GETTING THE JOB

CONTENTS:

• Why is getting this job so hard?
• What does the ideal venture capital and growth equity candidate experience look like?
• What about non-traditional candidates?
• How should I prepare for my job search?
• How do I make connections and get my "foot in the door"?
• How do I find open jobs?
• What can I expect from an interview process?
• How do I prepare for an initial phone screen?
• How do I prepare for in-person or other "fit" interviews?
• How do I prepare for technical questions and interviews?
• How do I prepare for an investment case?

DETAILS:

Why is getting this job so hard?

Because the VC/GE industries are the wild, wild West of finance. Skim "THE JOB" to understand why (TL;DR: It's not you, it's them).


What does the ideal VC/GE candidate experience look like?

Typical pathways into VC are also those that might appeal to folks working in VC, like banking, consulting and entreprenuership (for details on these, check THE JOB). It's important to understand why this is the case, so you can tell your "story" whether you hail from these industries or others. Here are the elements that top VC/GE pathways have in common:

• They're "people jobs" that form the ability to rapidly build relationships and networks, and influence (read: "sell") for a positive outcome.
• They offer the opportunity to develop expertise and networks in a specific sector or theme and predict (and act on) the latest trends.
• They develop the skills needed to analyze a business qualitatively and quantitatively and communicate these insights: macro-level research and trend analysis (e.g. which markets should we invest in and why?), quantitative and technical skills (excel modeling, number-crunching, and potentially other software/platform skills), and communication tools (e.g. PowerPoint) and techniques (e.g. in-person communication techniques).
• They're frequently prestigious jobs that give VC firms who hire you cache (unfortunate, but true). They also signal grit and work ethic due to their well-known long hours and client service orientation.
• They sometimes offer the opportunity to develop operational expertise, or the ability to execute plans (instead of just strategizing) which helps better understand what makes companies successful.

For more details and examples, check out this overview of the ideal candidate bio + a real job description, and a well-curated list of VC pathway articles on John Gannon's blog.

What about non-traditional candidates?

A minute on the podium: VC's often privilege "traditional" candidates (high-ranked bankers and consultants or others with brand experience in "gateway" fields). This seems to be due to: A) having a surplus of candidates to choose from (and no decent top-of-funnel filtering methods) B) desire to improve firm prestige, and C) the (false) belief that the only people who know how to model are bankers. This focus on prestige markers tends to disadvantage many who would be great at the job. See "RECRUITERS/PLATFORMS" for a list of networks breaking down barriers for diverse and non-traditional talent.

And some advice for non-traditional candidates: While it helps to gain (ideally well-branded) experience in a "gateway" industry, you can also tell a good "story" based on alternate experience. Make sure to hit on some or all of the elements in the above "ideal" experience overview. In addition, emphasize these traits to help you stand out from the crowd:

• Expertise + passion:  Prove that you know an industry or sector well and can't get enough of it. Know your facts, build investment theses, cultivate a list of companies you'd invest in, and find ways to express your ideas (blogs, twitter, creating a personal portfolio, etc.)
• Operational experience:  If you've done something (especially at a startup) that looks like what entrepreneurs do, you can argue that you know what it really takes to make companies successful.
• Networks:  This is rare at early tenures, but if you can bring differentiated networks to the table (e.g. deal sources, companies, other investors, buyers for your target firm's portfolio) you'll stand out tremendously. 
• Knowing your firm:  Do deep research on your target firms' theses and be able to converse intelligently about them - and even debate about them. And, again, name-drop companies you're tracking that fit the company's thesis.
• Modeling:  Prove without a doubt that you can model. Gain technical experience (whether on the job, on the side, through education / MOOCs / etc.) and advertise it prominently on your resume.

How should I prepare for my job search?

It's hard to recruit for generic venture capital. You have to learn everything about everything, with no way to stand out from the crowd -- while hoping that you actually like the job you land. You'll have more success in recruiting if you identify what you like and what you're good at, and lean into these things (hard) to refine your search process and identify firms where you'll make the best fit.

Here's a great article with 4 questions that can help you do this.

