How to get started as a Venture Capital (VC) analyst

A lot of people ask me about my VC experience and want to know the
secret to getting into the VC world.  Its a pertinent question,
especially if you're in NYC.  If you've been paying attention, my VC successor will probably reach the  halfway point in his stint this year, and
if you wait until that spot actually opens up to position yourself, well, you'll
probably be too late.

As an analyst, you can be useful at pretty much only three things:
communication, sourcing, and analysis.  The great thing for VC wannabes
is that these are all things that you can do now, before a job even
comes up.  There's nothing stopping you from putting forth your
analysis of a new startup, or tipping VCs off to potential deals today,
even when you're not at a firm. 

Many students have the misconception
that, as an analyst, you're going to be put in front of a big stack of
business plans and your filtering skill is what's going to make you the
next Mike Moritz.  Guess again.  VCs hustle hard to track down deals
and they expect everyone in the shop to be bringing deals to the table,
because you should be in the flow of interesting things going on.

But, all this can be a lot of handwaving unless you have specific,
applicable action items, and since the web loves top ten lists:



1) Make a digital home for yourself.

If I haven't beat this to death already, creating a digital presence, preferably through a blog, gives people you connect with a landing page.  It is the center of operations for all your online networking and a place for people to assess what you're all about, what you're thinking, etc--the equivalent of  hoisting a sail on a windy day.  No presence, no sail.

2) Know your community calendar... attend.

As a VC, you want to meet innovators, but the innovators are already meeting... in Meetups and Co-working groups, speaking events, and usergroups.  They'll be a lot more accepting to you if the first time you meet them isn't when you're trying to vulture around for something to shove money into.  Plus, you need to get out there and in the flow to keep up with what's going on. 

3) Be passionate for the product...no matter what it is.

Frankly, I don't know how anyone could be a VC analyst and not be passionate about the products they're looking to invest in.  If you're doing web services, and you're not a user, you're just never going to get it.  Why do people use Twitter?  Why is Facebook better than MySpace?  These are things you're just not going to understand if you're not a real user. 

4) Be an innovation leader in your own world.

You don't have to be a former entrepreneur, but being generally entrepreneurial and an innovator helps.  Did you lead the investment or entrepreneurship club at your college?  No?  Why not?   There wasn't one?   BUZZ  Wrong answer.  You should have started it.

5) Be selfless with your time for startups.

One of the most valuable thing you can do with your time as analyst is just talk to a lot of startups...get a sense of what you like and what you don't, best practices, good teams vs. weak teams, etc.   And startups are often looking for feedback, beta testers, ideas...   the more you make yourself available, the more you will learn and generally be seen as a useful person to talk to.  Go help a startup with their marketing plan.

6) Ignore the hype.

It's not just about e-mailing the companies you find on TechCrunch.   Just because it doesn't have AJAX doesn't mean it won't be worth billions one day.  Remember that the whole world doesn't necessarily blog and some startups can't even be found online yet because they're still in stealth.  You need to cut through the buzz and make your own decisions.

7) Teach.

You will never have a clearer understanding of how something works until you attempt to teach it to someone else, which requires you to make some semblance of sense of your subject.  Offer to teach at your high school or the Learning Annex or anything...  Convince grandma to join Facebook.  It will be a sobering experience and will remind you that not everyone gets RSS and some people don't see the value of being social and out there.  It's those people that startup success is built on.  Win the middle.

8) Be social and have a personality.

If you're going to be an involved community member, people need to actually like hanging out with you.  This is where those countless hours in college bars should have taught you something.  I know plenty of people who succeed because of their great personalities more so than any other reason.  It's not hard to be nice and have a little fun... try it.

9) Build relationships with VCs..not just for stock information interviews.

Right now, you can go do a report on a hot new space or a review of a product and send it to a VC (or tag it for them).   If you really want in to this space, why wouldn't you?   How about hanging around their blog or showing up at the same events?   VC's don't live in a bubble.  Their job dictates that they need to be "out there" and that's where you should be, too.   It always blew my mind when I was at USV how many people sent biz plans to info@unionsquareventuers (dot) com, when we were so out there with our digital presence. 

10) Know your place.

You are not a partner.  You're an analyst.. or you want to be.  There are a lot of people with a lot more experience than you who have seem this all before.  Respect experience.  Don't trash a startup, because, for all you know, the entrepreneur is the VC's best friend from Stanford or they're currently in talks for funding now.  The best thing you can do sometimes is listen.  Listen to what VCs and entrepreneurs are saying on blogs and at conferences and take it all in before you go position yourself as the greatest thing since sliced bread....especially since a large part of your job will be listening and asking smart questions.

So, the next time I hear from someone via LinkedIn or e-mail who wants to hear about my VC experience, I fully expect that they already go to Tech Meetups, have joined nextNY if they are in NYC, use all this stuff passionately, etc....   That's a good first step.