Hi Final Draft friends! We know a lot of you are interested in breaking into venture capital, but might not know how to get started. VC revolves around backing founders as they build their businesses, but how does a venture capitalist launch their own career in order to do so?
In this blog post, we’ll provide a guide on how to break into venture capital, even from the walls of your dorm room.
Why Venture Capital?
Before diving into the specifics, let’s talk through some reasons why a career in VC might be interesting to you.
VC is a form of private equity financing that focuses on investing in early-stage startups and emerging companies with significant growth potential—think of VC like the jet fuel for innovation and growth in the startup world. It’s what helps small, scrappy companies turn into industry giants.
1. Shape the Future: VC professionals have a direct impact on shaping the future leaders of the global economy by supporting innovative startups that can have a profound impact on society.
2. Empower Entrepreneurs: Supporting small startup founders as they battle the odds can be super fulfilling.
3. Financial Rewards: If you pick a winner (or a few), the financial rewards in VC can be massive. This happens less than it might seem in the media and on VC Twitter. This is an industry of Power Law, after all.
1. Slow Rewards: VC investments often take years to mature, making it challenging to assess your performance and financial gains.
2. High Risk: VC is a high-stakes game. Investing in startups that are just sprouting their wings means you could also face substantial financial losses if they don’t take off.
3. Competition: The industry is highly competitive, making it difficult to secure jobs, win deals, and advance within established VC firms.
Becoming a Venture Capitalist: Primary Pathways
To establish a career in venture capital, you will typically enter through one of these primary pathways:
- Pre-MBA: Many VCs join firms before pursuing an MBA, often with backgrounds in management consulting, investment banking, or operating at startups.
- Post-MBA: Earning an MBA from a top school remains a viable entry point into VC, particularly for those with prior experience in investment banking, private equity, consulting, or startups.
- Senior Executive or Partner: Successful founders or high-level startup employees can enter VC at a senior level, such as Partner, Executive in Residence, or Operating Partner, leveraging their networks and experience building.
- Angel Investor: In recent years, becoming an angel investor has become a meritocratic entry point into VC. Most angels are high networth operators, making this particular path way less accessible (especially for students!)
Standing out Amongst the Competition
It’s no secret getting into venture capital can be challenging. Here are some actionable steps to help you stand out and break into VC:
1. Start Investing: Begin investing in startups or public stocks to build a portfolio. Crowdfunding platforms make it accessible, even with small amounts of capital.
2. Build Subject Matter Expertise Expertise: Leverage your unique skills or background to become valuable in a specific industry or sector that interests you.
3. Gain Startup Experience: Work for reputable companies, particularly in roles related to finance, strategy, or startups. If you can, start your own successful company, which can be a direct path into venture capital.
4. Expand Your Network: Attend industry events, workshops, and join professional organizations to build connections with industry leaders.
5. Social Media: Start a blog, grow your Twitter presence – publish your investment insights and thoughts online.
6. Join a Student Venture Fund: Gain real-world VC experience from funds like, Dorm Room Fund, that allow you to build a track record without having to deploy your personal capital.
(Shameless plug) Dorm Room Fund’s Investment Partnership applications are closing next week! With 78% of our alumni becoming founders or VCs after graduation, DRF is an amazing stepping stone for breaking into VC as a student.