How do I make connections and get my "foot in the door"?

The RECRUITERS/PLATFORMS and OPEN JOBS sections of this website will help you find jobs that are already open. But in the wild West of VC/GE, many jobs aren't posted publicly, and candidates are frequently found through friends and networks. Here are some ideas for getting your foot in the door:

• Medium series with two great overviews of, again, why getting this job is hard and what you can do about it by Haje Jan Kamps and Sarah A. Downey.  
• A few tips + good industry stats from Seth Levine. 
• "Breaking in" advice from 46 VC's. 
• A couple articles on the "fake portfolio" approach here and here.
• Some great general reach-out advice from Steve Blank. 
• And finally, the ultimate aggregator of "breaking in" content, John Gannon's blog.

How do I find open jobs?

If you're well-networked (see above) they'll find you... but it doesn't hurt to check in with folks you've connected with (VCs and otherwise) every so often to see if they have or know of any openings. Also see RECRUITERS/JOB BOARDS and OPEN JOBS for any publicly listed jobs.


What can I expect from an interview process?

As usual in VC/GE, every firm is different. But a typical process will likely have the following components:

• Early screens, typically on the phone:  This is where investors check if your profile fits their criteria (or for non-traditional candidates, if you've got a great story that shows expertise / passion) as well as if you're interested, you know their investment type/market focus, and you have some good independent ideas about these investment types/markets. By this time, you should have at least "cocktail party" knowledge of the firm's market/s and know your own "story" cold. 
• In-person or other "fit" interviews:  You'll dive deep into the firm's theses and how you'll add value in execution. You'll likely talk through your own ideas relevant to your target firm in depth: trends in key markets, companies that will succeed or fail, and your favorites (and even least favorites) in their portfolio. You'll also dig into your experience to share why this space matters to you and why you'll add value. Of course, you'll get the typical "fit" questions as well (e.g. times you've faced challenges, worked with others, other "airplane test" questions), but know that VC/GE "fit " interviews are often an assessment of how you'll fit within the firm's investment thesis as much as its team. 
• Technical questions and/or interviews (these may be combined with in-person interviews, follow as second-round interviews, or be provided offline as a "case"): Firms differ in what they test upfront, but I'd be familiar with at least the basics of valuation and cap tables, 3-statement modeling in excel, and the basics of VC returns (see next sections).
• An investment case (as with technical questions, this may be a part of interviews, follow as a second round, or be provided offline): Firms will often assess how you'd approach and communicate the investment case for a real company. You may be asked to find one online, or you might review a real memo and decide if you'll invest in a company and at what price, and create a memo or deck on the relevant details.

How do I prepare for an initial phone screen?

Here are some of the questions you might be asked on a phone screen (and some tips and sample answers):

• What's your story / what brings you to this firm?
• Why VC? Why this industry/sector/fund type?
• What do you think are the top 3-5 trends in our industry / sector?
• What are some trends in VC generally? (You can skim pitchbook’s latest report for context here.)
• What are your top 2-3 favorite investments from our firm and why? (You might even be asked: any least favorites?)
• What are your top 2-3 favorite investments from outside our firm and why?
• How would you value an investment? (Sample answer: I'd start with the basics of valuation (see: THE JOB) and follow up by refining this valuation by comparing it to "comps," or similar transactions; talking to experts and customers; and assessing execution factors like market, team, risks, etc.)
• Some other data points that may be helpful:
• Rough market size/s for whatever market/s your target firm is in.
• Rough population of the US and a couple major cities (for market sizing conversations).
• Average target VC returns: Typically 40% per year or 10x invested capital (not that all investments hit these targets; but most early investments will target this return).
• Good questions to ask VCs/GEs in early conversations:
• What round of investment do you usually participate in, and what's your average check size? What returns do you typically target?
• What are the traits that will make someone successful in this role?
• What is the expected path for this role? Do you typically grow (read: promote) people within the firm, or do folks in this role typically move onto other firms?
• What do the next couple stages of the process look like? (It's a very good idea to ask about the process to save yourself time and energy. No need to prepare for an LBO if the VC tells you you're getting a cap table case.)
• For some industries: How do you tend to work with other players (e.g. public, private, non-profit)?
• For some firms: Do you evaluate impact outside of financial returns? How?

