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This blog firstly appeared at VEECEE
A typical Venture Capital fund, with the size of 100-200 million would probably have 2-4 Partners, possibly 1 Principal and 1-2 Associates or Analysts. In a recent blog post, Vincent Jacobs from Kima Ventures took a deep dive at the backgrounds of junior employees at European venture capital funds. In total he identified 175 people working in junior roles at 103 different VC funds in 15 different European cities. It is quite an interesting post. But one of the main takeaways is that Venture Capital is a very small industry, with only 175 – 200 junior positions around Europe.
When I decided that I wanted to become a VC, I started reading every resource I could find at the time. The majority of articles on ‘how to get into venture capital’ pretty much argued that it is impossible to enter the sector without enormous luck and at least 20 years of experience. One of the most famous posts presenting a similar opinion is the ‘ Venture Capital Aptitude Test’ from Guy Kawasaki, where he mentions ‘ Venture Capital is something to do at the end of your career, not at the beginning. It should be your last job, not your first’.
Most of the people who ever tried to get into a junior role in Venture Capital have probably heard the response “You have no experience. Go work for 20 years and then try to enter”. As a VC you need to find the best companies to invest at and then use your experience, advice and network to add value to the company and help them grow. Therefore the logic goes. What value can somebody without a vast experience add?
Whilst I agree with the basis of the argument, and I have great respect towards Guy Kawasaki and all other people that share similar views, I sincerely believe that it is better to enter the Venture Capital industry from a young age and grow your experience in the sector. The three main reasons are:
1. More productive years
Malcolm Gladwell wrote a book called “Outliers” in which he stated (presenting evidence to support the argument) that it takes 10,000 hours of involvement and practice to become an expert at something. When you translate this to working hours, this could mean anything between 4-8 years before someone masters a given subject. By using a simplification and taking the average, I am assuming that an outsider to the Venture Capital industry would need at least 6 years of work experience in the sector in order to become an expert at it.
A senior executive joining the Venture Capital sector at the age of 50, after having gained 20-25 years of experience would start being highly productive at the age if 56. Assuming a typical fund lifetime of 10 years and a new fund raised every 4 years, this partner would be able to be fully active after getting to the ‘expert’ stage (from fundraise to full exit) in maximum 2 funds.
On the other hand, an Analyst / Associate / Principal, joining a Venture Capital firm at the age of 30 with already 3-5 years of job experience would gain the ‘expert’ stage at around 36 years old. Applying the same assumptions and simple math, this person would be able to be fully active after getting to the ‘expert stage’ (from fundraise to full exit) in around 6-7 funds.
2, Easier to mingle with young aged entrepreneurs
Being at a young age, it becomes easier to source and connect with young aged founders, since you are sharing similar interests, life style and possibly common friends.
3. More receptive to new technologies
Venture Capital is one of these industries that your job never ends. You are constantly working. There is always another article to read, there is always another great event to attend, always another promising entrepreneur to talk to. In this sense, it requires people that still have a young person’s mentality; continuously eager to take the extra step, forget everything they know and learn something from the beginning. Young people, carry less experience and therefore are more receptive on new ways of doing things.
In conclusion, whilst I fully understand the importance of operating experience prior to entering the Venture Capital world, I believe that given the opportunity and assuming somebody really likes the industry, it is better to enter from a young age. Venture Capital is an industry that allows people to get enormous responsibility from a very young age, even in junior roles. Besides being highly intellectually stimulating, I sincerely consider Venture Capital to be the ideal industry for someone to develop leadership skills and grow a great professional network, while at the same time really making an impact.