You’re fresh out of university and are hungry to make a name for yourself as an investor. But not just any investor. Wall Street and stock markets are for boomers. You want to be a venture capitalist. You want the salary, the returns, and the reputation that comes with being a key dealmaker.
But how do you get your foot in the door? Where do you even begin?
A career in venture capital is one of the most difficult to break into. In fact, it has even been compared to breaking into Fort Knox. It isn’t impossible but it is extremely difficult.
Why?
VC jobs are scarce and are rarely posted (often being shared internally among the networks of VC firms). When a VC job is posted, thousands of people apply for a single role.
Where does that leave you?
How does one start a career in VC as a fresh graduate?
Is it even possible?
This is what this article is going to break down.
If you manage to get your foot into the door at a VC firm, it will most likely be the result of participating in a fellowship program.
But what does that mean?
Fellowships are awards given to exceptional individuals who have extraordinary academic or professional backgrounds. They are difficult to obtain and are quite rare. Fortunately, this job board is updated weekly with VC fellowship openings.
Fellowships often last a year and involve a program consisting of coursework and mentorship from the senior members of the firm (some VCs even have mentors from other major firms). Those who are lucky enough to participate in a fellowship learn all major aspects of the VC industry. This includes, but is not limited to, the following:
The goal of a fellowship is to build a path into the VC industry for aspiring investors. Not only do VC fellows receive a salary at market rate, but the knowledge and connections they make allow them to have a future in a highly competitive and highly compensated industry.
Popular fellowships include 406 Ventures, Amasia, and Bowery Capital. For an expanded list, you can visit Profellow.com.
Venture Scouts are individuals who are able to identify promising startups at the early stage and pass on deal flow to venture capital firms that they are associated with. Many VC firms have scout programs available to the general public. While not the ideal arrangement (scouts are unpaid and are generally considered interns while in other cases, they are established entrepreneurs who pass on deal flow), it offers a path into venture capital.
There are two types of VC scouts. The first is an internal VC scout.
Internal scouts work as a full time member of a team within a fund or a fund’s scouting program. An internal scout could include interns, associates, researchers, and even junior partners who happen to come across possible investment opportunities. The aim of the internal scout is to meet as many founders as possible. If the founders are a match for the firm’s thesis, they are then brought into the firm to pitch.
The next type of scout is an external VC scout. External scouts are not full time employees and are not paid. They often scout companies for the fund as a side hustle. These are often well connected entrepreneurs or angel investors who have a relationship with the VC fund and provide them with possible investments.
Regardless of what type of VC scout one may be, they both have responsibilities.
This sounds like a lot of work and the position is unpaid. So how do you make money as a scout? There are a few different ways.
Compensation for relevant introductions: Some scouting programs will compensate their scouts with a small bonus whenever an introduction is made between the fund and a company that matches their investment thesis. This is often after due diligence is completed and the introduction isn’t a cold email. This is more common with firms that send scouts out to focus on startups in certain verticals and geographies.
Compensation on deal completion: Certain programs will compensate the scout only after an investment is made into the startup and the deal is completed. It may be a small percentage of the total amount invested or just a flat fee, it depends on the scout program’s conditions and terms.
Compensation via equity proportional to the investment: In some cases, the scout is compensated via equity. This is different for every program. Under some circumstances, the scout holds equity and is listed on the cap table of the startup. Or the scout shares in the investment returns IF the startup has a liquidity event (whether through an IPO or acquisition). The average exit for a startup could be between five and ten years, so don’t start looking at yachts just yet.
If you are interested in becoming a VC scout, Superscout.io has a directory of over one hundred scout programs offered by various VC firms (many of them top-tier). Each one is broken down by investment focus, program details, and application process. Some programs, like Sequoia, are invite-only. Others like Ada Ventures have an open application process.
Regardless of how you plan to enter the world of venture capital, it helps to have resources for networking, job opportunities and, most importantly, learning. One of the best resources is the GenZ VC Slack. Join over 17,000 GenZ founders, creatives, investors and those looking to break into VC. They also have a job board that is frequently updated with new opportunities.
Speaking of Slack channels, Sutton Capital has a slack community of almost 24,000 users who include everyone from scouts to general partners.
John Gannon has a great blog that includes global VC jobs and internships. This is constantly updated and should be bookmarked for those who are truly interested in getting a job in VC.
Breaking into VC, especially as a fresh graduate, could be one of the most difficult things you attempt. But it could also be the most rewarding, both financially and professionally. By having an understanding of fellowships, scout programs, and these free resources, you are giving yourself an edge.