership of your situation, and you need to differentiate yourself.

 Asking for “help” and “advice” on your job search strategy psychologically allies them with you, and prevents them from declining to talk because they don’t have an opening at their firm.

 This “help/advice” phase of the conversation also gives them time to warm up to you so they are comfortable using their Rolodex for you.

 Be different, have a solution To differentiate yourself be prepared to have a well conceived point of view on where you’d be investing right now, or interesting ideas on sourcing deals, or generally some way to demonstrate that not having a VC job hasn’t prevented you from acting like a VC.

Make it clear that hiring you will provide a solution to whatever may be their problem. Along these lines, going to conferences will give you ideas, put you in contact with new leads, and prove your sincere interest in the business.

(It’s often possible to get into conferences for free or at discounts if you offer to help the organizers with event setup/breakdown.) Working around VC if not in it If none of this is working, there are more creative but time-consuming ways to get noticed.

 VCs have mentioned that they would consider short-term consulting relationships to help them deal with troubled portfolio companies. Others have said they would welcome introductions to quality companies seeking venture investment.

They are often prepared to pay for these services. Actually taking a full-time position at a portfolio company is another possibility. Targeting the segment du jour And if you are interested in buy-side private equity generally, there are areas that are actually thriving in this environment.

 Loath to lose management fees, many partnerships are shifting their investment focus rather than returning capital commitments.

Mezzanine debt, biotech, distressed assets, and defense companies have all seen investment increases. If you are flexible on geography, approaching venture firms in smaller cities or suburban areas will allow you to sidestep the throngs of candidates on either coast.

 Do you really want in?: With so much turmoil, it’s not always clear that any job in the industry is a good job.

 Numerous VC to whom I’ve spoken have warned that the job isn’t nearly as fun as it once was, and job security no longer exists.

Evaluating a job offer is complicated by the questionable viability a numerous partnerships, portfolio write-downs endangering incentive compensation, and the likely death struggles for advancement in overstaffed firms.

 The good news is that for those firms that survive the shakeout, those standing will be richly rewarded during the rebound.

Even if the job search is unsuccessful, the effort itself extends your network the seeds you sow today may yield fruits in better times.

Mark Cicirelli graduated from Harvard Business School in 2002, and joined Thomas H. Lee Putnam Ventures. Mark is now an investment analyst at Elliott Associates, an activist hedge fund.