How do I prepare for in-person or other "fit" interviews?

There are three tricks to excelling in these interviews:

• Know your firm and their market/s:  Understand what your target firm invests in, and why, and have strong knowledge and nuanced hypotheses about target markets (including specific companies you're tracking). This might mean doing independent research, or you might have the info you need from tracking these markets routinely. You should also be able to speak to what differentiates your target firm and why these traits are important. Some examples (jargon included!): Are they "thought leaders" in the space, known for being "founder friendly," or do they have other differentiated networks or assets?
• Know your "story":  Have a clear, compelling narrative of your personal and/or professional experience that brings you to VC/GE, to your target firm's particular investment areas/theses, and to the firm itself. 
• Know your differentiators:  Based on your experience/skills/interests, understand how you'll add value to the firm in executing on its investment mandate. What do you bring to the table that's expected (e.g. analysis, modeling skills, etc.) and what do you bring to the table that other candidates won't (unique experience/skills/expertise, or even passion for the subject)?

Finally, you may hear some of the "phone screen" questions again in later interviews -- So make sure you don't forget what you learned prior to Round 1!

How do I prepare for technical questions and interviews?

Valuation and Capitalization:

• For newbs, a quick overview of valuation types.
• VC valuation: The best intro is a chapter of Venture Deals by Brad Feld and Jason Mendelson. Though it's aimed at entrepreneurs, it's actually one of the best resources for new VCs. I wouldn't recommend reading the entire book before interviews, but chapter 1 (intro to VC/deals) and chapter 3 (just the "price" section) are superb. There's also a free summary on Feld's blog.
• Another great walkthrough is BlueBook's YouTube series, "Startups Valuation Using the Venture Capital Method." The first 5 or so episodes are most helpful, with additional details (likely overkill, but try to get a read on your target firm) in later episodes.
• You can also experiment with excel valuation at The Venture Capital Method. You'll likely only need to know #1 ("basic") for interviews, but try to get a pulse from your interviewer on if they test on capitalization, and if so, how deep they'll go.
• You can then play around with sample cap tables at Venture Hacks. Again, keep it simple for interviews: it's usually about demonstrating your familiarity with the concepts and calculations, since the nitty-gritty can be learned on the job.

Deal Terms:

• It's unlikely you'll be expected to know the finer points here, but if your target firm suggests that you might, I'd read chapters 4-5 of Venture Deals and/or the summary on Feld's blog for the basics.
• Folks might also mention an investment vehicle that's all the rage in early-stage VC, convertible notes: You don't have to know everything, but can skim for basics on notes here and on SAFEs (a founder-friendly note) here.

Basic Financials:

• If you're rusty, this YouTube playlist at BlueBookAcademy is a great reminder. Investopedia also has a good walkthrough of main items / potential analyses.

3-Statement Modeling:

• You should know how to create a simple 3-statement excel model (which, for technical interview purposes, will probably all fit on one excel sheet). There are lots of free or cheap online courses, but here's a sample on Udemy.
• Note that you'll need to know more than this on-the-job, as you'll use your modeling skills for evaluating companies and deals, and may also help your portfolio companies build operating models if they don't have internal financial expertise. If you're less familiar with detailed modeling, I'd recommend asking the firm you join to provide training (e.g. I used Training the Street) to allow you to ramp-up before and after you join.

LBOs:

While early-stage VCs typically won't ask about LBOs, later-stage VCs and GEs might (and PE folks definitely will). The materials below will also be helpful in prepping for generic 3-statement financial modeling.

