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Jon Bradshaw & Peter Harris

Learn how to become an associate at a venture capital firm.

How Does One Become an Associate at a Venture Capital Firm?

Do you want to become a venture capitalist? If you’re wondering how people land an analyst position at a VC firm just out of school then join us.

This podcast talks about how one becomes an associate at a venture capital firm.

Questions covered in this podcast include:

– What are the top skills?
– How do you develop those skills?
– Does school matter?
– Work experience
– The Top Internships
– The Top Extracurriculars
– The Top Skills

Bonus round 
– What if I’m not good at finance?
– What if I didn’t go to a top tier school

Hosted By

Episode Transcript

Jon: So today on our podcast, we wanted to focus specifically on how does one become an associate at a venture capital firm? Peter has probably placed or help more people become an associate at a VC fund. Could we dare say you're the number one person who's placed associate elsewhere?
Peter: I don't know. Maybe there's a couple other programs out there that that place a lot of people that maybe straight out of undergrad.
Jon: Okay. So first off, like, what is an associate at a venture capital firm? Yeah. Like, what do they do? What is their role? And then they're like, let's go down into like, how does one actually become an associate or get a job?
Peter: Yeah. So it really depends on the firm. But associates generally are doing some mix of due diligence, support, deal sourcing and then operations on an as need basis. Right. So it's kind of a mix of a bunch of different things. Ultimately, you're just you're there. You're there to support the partners and the VP's and so forth of the fund.
Peter: Some firms, an associate role or an analyst role is very focused on deal sourcing and other firms. It's very focused on doing due diligence and the partners are more focused on deal sourcing and then others it's you're doing a lot of operations like fundraising, dealing with LP is tracking portfolio companies preparing materials for LP updates. I mean, it could be a bunch of different things like that.
Peter: It's generally, I think it's a pretty dynamic role. but also, you know, fairly analytical.
Jon: But an associate technically could be a wide variety of things. So like the way I would break it down is yeah, one is it could ultimately be your network. Who do you know already in there? Your skills may not matter. Second, it could also be your access to capital. If I was an associate student and said, Hey, my dad or my family or someone I know could bring $1,000,000 check with me or more, perhaps that might be a really easy way to get a job in VC.
Jon: And the third would be your skills. So let's go through each one of these First, the network. How does your network affect your role at getting a job with a venture capital firm?
Peter: Yeah, well, I mean, if you think about what venture capitalists do, it really boils down to three things. So venture capitalists find investment opportunities, diligence, and make investment decisions, right, and fundraise. And so if you can do two of those three things, then essentially and do them really, really well, like world class, you can be a venture capitalist if you can do all three, that's incredible.
Peter: Maybe you're a bit of a unicorn. If you can only do one, you're not going to happen, right? So when you think about those three skill sets, two of those are very network driven, right? One is sourcing deals, sourcing investment opportunities, getting access to really great deals, and two is fundraising right? So your network is super, super important.
Peter: At the end of the day, venture capital is very much like a people business.
Jon: What would be the top five skills generally for an associate then?
Peter: Well, for an associate level person, you're probably going to be more focused on kind of grunt work type stuff that's going to be more analytical. So in that case, I would say you really want to develop skills around doing due diligence. So understanding business models, understanding technology, understanding financial metrics, being able to do presentations and act professionally within different types of environments, whether you're fundraising, your deal sourcing, you're pitching to your investment committee, you're working with your partners, like all of those different things.
Jon: Okay, how do we develop these skills?
Peter: So on the network side, I mean, one of the super easy things you can do is just get out there and meet people, right? And try to find ways to add value to those relationships, even, you know, with no expectation of anything in return. Right. So going to different events, different conferences, being a connector between different people, whether that's connecting entrepreneurs to potential hires, connecting entrepreneurs to other entrepreneurs that could be great partners, connecting them to sources of capital.
Peter: Right. Adding value to the all of those relationships can be a great way to start building out those your network and your people building skills. On the diligence side, really what you need to do is start making investments. You could do that. There's a lot of different ways to build that skillset. One would be, Hey, go on to sites like Republic, like we fund or like Seed Invest and others and start actually investing some of your own money in developing your own investment thesis around that.
Peter: Another would be like reaching out to companies where maybe you're not personally able to invest money, but you can invest time and help those companies out with things that they need. Right? You could do different internship programs like University Growth Fund, for example, where you're going to be able to work on deals and and kind of get the reps you need of looking at multiple companies, multiple business models, evaluating lots of different management teams, building financial models, evaluating financial metrics for different businesses.
Peter: All of those things are going to be really helpful in developing that those skillsets.
Jon: Okay. Does school matter?
