Dear SaaStr: How Do I Become a VC?
VC looks a lot more glamorous than it is.I f you are starting from the ground floor, first, bear in mind your compensation will be just OK, you won’t really get any “carry” (i.e., share of the profits on the investments) for a long time, if ever — and your job likely will be to hunt.
To bring in the next Slack, the next Datadog, the next Shopify. And that is hard.
- First, the partners will all be biased in favor of the deals they source themselves. So you’ll have to hunt even harder. They will turn down almost everything you bring in, in favor of their own relationships and network. Not everything. But almost everything.
- Second, there are so, so many startups so you’ll really have to learn what the partners like. You’ll finally bring in a Slack, but you won’t know how to socialize it with the partnership … so they’ll pass. And you’ll pull out your hair.
- Third, you are going to have to find some way to get really good at sales. The best founders often don’t want to be hounded by junior analysts and associates. Why will Jeff Lawson take your call or email?
- Fourth, Why You? You have no brand, no track record, nothing special. There are plenty of VCs, and not enough great founders. Even at the VC firms with the biggest brand, that doesn’t mean you have a brand. And it’s even harder at firms with no brand, or negative brands.
- Finally, Competition is Sort of Fierce. It’s not a Sit in My Office and Look at Pitches job. It’s a Go Find the Next Slack job. And 20 others are trying to do the same thing.
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Why will you win?
OK now let’s assume you are actually good at this. Hunting, and then Convincing, and then Sourcing. A real successful hustler, convincer, socializer, and closer.
Then, understand most VC firms have almost zero promotion paths. Odds are stacked against you again. Those 3 general partners may be plenty happy just riding things out. Or keeping the economics they have exactly as they are. And even if you did source Uber, well, the partner that manages the deal will likely take all the credit. And even if they do decide to add a General Partner — they may grab a VP or CEO from the portfolio. Or a lateral hire. Not you. You weren’t a VP at Stripe, after all. Just some kid that hustles well.
And even if you do get promoted, it will be another 10+ years until you make any real money. Or longer. It takes a long, long time for early-stage funds to make “distributions” of their profits from investments. If there are any. And you may not even get much carry in the first fund you are a partner in. You may have to wait another 3–4 years to get material carry. And then 10+ years to see distributions from that fund.
- Not scared of the odds?
- Not worried about hunting, sourcing, and the competition?
- OK with the lack of any career path?
- OK with it taking 15–20 years to make real money?
If that’s all good by you.
Then find a way. Go work with the best you possibly can, and find a way to close 1 or 2 Figmas. For real.
Others have.
