Five things to know before pursuing a career in the VC world

Since I started to run MemoHub batches last August, I had a little more than 20 people participating. One thing I didn’t expect, and which was very interesting to me, is that two people told me that completing the program made them realize that a career in the VC industry is not for them and that they would stop applying to VC firms going further. To be honest I didn’t expect this type of outcome. I was prepared that some participants might not like the program, but not that completing it makes them realize that the job is not made for them.

And it’s true that many people might idealize the VC job. Like any other type of job, there are some aspects that people might not be aware of and that can potentially repel them from pursuing a career in this industry.

Here are the five most important aspects that I believe you should be aware of before deciding to embrace a career in the VC world.

1- Analyzing markets and companies can be a tedious task

As an analyst, and even as a more experienced VC, you will spend a lot of time analyzing the different aspects of the investment opportunities you’ll come across. You’ll need to understand the structure of a market, to conduct market sizing, to figure out the positioning of a company in a competitive landscape, to analyze moats, to learn how a new technology works, to break down the unit economics of a company, etc (these are all the tasks we focus on in the MemoHub program). Most of the time this work requires hours of research that can be frustrating if you don’t like to dig. You won’t do all these tasks for every single deal, but as an analyst or junior VC, it will be a major part of your job and if you don’t enjoy this process a minimum you should think twice about embracing this career.

2- The VC job can be very repetitive.

In my opinion, one of the major differences between a career in a startup and in a VC firm is that the VC job is much more repetitive in terms of tasks. When you work in a startup your job and the tasks you complete can change dramatically in a short amount of time. You can, for example, start as a content writer to later evolve to head of marketing and reach the C level as a CMO. Each of these positions is completely different. As a VC you won’t experience such dramatic changes and the tasks you’ll be doing will more or less stay the same.

I decompose the VC job into four components: 

  1. Dealflow: sourcing, analyzing and picking investment opportunities.
  2. Dealmaking: convincing the founders and your firm to make an investment, followed by negotiation and closing the deal.
  3. Portfolio support: helping the companies you’ve invested in..
  4. Fund management: the administrative and strategic parts of managing a fund.

What really changes in the career of a VC is not so much the tasks he will do, but the allocation of them. At the beginning of your career, you will mainly complete tasks related to the aspects #1 and #2. As you gain experience, the allocation of your tasks will slowly move to  #3 and #4. But your job won’t change as dramatically as it can when you pursue a career on the startup side.

3- You’ll spend the majority of your time writing emails and attending meetings/calls.

Be also prepared to spend the majority of your time answering emails and attending meetings/calls. You will argue that it’s also true for many positions on the startup side, but I will answer that you have a much stronger feeling of working on a “concrete” product. As a developer, you spend a lot of time writing code and see its impact on the product, as a marketer you spend time creating campaigns and analyzing the results with analytics tools, as a sales you iterate on your sales playbook and try new things regularly, etc.. You don’t have the same feeling of working on a “concrete product” when you are on the VC side.

4- You won’t work in a fast-changing environment.

By design, the vast majority of VC firms are small companies with around 3 to 15 employees that don’t change their org structure nor grow their number of employees that much over the years. The difference with a startup is that if your company happens to be successful, then it will grow its number of employees as well as its structure and you’ll likely work in a constantly changing environment. I’m not saying that one if better than the other, but if you want to work in a dynamic and fast-changing work environment, don’t expect that when joining a VC firm.

5- Your career will likely evolve slowly.

The last point is linked to the previous one. As VC firms are small companies that don’t grow, it can take a lot of time before you evolve in your role. The typical structure of an investment team is composed of a “Partner” layer (the highest rank) with a non-Partner layer below composed of analysts, associates, principals, VP of investments (basically various seniority levels).  Since most VC firms don’t grow in terms of the number of employees, you often have to wait for a colleague above you to move to another firm before getting a promotion. Career development can be really frustrating on the VC side as it depends on many factors that you don’t control. You can be really good, but if there’s no opportunity within your firm you won’t be able to evolve.