Peter: Peter 100%. Yeah. Going to a top tier school is going to make a huge difference. You go to Harvard, you go to Stanford, you go to Wharton, to a lesser extent, some of the other schools like Yale and so forth. That brand is going to carry a lot of weight and part of what's going to carry a lot of weight as well as the brand is the network and the doors that will open from a network perspective.
Peter: Right? You go to Stanford, pretty much everybody on Sandhill Road has some sort of connection into Stanford. And so you're going to be able to tap into those networks. That said, if you don't go to Stanford, you don't go to Harvard. Does that mean it's a death knell and you're never going to be able to be a successful venture capitalist?
Peter: Absolutely not. Right. It just means that it's going to be a slightly harder pathway for you to beat in order to get into the industry. Right. It's going to be a lot more dependent on you and your your personal hustle and your your networks that you're building and the relationships that you build in order to to make up for that gap for schooling.
Jon: How much does your undergraduate matter? Like, am I a philosophy major, Am I a finance major? Am I an accounting major?
Peter: So major matters a little bit. I would say if you look at most venture capitalists, they have a background in something technical. So most often computer science, electrical engineering, computer engineering, those types of things, even though they may have never actually been a computer scientist or programmer or what have you. The reason why that is is probably multiple fold.
Peter: So one, if you're a technology investor, having a technical background is really helpful in evaluating technology. That should be obvious. The other thing is if if most of your peers right, companies that you're investing in our founded by people with a computer science background. Right. They're going to be more likely to engage with you and respect you. Right.
Peter: And then the other thing is, if if a lot of the other venture capitalists also have a technical background, they're going to respond in a similar way. Right? They're going to look for that because, you know, the reality is technical degrees are challenging. They're hard to do well. And so if you've been through that gantlet, if you will, it's kind of a badge of honor and and something people look for just like they do.
Peter: You know, if you do an investment banking or management consulting or any one of these other, you know, prestigious, hard to do things right.
Jon: How much does an undergraduate versus a graduate degree matter? As for getting in a role as an associate, so.
Peter: The typical pathway in most venture funds is people go and do investment banking or management consulting, or they work at a startup for a number of years, and then they'll hop in with a venture fund for a couple of years as an associate. At that point, they basically have two years to prove themselves. If they can demonstrate that, they can identify really interesting deals and they can add a lot of value to the firm, and that firm decides, hey, you know what?
Peter: We don't want to miss this individual or lose this individual. Then they'll promote them to a partner path position. So that could be like a principal or maybe even a senior associate or a VP, depending on the firm. And at that point, like you don't need a graduate degree, you just stay at the firm and kind of rise through the ranks.
Peter: On the other hand, if you know, you don't meet that hurdle, which frankly is an incredibly hard hurdle to reach, then typically students will go off and they'll go work either at a larger tech company to get some more operational experience or they'll go get an MBA at a, you know, top tier university. And then when they come back, use that to leverage their way into hopefully something that's a little bit more of a partner track position.
Jon: Yeah. What about something like Boston Consulting Group? Are there like top firms that people look at primarily?
Peter: Yeah. So on the management consulting side, yeah, I mean, I think you look at the top, the top five. Okay. So you know, the McKinsey's, the Bain's, the big of the.
Jon: World and it'd be either internships would be the same probably as work experiences.
Peter: I think the cool thing about venture capital is that it's very strategy minded and so any sort of role that's going to have strategy as as part of it is going to be useful, right? So that could be you're working in the Strategy Group or the corp dev group at a company that could be working at management consulting, that could be working at another fund, you know, like university Growth Fund from an internship perspective, right?
Peter: You're getting kind of real access to venture experience. It could be interning for like a seed fund or an angel group or just working closely with an angel investor.
Jon: What would be your the top like extracurricular activities that like a student could have to get an associate role? Like if you're looking at their resume?
Peter: Yeah. So I think being involved on campus as a student, working with entrepreneurs, working with entrepreneurial clubs, maybe even starting your own side hustle your own side business so you can kind of say, I've been through that, I've been through the meat grinder that is entrepreneurship. I think those things can be really helpful. I think attending conferences can be really helpful because you're out there meeting people, you're seeing what's happening, you're listening to, you know, very thoughtful people talk about the challenges that they're facing and how they overcame them, right?
Peter: It's the ability to learn through somebody else's experience. I think case competitions can be really helpful as well. Right. Anything that gets you as close as possible of actually doing deals is going to be, you know, incredibly beneficial.
Jon: How does the University Growth Fund specifically prepare students for that? Because the way I would look at it is if I was a student and I wanted to get into VC or even finance or anything related in those fields, I don't see anyone right now in my current network that I know that's been more successful at placing students there than you.
