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November 09, 2006

How to Get a Job in Venture Capital and Private Equity

posted by MR WAVETHEORY at 11/09/2006 03:27:00 AM
Every college graduate and MBA graduate today wants a job in venture capital or private equity. Getting a job in venture capital and private is not easy. It is very hard, so here are some tips and advice from candidates who have succeeded in getting VC and PE jobs. If you can get a VC or PE job, you can get any job in the world.

Getting a VC / private equity job as a pre-MBA candidate:
“The first few rounds of interviews were grueling. I had never built an LBO model from
soup to nuts, but I believed that I understood how. After all, I had spent the last two years
advising clients on purchase and leveraged buyout accounting. My background gave me
the ability to read financial models and follow the flow of funds through the income
statement, balance sheet and cash flow statement. During the interviews they drilled me
hard on financial modeling. I was candid with them about what I knew and didn’t know. I
also told them that I was confident I could build a model, but I had to convince them of
this. I think this firm saw in me someone who brought a different perspective, with no
pretensions. I knew the learning curve would be steep, but it was steeper than I thought it
would be.”

Getting a VC / private equity job as a post-MBA candidate:
“Once I decided to go after private equity job opportunities, I realized quickly how
difficult it would be. I was at a top business school and many of my classmates had PE
experience. So, not only was I competing against top students, but they were top students
with the experience that I did not have. I took courses on restructuring and investing, but
many firms could not get around the fact that I had no PE experience. I tried for a
summer internship, but there are very few available….I never got picked for interviews
out of the resume book, but I started to understand what they wanted. I spent several
months researching the industry so I could understand the business….I knew I had a lot
of exposure to deals on the research side and was aware that deal skills are a commodity.
With that in mind, I spun my leadership skills showing that I was competitive and could
manage people… I got some interviews at PE funds during my second year, but I only
made it past the first round on a few occasions. It always came back to the same thing – I
had no PE experience. I knew my options were limited, but I also knew I could get a
job.”

Getting a VC / private equity job after an Analyst Program
“PE funds compete each year for the top pre-MBA talent. If you’re one of these elite
Analysts you usually know it—you’re probably in a top group at a top firm; you’ve been
invited to work on live deals with extensive modeling, have traveled for the firm and
received a positive mid-year review. Over the last few years the competition for the
leading Analysts has picked up in intensity due to the tight market and the record amount
of capital that has flowed into the industry. The demand has become so great that a lot of funds (especially larger ones that make multiple hires for each Analyst class) are starting their searches earlier each year to ensure they are previewing all of the best Analysts before they are hired by other funds or commit to staying on longer at their current firms. Some PE funds even extend offers for positions a full year in advance. The accelerated hiring has been led by the mega funds and there has been a trickle down effect on hiring at all funds that want to get the best talent available. For example, under the new pace, funds that used to make offers to Analysts in March of their last year are now hiring in December and the ones that hired in December are hiring in October or earlier.”

Getting a VC / private equity job after Business School
“Post-MBA positions are generally assumed to be career track and come with a bigger commitment from the hiring firm and, thus, naturally have a high hurdle to entry. This is
why when looking to fill these roles there is an overwhelming, if not absolute, preference
to hire MBAs who have already worked and proven themselves in private equity… As
the private equity market has continued to grow and mature, a hiring cycle has developed
at the MBA level similar to the pre-MBA hiring cycle. Just as they did for pre-MBAs, at
the post-MBA level PE funds will compete early and hard for the best talent. If you’re at
one of the top three to five business schools and have previous PE experience at a brand
name fund, you can expect to hear from funds that are hiring (and even recruiters) soon
after you unpack your bags from your summer break…Historically, there have not been
enough top-pedigree candidates from brand name funds to go around. So, once that pool
of talent has been exhausted, the PE funds reach a point at which they have to decide to
look at alternate pools of candidates. This is when the choices become tougher and the
process a little more encouraging as there is a more of a level playing field. It’s when PE
funds are willing to widen the scope of MBA programs from which they seek candidates
with previous PE experience and begin to consider some select candidates who haven’t
previously worked in PE. This trend, which we expect to continue, has opened the door
for those MBAs without previous PE experience to potentially take opportunities away
from MBAs who followed the traditional path.”

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