Apparently Rob Go, co-founder of NextView Ventures, a Micro-VC firm based in Boston, gets asked that question frequently, especially around the time business school grads start hunting for a job. He offers a sober look at the reality of a venture capital job in a recent guest article for BusinessInsider.
While it looks glamorous from the outside, there are reasons to think twice about whether it’s the right path for you says Go.
First, you have to be comfortable with disappointing people. As a venture capitalist, you’ll only invest in 1 out of 100 investment proposals that cross your desk, and probably fewer than that. So you’ll have to say “no” to a lot of enthusiastic, bright, ambitious individuals who are pouring their hearts out to you in pursuit of their dream. You have to bring the cold, hard truth of reality to the equation: is this idea “big enough?” Will this team be able to achieve their goal? And while you may think you have the expertise to help entrepreneurs succeed, more often than not, you end up jumping in when things are going wrong, not right.
Second, being a venture capitalist is a more lonely experience than you think. Partners in VC firms spend a good part of their time travelling, meeting companies, meeting investors, or doing something else on the road. Each partner is like an island unto himself, an independent profit center, searching for deals and reporting back in the partner meetings every so often. And while the amount of solo activity differs from firm to firm, you may still find yourself spending a lot of time away from family and on the road, versus working together in close-knit teams.
Third, venture capital is risky. After just a couple of years, your skills grow stale and you are not as good as your former self before you became a venture capitalist. In 4-6 years, you start running out of other career options besides working in venture capital. So if you’re not a full partner by then with a meaningful chuck of the profits of the firm, your employment options get squeezed. A typical VC will do about two investments per year; a principal or junior partner might have a slower pace. So in 4-6 years, you might realistically be responsible for a total of 3 investments. This is the time when the other partners in the firm are going to make the decision whether to make you a full partner. Those aren’t great odds, says Go, in an industry where only about 20% of startups survive, and only half of those provide any sort of significant return for the firm.
“Do you really want to be evaluated on those 3 shots on goal, when: a) it may be way too early to tell if any of them are winners but losers are usually identified more quickly; b) broad market fluctuations have a huge impact on the success of these companies; and c) most VC’s will agree that there is a huge amount of luck involved in this business?”
What’s your take? Is a venture capital job worth the long odds? Has it been worth it for you? Why? Add your comments below.
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