Do You Really Want To Get Into VC?

Venture Capital Investors make investments into startup companies with the hope that they will grow rapidly and one day go through a liquidity event that will generate big returns. Although the job can seem glamorous, it can also be really tough. In this article, I'm going to highlight some of the worst parts of the job of a Venture Capitalist.

These points are all taken from conversations I've had with Partners at the various Funds I've recruited for over the past few years.

Listed in no particular order:

1. Most Days are Bad News Days: One of the toughest aspects of being a venture capitalist is dealing with bad news and sometimes total failure. Despite all their best efforts, not every investment a VC makes will be successful. In fact, only around 15-25% of VC-backed startups will be successful. Be prepared that in an average week, four days out of five will be bad news days. If you can't deal with bad news then you are going to hate being a VC.
2. Success Takes Years: As a Partner once told me "the best Investors are impatient people who know when they have to be patient". The 15-25% of companies you invest in that do become successful don't do it overnight. It takes years - years of ups and downs, years of trials and tribulations, years of battles with competitors, years of legal troubles with employees and customers, and years of changing regulations and legislation. If you can't be patient, you are going to hate being a VC.
3. Your Success Also Takes Years: Although some Funds have very flat structures and refer to the entire Team as "Investors" or even "Partner" the reality is that the economics of a VC fund means there are only so many spaces for people at the Partner level. I'll say it again...if you can't be patient, you are going to hate being a VC.
4. Pressure: VCs operate in an industry that is constantly changing, and they must keep up with the latest trends and technologies to make informed investment decisions. This can be exhausting, and the pressure to always be on top of things can take a toll on a person's mental and physical health. If you can't handle pressure, you are going to hate being a VC.
5. Long Working Hours: This really should not be a surprise and you are probably used to intense environments in Consulting or Banking or in a startup. However, it has to be said that VCs often work long, unpredictable hours. The job requires a lot of research, analysis, and meetings, which can be time-consuming. This may leave little time for your personal life, hobbies, or even sleep. A lot of VCs talk about the 'Athlete Mentality' - you need skill and natural talent to compete but if you want to win gold medals you also need to out-work your rivals. If you can't handle long hours, you are going to hate being a VC.
6. Lack of Control: As a VC, you don't have complete control over the companies you have invested in. You may be lucky enough to sit on boards and can offer advice and guidance, but ultimately it's up to the Founders and Exec Teams to make decisions and deliver. This lack of control can be frustrating, especially if you see a company making mistakes that you believe could have been avoided. If you need to be in full control, you are going to hate being a VC
7. Ethical Issues: VCs often face ethical dilemmas. For example, you may have to decide between making a profitable investment and supporting a company whose values you don't agree with, or investing in a Founder who just isn't a very nice person. This can be especially challenging when success could result in significant financial gains for you and your LPs. If you can't separate personal feelings from commercial gains then you are going to hate being a VC.
8. Sales: Originating great deals requires a huge amount of sourcing, networking and pitching, often in the face of rejection from Entrepreneurs and competition from other VCs. You need to be a strong salesperson with plenty of 'hustle' who can deal with frustrations and disappointment. If you hate sales, you are going to hate being a VC.
9. Persistence Beats Resistance: Gaining access to great Entrepreneurs and great deals requires enormous resilience. You will be told 'no' a lot and sometimes you might not get any answer at all. If you can't be persistent, you are going to hate being a VC.

In conclusion, although being a VC can be a dream job, it's not for everyone. While it can be exciting to be part of the startup ecosystem and make a difference in the world, there are many challenges that come with it. These include dealing with failure, constant pressure, long working hours, lack of control, ethical issues, influencing portfolio companies, and having to be very patient. It takes a special kind of person to succeed as a Venture Capitalist and thrive in this challenging industry.

I hope this hasn't dissuaded you because, if it hasn't, developing an understanding of the above is going to massively help you on your journey into Venture Capital. I've seen many people fail interviews because they came across as too positive about the investing space and seemed naive or oblivious to the challenges. If you can face the realities above and they don't put you off, you might just love being a VC.

Please add your own comments. I'd love to hear more opinions on the VC industry.