The Business of Venture Capital. Mahendra Ramsinghani

The Business of Venture Capital - Mahendra Ramsinghani


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Square defined web presence as “anything accessible via a URL. It could be a blog, a social networking profile, a portfolio, a company, a social bookmarking archive… . It is whatever you think best represents who you are online.”9

      Interviewing for Your VC Position

       Preparation:

       Investments: Research the venture firm's profile. Understand the sector and stage of investments, assets under management, and its latest fund size.

       Look up the key portfolio companies, and map their progress. Have these companies signed up strategic partnerships? Have they raised follow-on rounds of capital?

       Performance: Research any major exits.

       Philosophy and culture: Read the founders’ and senior partners’ blogs. Understand their mind-set and philosophies well.

       Reference checks: Call founders, co-investors, ex-employees . . . get to the bottom of how the firm treats people.

      Examples of questions you can ask the venture firm:

      1 What is the fund's investment strategy?Of course, you have done your homework, checked out the websites and online data sources. You know the firm's history and the background of the founders.Research one or two specific investments, and assess the competitive universe of similar investments made by other venture firms. Dive into the investment rationale and find out why this opportunity was chosen over others.Ask how the fund's investment strategy has evolved over time. What challenges has the fund faced, if any, in sourcing opportunities? In raising capital?Find out the life cycle of the current fund. All venture funds have a three- to five-year investment period from the time the fund is raised. Thus, depending on the timing of your entry, you could be involved in making investments, managing the portfolio, or preparing for the next fund raise.

      2 What is a typical day at the firm? To whom would I report, and what self-development opportunities exist for an entry-level person?Look for opportunities where you will participate in all facets of the business.

      3 Is this a collaborative environment or a field of cowboys who thrive going solo? How do the team members collaborate with each other, especially when the portfolio companies are in trouble? When has the firm let go of any staff, and why?Look for troubling situations. How were these handled by the internal team? Be prepared to get smooth-talked and do not believe everything you hear. You will rarely hear honest statements like “We screwed up on that investment” or the GP “is a Machiavellian despot, who screams his head off and throws things around, muttering obscenities.” Talk to the industry peers and CEOs of portfolio companies to get a true sense of the culture of the firm.Can you see yourself having fun with this team? A beer on Friday night?

      4 How will my performance be measured? Will we have clear milestones established? Will I be able to measure my own progress? Beware of any firm that does not offer clarity in performance metrics, as ambiguity can be used to hurt you.

      5 At what point will I be eligible to be on a partner track? In some firms, candidates are elevated to partner status after successful exits, while in other firms, it's a function of time.

      Mind Your Language … and Your Handwriting

      When Forbes profiled Arthur Rock, a young investment manager in Boston, Dick Kramlich read the article with great interest. Arthur was hiring. “Well, I'm gonna find a younger partner …” Dick sat down and wrote him a longhand letter. “I never had ever done anything like this before” he would recall. “The following Monday I got a telephone call. “Mr. Rock's on the line.”

      Arthur hired Dick shortly thereafter. “I found out there were over a thousand responses to the article. And that Arthur had a handwriting expert that analyzed my letter. Isn't that funny? So that's how I got in the venture business.” Later, Dick Kramlich went to found New Enterprise Associates (NEA), a multibillion-dollar global venture fund.

      Candidates often underestimate the power of internship opportunities. Many practitioners would be open to a thoughtful email or a call along the lines of “Hi, I am graduating next year and wanted to explore a summer internship. I have studied your investment thesis and have identified a few opportunities that may be of interest. Let me know if I can come by and discuss these.” That kind of an opening gambit is bound to get a response.

      Often, those at a junior level may wonder if entrepreneurs will engage with them. The debate is rife with opinions of a thousand bloggers: entrepreneurs should only talk to those professionals who can make decisions. While various blogs emphasize the important attributes of the investor's stature, experience, decision-making abilities, or getting the deal done, to get to the decision makers, the starting point is often a junior person. Pat Grady, partner at Sequoia Capital for over 12 years says, “When I joined Sequoia back in 2004, I was the youngest in the firm but my title was partner. For Sequoia, this was never about a ‘sourcing’ gimmick, making sure that founders ‘talk only to partners’ hence this title. It was a genuine intention to align everyone


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