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How to become a venture capitalist

Since I joined the ranks of venture capital investors, the most common question I seem to get from my friends and colleagues is, “How did you become a venture capitalist?” I think it’s because the path and even the role seems opaque to so many. For others, mostly those working at technology startups, venture capital can seem like a dream job.

Before I attempt to answer the question, I’d like to point out that the glamour of many jobs often appears greater from the outside than the inside. Despite the potentially misleading title of this blog, please don’t assume you’ll come away knowing how to become a venture capitalist. Truth be told, I didn’t actively pursue going into venture capital, and I doubt there is any one clear path to becoming a venture capitalist. From my observations:

  • Some come from being an entrepreneur.
  • Some come from being a business executive.
  • Some come from being in finance or investment banking.
  • Some come from academia or even inherited wealth.

Instead of trying to map a path into venture capital, I think it’s better to map a path to your own dream job. When someone comes to me for career advice, I like to share with them some of the tools that helped me navigate the forest of choices available to pursue. Here’s a career Venn diagram that I put together based on some work posted by two guys named Simon Kemp and Bud Caddell.

career venn diagram

This graphic (created on Canva) is a simple yet handy way to think about the three key areas to consider when evaluating a professional opportunity.

Strengths:
Everyone does something pretty well, ranging from above-average to world-class. Evaluating your strengths should begin with a retrospective view of the work you’ve done in the past. I generally encourage folks to seek out mentors, advisors, and peers that you work closely with to get their perspective on your strengths. A variety of tools such as 360 reviews, personality evaluations, and some analysis of how you spend your time can help you gain insight into your strengths. The exercise of self-assessment can be an uncomfortable one that most people would rather avoid. Don’t feel bad about the discomfort; just power through and seek the truth. No one is ever dealt a perfect hand in the game of life, but you have to know the cards you’re holding to play the game as well as you can.

Passions:
This is likely the most straightforward area of evaluation, but it does require some introspection. And while our passions can change over time, there are some things in our lives that endure and hold our interests. It’s important to think over the horizon of time and identify the areas that will most likely keep you coming back for more. A good litmus test is your hobbies. If you can somehow incorporate those underlying components of your favorite hobbies/interests into your professional endeavors, you will likely have more passion for the work that you do. And work will feel less like a four-letter-word.

Rewards:
Most people want to make a lot of money in the work they do. But not all jobs have the same pay range, for a variety of reasons. So yes, it’s important to rank the financial components (salary, bonus, equity) to tap into your motivation. However, the non-financial rewards (autonomy, mission, career path) that motivate you to do your best work are often overlooked. Try to think about when you did your best work and the environmental elements (supportive boss, team culture, ongoing training) that helped you do your best.

My path into venture capital:
I was recruited twice into venture capital investing. The first time was several years ago, but I did not pursue the opportunity then because the VC industry seemed opaque, intimidating, and difficult to understand. I understood that a VC’s role was to invest in companies, sit on boards, and have the shared responsibility of hiring, supporting, and sometimes replacing the CEO. However, I had heard some horror stories of big egos, politics, and the high percentage of arrogant yet capable people working in venture capital.

That said, many top tier firms, such as NEA and Sequoia Capital, had established an admirable approach of consistently putting their portfolio companies ahead of their own firms. I had first-hand experience with this positive behavior, as well as the significant benefits that high-quality VC board members could make in the early days of a startup, particularly around strategy, positioning, and talent recruiting.

This leads to my story with Venrock. I had never worked for a Venrock portfolio company but I knew that Venrock was one of the highest ranked VC firms, particularly with IPO exits. Venrock was recruiting for a new investor to help lead the charge on infrastructure, security, and cloud-centric technology investing and looked at a variety of candidates. My background matched several of the key criteria they were seeking: technical background, moved up the ranks from programmer to executive, operating experience at large technology leaders and fast-growing startups, and relevant infrastructure knowledge in networking, security, virtualization, and storage. Venrock had built an impressive franchise in this area of technology infrastructure particularly with Partner Emeritus Ray Rothrock, who recently retired from the firm.

Like NEA and Sequoia, Venrock has a strong reputation for supporting its entrepreneurs and portfolio companies. When I started to ask around about Venrock, it became clear that they had earned high marks over multiple decades for being value-adding board members to their CEOs and founders and overwhelmingly patient to their startups. That investing philosophy could be attributed to the Rockefeller family roots where the emphasis was on “not being afraid to give up the good to go for the great” and “every right implies a responsibility; every opportunity, an obligation; every possession, a duty.” Further, both Brian Ascher and Bryan Roberts, who led the charge in recruiting me to Venrock, stressed that there were two key tenets to the working culture of Venrock:

  1. Intelligent application of hard work & hustle
  2. Don’t be an a–hole

These cultural tenets might sound like motherhood and apple pie. However, they have meaningful application in daily conduct. The culture here is a key differentiator in evaluating and investing in quality startups, while supporting and helping entrepreneurs. I chose Venrock because its values and culture align with my approach to doing business. Venrock offers me a platform to leverage my strengths and experiences, rewards me for successful investments, and allows me to continue to work with entrepreneurs that have a similar enthusiasm for building the future.

Final thoughts:
I believe the best way to seek our own versions of success has to start with an introspective search for what strengths we possess inside, what brings us joy and fulfillment, and what forms of reward motivate us to do our best work. Try to strip away the expectations of society, friends, and family, because the collection of our choices and actions define us as individuals. It’s important to think across stretches of time and to dig deep inside to discover what makes us tick and hopefully content.

This approach might not lead you to a role in venture capital investing. In fact, it might lead to a role that’s the opposite of what VCs represent. Yet the rewards of finding work that maximizes our strengths and engages our passions sounds far better to me.

dougdooley456How to become a venture capitalist

Comments

  1. Pingback: How to become a venture capitalist : Venrock

  2. Gregg

    Hi Doug,

    Thanks for the post. This Venn diagram is a powerful, concise summary of the challenges and trade-offs in career planning. Always harder to do in practice on yourself, but something I intend to give some thought to using this framework, as I want to start mapping out what this looks like to know what to aim for, and of course why.

    Then throw in a few more circles about location, your partner’s career, kids, work/life balance, etc and it gets more complicated!

    1. Author
      dougdooley456

      Greg – Thanks for the comment. I agree it’s tough to do on yourself and there are several more variables to factor for completeness. Work consumes a massive amount of our energy and time. I found it to be a handy framework to get honest with myself about how I spend my time. Goal is to love what you do and do what you love. Best wishes on your journey. Doug

  3. Robert Hudgins

    Look forward to future blog subjects. You’re off to a good start. Proud of you.

  4. Ying Ying Shi

    What could be more difficult than to put a complex reality into a simple Venn-Diagramm? The graph is amazing and extremely enlightening. No one should settle until having found the intersection. Congrats Doug for having found it in Venrock!

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