MBA to VC: a Resource Guide
|Jul 3, 2019|
Around this time of year, I receive a number of inbound requests from MBAs who are interested in pursuing careers in venture capital.
Because I find myself sharing the same set of resources and suggestions, I compiled this list of articles, resources, newsletters, and other information. While this list is intended for MBAs, anyone interested in entering the industry or simply learning more about venture capital will find it to be a useful starting point.
Note that this is not a tactical playbook for MBAs on "how to break into VC". There are already a number of excellent posts on that topic. Instead, it's a list of the resources I've found valuable during my transition into the industry.
The resources are broken up into three categories that map roughly to the stages of a career transition.
Foundations: VC career switchers come from a variety of backgrounds — finance, startups, big tech, consulting, and more. It’s important to build a foundational understanding of how the industry works, the language used, and how to get involved.
The How and Why of VC: it’s important to understand why venture capital is attractive from an investment perspective, beyond the fact that it’s fun to invest in really cool tech and awesome founders (it really is!). Questions like: How does a fund return money to its LPs (limited partners)? And why would an investor choose to allocate capital into relatively risky venture investments to begin with?
Building context: Develop a unique point of view on topics, industries, trends, or technologies that matter you. Begin to build a skillset or offering to add value to founders, investors, or other participants in the ecosystem.
Next steps: Finding opportunities and building a network.
Develop an understanding of how the industry works, the language used, and how to get involved.
Brad Feld's Venture Deals is widely considered to the best single resource to understanding term sheets,
VC Glossary: bookmark this; you'll refer back to it as you begin to learn the language of VC.
Blogs and newsletters
VC is a fast moving industry. I've found these blogs and newsletters valuable in keeping up to date on funding news, high-profile people and firms, technology trends within my areas of focus, and in my local environment (NYC).
Axios Pro Rata: The best high-level overview of activity in the industry. If you read just one newsletter, read Pro Rata.
Fortune's Term Sheet: similar to Pro Rata. You’ll see many of the same deals covered.
CB Insights: often tongue-in-cheek but always insightful, CB Insights is especially good at covering entire industries with its deep dives.
Ben Thompson's Stratechery covers broad topics beyond VC, but his thoughtful analysis will be valuable as you learn to conduct your own analysis or want to do a deep dive on an industry he covers
AVC: Fred Wilson of Union Square Ventures shares thoughts and news in a regular newsletter.
Tom Tunguz of RedPoint writes a blog and newsletter that focuses on SaaS startups, data analysis, data-driven investing, and more.
Andrew Chen of a16z writes essays on growth at early stage startups and other topics.
Both Sides of the Table: Perspectives — often tactical — from entrepreneur-turned-VC Mark Suster.
Paul Graham: Essays and blog posts from Paul Graham, founder of Y Combinator, on early stage startups and investing.
Local events and resources
Beyond building general knowledge, it's important to become involved in your local VC and startup ecosystem. I can speak only to NYC-specific resources from my own experience, but most cities or regions with active startup or technology ecosystems will offer a wealth of opportunities to get involved locally, from meet ups and events to newsletters with a geographic focus.
AlleyWatch: covers the New York technology, startup, and entrepreneurial ecosystem.
The How and Why of VC
Beyond a general interest in technology and early stage startups, you should be deliberate about why VC interests you as an industry and as a career. To do so, I suggest studying the VC from both an investment (i.e. capital allocation) and a tactical perspective: why do investors choose to allocate capital to VC and venture-style investments, and what does a VC investment actually look like?
Understanding the economics of venture capital
Sometimes referred to as "venture math", it's essential to understand how VC firms make money and why venture investment provides an attractive investment opportunity to a firm's LPs.
Homan Yuen explains the how and why of venture capital investing in VC Math
John Cousins of MBA ASAP explains how to calculate IRR Internal Rate of Return. IRR is a metric commonly used to measure VC performance. Similarly, Scott Hirleman's piece Why IRR Is The Most Important VC Performance Metric addresses the same topic.
Fred Wilson of Union Square Ventures explains Venture Fund Economics
Meaningful VC Exits: The math on what it takes to return a fund
Portfolio Construction: How should you build a seed-stage portfolio?
Three Core Principles of Venture Capital Portfolio Strategy: What does it take to build a successful VC portfolio?