LBO conceptual overview

• What is an LBO: A leveraged buyout is the acquisition of a company using borrowed money ("leverage") instead of or in addition to using investor capital. The key selling point of the LBO is that the investor isn't actually the one borrowing the money -- the company is borrowing the money, and is therefore responsible for paying down interest and debt using future cash flows generated from the business. This means that borrowing risks are borne by the company, not the investor. Since most LBOs use debt to cover 50-80% of the purchase price, however, investors typically still have skin in the game, as they need their stake (typically 20-50% of the total) to increase in value as well.
• What makes a good LBO target: These targets a) have strong and stable cash flows / profit to pay down debt and interest and b) are expected to be more valuable in the future than today, so that investors can get a return on their stake (e.g. the company may grow in revenue or EBITDA, or change its valuation multiple so that the same revenue or EBITDA is worth more in a later transaction than in the current one).
• Goal of the LBO exercise: The goal of an LBO test is usually to calculate a company's terminal value at an eventual sale, the total value returned to investors, and the return profile of the investment (multiple of money and IRR). Typically, this is done by:
• Using projected EBITDA (either provided or quickly estimated) to calculate free cash flow (FCF) for an investment period (typically 3-5 years).
• Using the terminal projected revenue/EBITDA, debt, and valuation multiple to calculate the company's exit value (i.e. how much you sell the company for later).
• Adding these numbers together to get the total value of the company returned to investors (and multiplying by the investor's stake to get investor-specific returns).
• Comparing the total dollars returned versus invested (e.g. multiple of money, IRR).

LBO technical overview

• Detailed overview of LBO objectives and assumptions here.
• A "Paper LBO," i.e. an LBO task simple enough to be done on paper or a one-sheet excel calculation here.
• A detailed LBO modeling task, which is typical within PE but much less likely in GE/late-stage VC here.
• Some other notes and assumptions:
• If you expect to receive an in-person LBO and/or returns analysis "on paper" (i.e. no excel help), it may help to memorize the IRR associated with various multiples of money and timeframes using this table.
• Purchase price assumptions: You'll typically buy the company at a multiple of revenue if small (e.g. under $10M revenue) or unprofitable, or at an EBITDA multiple if large and profitable (although there's a growing trend in VC of crazy revenue-driven valuations at later and later stages of growth, which I personally can't get behind).
• Sale price assumptions: Remember, you aim to multiply the value of your stake in the company as an investor. That means either your valuation multiple improves (e.g. you change the company business model so that it sells at a 20x EBITDA multiple instead of your 10x purchase multiple), or you increase the basis of the multiple (revenue or EBITDA) so that your company's worth more at sale than purchase.

How do I prepare for an investment case?

Firms will often assess how you'd approach and communicate the investment case for a company. You may be asked to pitch a company based on your own research, or you might review a real memo (or sell-side banker's memo, called a CIM) and decide if you'll invest and at what price, and create a memo or deck on the relevant details.

I'll share guidance assuming you've been asked to draft a short deck or memo (usually 5-8 pages), as you can always trim content if they give you a short answer or a reduced page range. Here are items common to most short decks or memos: 

• Quick overview: 
• Company: Industry, business model, clientele, trends, growth plan, headquarters, founding date, etc.
• Deal: Pricing indicators and underlying financials e.g. "expect valuation of 6-8x 2019 LTM EBITDA of $5 million," any deadlines, etc.
• Equity structure: How much is being bought and from whom, how much is rolling over, will investors use cash or debt for the purchase, etc.
• High level financials: Include historical and projected (whatever projected financials your investment case is based on).
• Financials & projections: 
• Historical financials (and any callouts).
• Projections your investment case is built on (if you're fancy, you'll have a "base case," an "upside case," and a "downside case," but you don't have to go through them all here - you may want to just list the base case).
• Investment merits
• Investment risks
• Total accessible market (TAM): You can find this online or just do a high level estimate. Doesn't have to be a whole page / section if the TAM is simple to communicate.
• Returns: What you expect to make on the company after you sell your stake, typically within 3-5 years, as well as the returns profile on investment (multiple of money, IRR, etc.). Again, if you're fancy, you'll have a "base case," an "upside case," and a "downside case" here.  
• Next steps: What some areas you'd want to explore as a part of diligence? These can be company-specific, but frequently include questions around management/team, operations/scalability, and customers/competition. What are other next steps?

You might incorporate other analyses or components in your case based on the company/industry specifics and the information you're given, but I'd use the above as an initial check list and tailor accordingly.