Peter: If you think about it like very base level of any industry, right? There's a ton of jargon, and the jargon is there to make things more efficient. But it's also kind of designed to keep people out. And so step one is you just need to know all the jargon. You need to know what a pro-rata right is and a liquidation preference and a pre money.
Peter: You need to know like read a redemption clause might be you need to know like, okay, what does it mean when a company is raising, you know, a valuation that's flat from the prior round or a down round. Right. There's all these like contextual things that you need to understand that's all tied into the jargon.
Jon: So I wanted to get an internship with you, but reading like Jason Calacanis this book, Angel, be a good.
Peter: I think that can be a really useful thing. I think this week in Startups, his podcast could be helpful. I think, you know, just reading TechCrunch and Venture B and some of these other these other resources and just getting a feel for what's going on and seeing those words pop up again and again and then and then understanding what they are.
Peter: So I think that's the first level, right? Just you need that kind of basic.
Jon: That's how to get in. But like your program specifically, you guys are making deals with top alongside top tier VC funds. But like if I wanted to become an associate at like Benchmark for, for example, or battery, if I came here and work for you, I would be actually doing the role of an associate. And I don't think it's the closest approximation to say I have real like two years of experience at my college and then go apply.
Peter: And that's what I was going to say. The first level is you just need to like know what's going on, and then once you know what's going on, then it's like, okay, what we do at University of Growth Fund is we actually have you do it right. So you are evaluating investments and it's not just like, Hey, you're the lowest totem pole on the team and we're giving you like some minor, unimportant piece of the diligence to work on.
Peter: It's you're part of the deal team and you have to do as a team all the due diligence that's necessary to help us make a true investment decision and then we don't stop there. It's not like you do all the due diligence and hand it up to me and my partner and we make the decisions because we're the big boys.
Peter: You actually have to make the decision. And so every student has both the opportunity but also a responsibility to review all of the due diligence material that's been done by the rest of the team, challenge their assumptions, and then vote on whether or not we move forward. And I believe it's that action of like having to make a decision, right?
Peter: You can't just like read a text contract are going to be like, I think that's an okay deal. Like you actually have to decide like, would I put my own money into this deal? Right? And so that whole exercise of making that decision, you know, I think gives you kind of those reps, that pattern matching. Right. Okay. That's necessary.
Peter: And to your point, right, once you've done that for a couple of years, you can now point back to, you know, five, ten, 20, 30, 50 deals that you've evaluated and a handful that you've actually closed and say, yeah, I was part of this deal team and I can walk you through the investment thesis at a very deep level and explain it in a way that you understand.
Peter: Right. And so that ability allows our students to really hit the ground running when they when they started a venture fund. And as I mentioned earlier, if you think about what venture funds are looking for at the associate level, they're kind of looking for people that can hit the ground running and add a lot of value. That saves the partners time.
Peter: Right. And so that ability to like, step right in and know how to evaluate a market and a management team and build out financials and evaluate financial metrics, really saves a ton of time for the partners so that they can focus on the things that they're really good at, which is, you know, sourcing high quality investment opportunities, advising startups on the board at the board level, fundraising, some of those other activities.
Jon: That's one of the parts I missed about being in the Angel VC space. Yeah. Is that you're always learning, you're always asking yourself interesting questions like what if? Whereas right now I'm an operator. Yeah. And it just it's what I realize is that to be an operator for the most part, you're just you're doing very repetitive tasks and optimizing that task by, Hey, how do we get 2% better this month versus a what's the next billion dollar company that we're to look at.
Peter: Which makes it really fun, right? The flip side is you got to in order to make good investment decisions, it can't just all be fun, right? You got to get up the learning curve on these new technologies, these new business models really, really quickly because these things move incredibly fast. And so it's this challenge. It's yeah, it's really dynamic and you're learning a lot, but you got to be able to learn really quickly and you've got to be able to understand kind of complex things very quickly.
Peter: And so that's the other thing we look for is, you know, can this person like, think critically about things, right? Not even deals, but just like markets and interactions and people and competitors and models, Right. And and how those things will flow out. And so those are really the three things we look for, because we believe if we have somebody that's really passionate, they're able to get to the learning curve really quickly on things, understand complex situations and theories and so forth.
Peter: And they're a great team player. We can give them the experience, the training, the skillset, everything else that they need to be a successful venture capitalist.
Jon: Awesome. Well, thanks, Peter.
Peter: Yeah, thanks, John.
Jon: All right. If you have more questions, you can hit us up on the Twitters and we'll put the links in the bottom of the video. Sounds great. Thanks, guys.