Deals and term sheets
These are the contracts and agreements that outline the specifics of an investment. An understanding of term sheets illustrate how deals are executed in a tactical sense: what terms are important to investors/founders? What is negotiable/non-negotiable? What is standard/non-standard in most term sheets?
Understand what VCs mean when they talk about various stages, like Seed or Series A.
The Pre-seed FAQ: Great overview from respected seed investors K9 Ventures
For Fundraising, Seed is No Longer a Round, It’s a Phase: Hunter Walk comments on how seed stage investing has evolved
What does success look like?
With an understanding of venture economics, you might wonder what success looks like in VC and how performance is evaluated.
Fear and loathing in venture capital: Max Niederhofer of Sunstone Capital highlights some of the challenges associated with pursuing a career in venture investing. Despite the bleak title, it's a useful piece on how to face the difficulties of this career path.
VC and frequent writer Semil Shah published an excellent piece about breaking into and succeeding in venture capital. In the piece, he argues that it's essential to develop "context". Semi defines "context" as:
"You have a network; you hold a point of view on a few topics that matter to you; that other people seek you out for help and advice; you have some understanding as to how the ecosystem’s participants — the founders, the early employees, the “joiners,” the operators, the angels, the investors, and the press — interact"
This idea of context resonates with me. To that end, I've used the following resources build my own unique context.
Developing an investment thesis
Because success in venturing investing is often predicated on making contrarian bets, it's important to develop your own unique point of view.
Simply put, you might think of your investment thesis as your worldview as it relates to an industry, technology, or macro trend. Given what you believe about the future, how will you place your bets?
USV Investment Thesis: USV periodically updates its investment thesis and explains how its past or future investments fit into that thesis.
Marc Andreesen Debates Peter Thiel: a video debate on the macro-perspective on innovation.
Beyond Network Effects Digging Moats in Non-Networked Products: Building defensibility beyond network effects.
Thinking like an operator
In order to effectively evaluate an investment opportunity, you will need to have an understanding of the business drivers at a startup. Start by understanding some of the most commonly used metrics and measures: CAC, burn, margins, LTV.
Burn Rate: Thinking about burn rate and it relates to fundraising.
Profitability in Tech: The growth vs. profitability question.
The Only Thing That Matters: thoughts on team, product and market from Marc Andreessen.
Managing a Fund: LPs, Returns, and Management Fees
Recycling Your Management Fees: Overview of recycling management fees and the resulting impact on a fund.
VC Industry Evolution: A look at the evolution of the VC industry in recent years.
Pay Attention to the Package: Fred Wilson on why timing matters when investing in technology trends.
Creating GP-LP Alignment — Why Terms Matter: A leading LP weighs in on management fees.
After you've armed yourself with a strong foundation in all things VC, developed context, and built out your network locally, you're likely seeking opportunities with a fund.
The bad news: no matter how knowledgable and prepared you are, venture capital can feel like an opaque, clubby industry. Fortunately, there is a wealth of resources readily available to those targeting a career change into venture capital.
Your Personal Brand and Niche
You likely noticed that many of the resources above are written and published by VCs. Publishing content for free, however, isn't purely altruistic: VCs have a strong incentive to remain top of mind for founders looking for capital as well as for other investors and even potential LPs. Writing and tweeting serves to build their brand and ensure they remain top of mind. You can approach your own personal brand in a similar way.
Mark Suster on why building a brand matters
VC Jobs and Internships
John Gannon’s regularly updated blog is an excellent resource to find VC jobs and internships
The popular VC Finder Google sheet lists VCs by sector, stage, and focus area. You might use this to build a list of target firms that interest you. It's focused on firms with a New York presence.
AngelList is most effective at finding startup jobs, but you can also use to find VCs who have invested in companies you admire or are in your focus industries.
School clubs and newsletters: as a student, you should leverage the resources available to you on campus. Most business schools located in major tech hubs have some flavor of VC club or association. Join and ask your classmates or club leaders leads, intros, and other opportunities.
Organizations like NYCVC (New York) and NextGen Partners (Bay Area) often host events and meetups, or maintain active discussions, forums, or Slack channels. While they often restrict membership to professionals actively working in venture capital, you might consider reaching out to organizers or members to inquire about upcoming events or specific people you'd like to get in touch with.