Friday, 11 January 2013

How to Become a Venture Capitalist in Canada


It seems that a lot of people ask me how to become a venture capitalist.  Seeking that answer got me reflecting on my own path to this point in my career.
 
First, here are the straight goods:  it’s not easy to become a venture capitalist.  Some who have made it give a nod to being in the right place at the right time or just plain old luck.  But all entrepreneurs, all successful business people know that luck is a fine blend of preparation and opportunity.  There are people in every area of life who seem to attract luck and success, but a deeper examination usually turns up several key characteristics. 

One of these characteristics is good old fashioned hard work, over what is often a long period of time.  There’s no getting around having to work at something in order to gain acuity.


This funny poster hangs in the Mozilla headquarters.
Next, as Stephen Covey points out in his book The Speed of Trust, it’s critical to build trust among those in your field.  Business, especially investing, always has been and always will be a trust-based business.  When large sums of money are being transferred between bank accounts, the involved parties need to trust that everyone will do their part responsibly and with a high degree of integrity.  In venture capital, as in most things in life, you are your word.

Confidence is another characteristic of the venture capitalist mindset.  You will need confidence in yourself and your abilities as well as confidence in the deals and funds that you choose to engage in.  Confidence is born out of experience, education and mistakes: three things to embrace along your journey.  Painful as mistakes are, they will give you strength, resolve and a gentle grounding: in other words, confidence.

Finally, mind your p’s and q’s.  We live in a global village and word travels fast within it, no matter your sector or role.  So, when a frustrating situation arises, when a deal goes sideways or when an associate proves difficult to work with, you’ll need to quietly go into your office, shut the door, and hit your punching bag.  No nasty emails, blog posts or memos, and no snide comments to others: these will only come back to haunt you and tarnish your own reputation.

Finding opportunities that open the door into the world of venture capital is tough and usually beyond our control, but there are options available to those who want to find a way to wedge their foot into that door.

One of the better ways is to get hired onto a venture capital fund, and then work your way up through the ranks.  Are there a lot of such jobs?  No.  Is it a clear and easy path up the ladder?  No.

Ideally if you can land a job in the venture capital world as an associate or principal then you’re well on your way.  Again, time will be a factor, and you’ll need to work towards becoming part of the team who manages a new fund, since it’s unlikely that any other venture capitalists are going to step away from a fund that they’ve already invested time and sweat equity into.

Another option is to go the way of the angel investor, and then work to raise more money.  It’s best to tackle this task with the same mindset of a start-up entrepreneur.  That means that you’re wise to choose a sector or industry that you have experienced with.  It also means that you’re going to need money to invest.  I’d highly recommend that you have some experience in investing if this is the route you choose.  This is not the time or place to learn about investing, not the place to ask, “Hey, what is ‘due diligence’ and not the place to experience your first heart-breaking loss of capital investment.  But if, and it’s a big IF, this approach works, you will have proven yourself as a venture capitalist and be able to write your own ticket.

Of course, if you have a high-level position at a respected company, or were involved with the founding of a success story, then you might have some of the credibility that is needed.  Again, it will be a slow process, but one that leverages your network, skills and experience.  But it has to be real; diving into the murky waters of venture capitalism isn’t something you can fake.  We’re talking about transferring skills, successes and networks to work to your advantage.   Who you are and what you can do will always be the proof in the pudding.

Venture capital can be a lucrative, exciting career, but it’s not for the faint of heart, and is not a way to fast riches.  But if, after performing full due diligence on the career, you still feel called to dip your toes into its murky waters, then go boldly and hang on for the ride.

2 comments:

  1. Interesting blog. You failed to mention the bankruptcy of Thompson Kernehan, Mark Valentine' arrest in Germany. His ban from trading on the stock market. He can't even trade penny stock. Death spiral financing and his pump and dump schemes. Do your homework before you write a blog.

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