4 Takeaways from #BreakIntoVC: How to break into Venture Capital

Last week in my previous post, I shared my brief summer plan that specifically aims for Venture Capital after learning from failure. While attending a startup conference in LA, I decided to start executing my first milestone — reading books about Venture Capital and digesting them. The title goes, #BreakIntoVC: How To Break Into Venture Capital by Bradley Miles, currently a Co-founder and CEO of Roll with diverse experience in Venture Capital and Investment Banking. The book provides very informative resources in detail for those trying to learn more about the industry. To me, this was a solid starting point in which I was able to learn fundamental skills and knowledge that are beneficial on my Venture Capital journey. Thus, I would like to discuss four important takeaways I obtained from the reading.Keep in mind that the way chapters are categorized is how I feel that they are relevant to each takeaway.

Takeaway #1: Know what you are up to — Chapter 1 (conventional wisdom), Chapter 2 (Early Stage Investing), Chapter 5 (Growth Equity), Chapter 17 (Case Studies)

Bradley starts out by sharing his personal experience of getting into Venture Capital. Many people he had met told him that there are only certain ways to be a Venture Capitalist. However, that’s the common myth about the “notoriously opaque and misunderstood” industry. His wisdom is that because there are more viable routes than it seems, one should not be discouraged even before a sneak peek. Chapter 2 and 5 serve to introduce a general overview of Venture Capital and Growth Equity. The case studies involve six interviews from individuals who received internships and full-time offers in Venture Capital. Each person shares how one broke in and practical advice for those with the same goal.

I think these chapters are not difficult to digest so they serve as good starting points for those not familiar with the industry. Whatever route one is currently taking, it’s important to know what they are up to.

Takeaway #2: Establish channels that lead to more opportunities— Chapter 3 (Early Steps: Reaching Out), Chapter 4 (Early Steps: Overall Research), Chapter 13 (Semester Internships), Chapter 14 (Evaluating A Startup), Chapter 16 (Start A Club)

Networking (Yes, I know it’s a repetitive word choice in my blog) is frequently mentioned in several chapters in the book. The second takeaway is to establish channels that will eventually generate more opportunities in the future. One strategy to grow member traffic in a student organization I founded was to create different routes that people can learn about what it is (Yotubue, Instagram, LinkedIn, SEO, and fundraising events). Although this has to do largely with marketing/branding (I believe in the power of interdisciplinary learning!) in a group or firm, one can strategically use it to increase the likelihood of networking with people in the industry. Starting to write my own blog is one way of creating my personal channel, too.

Takeaway #3: Perform due diligence on yourself (Interview Preparation) — Chapter 8 (Industry That Excites You), Chapter 9 (Company That Excites You), Chapter 10 (Interview Questions), Chapter 15 (Mock Calls)

One firm I had a chance to interview houses an accelerator program (Summer & Winter), where they receive more than a thousand applications for each session. This doesn’t seem viable for a firm with less than five people. Just like them, many Venture Capitals establish their own extra-meticulous screening process, which makes sense because those that invest in early-stage companies execute with greater risks and rely on a couple that will give them a huge return that covers the rest of okay or below outcome. Preparing for an interview is no different since going through a hiring process from the firm’s perspective means that they impose some measure of screening with high expectation — how much value will be added (this depends on the firm’s situation).

These chapters explain where to start conducting due diligence. The first step would be to look for an industry that one is inclined to go deeper with market research resources like Markets and Markets and Statista. A quick Google search is always helpful. Then, one can start screening a few companies that are pitchable with an introduction, material events, hires, and overall suggestions/questions for management (Evidence -> Insights). By doing so, not only one is able to display their knowledge but also their passion in a specific space. Chapter 10 houses basic interview questions and sample answers that are necessary for one to understand what the industry entails (i.e. Why VC, Growth Equity vs. Private Equity, Why X firm, etc).

Takeaway #4: Digest the language and apply it in the right context (Essential Language) — Chapter 6 (Venture Debt), Chapter 7 (Performance Metrics), Chapter 11 (Fundamentals Of Accounting), Chapter 12 (Returns And Valuation)

For those coming from a non-business background just like me, the fact that many Venture Capitals nowadays look for diversity with a potential to bring greater values does not mean that knowledge in Finance and Accounting isn’t necessary. Rather, it plays a crucial role when it comes to understanding the specific language of Venture Capital. I used the word “digest” on purpose because learning always needs that digestion so that one is able to absorb it and apply in the right context.

Example from the book:

Definition: “Burn Rate refers to the amount of venture capital cash used in a given period.”

Application: “Companiesin the crowdsourced food and transportation space compete heavily to acquire customers. As a result of such high sales and marketing spend, the typical burn rate of companies in these industries is notoriously high. So much so, that in the past it has made sense for companies in the same industry — like Seamless and Grubhub or Didi and Kuadi, the two taxi hailing apps in China — to merge.”

Final Thought

This book is a great starting point for anyone wanting to understand how the Venture Capital industry functions. It is relatively short in length to finish within a few hours but rich in context to learn more than it seems. Although a quick Google search and Reddit are very helpful and free, I think a little investment to learn from people with credentials in the industry is definitely necessary to enrich one’s knowledge and broaden their perspectives. On that note, my next reading will be Venture Capital Strategy: How to Think Like a Venture Capitalist.