How to break into venture capital

Jessy, Casey, Hannah, Jo, and Abhi work at some of Australia’s most active VC funds.

Upon first inspection, their respective paths into VC have very little in common.

Jessy majored in Philosophy and English Literature at the ANU, worked in an electorate office, and spent two years in management consulting, before joining NAB Ventures as a Senior Investment Analyst. After one and a half years there, Jessy is now an Investment Manager and Head of Community at AfterWork Ventures.

At UQ, Casey was studying Biochemistry and Molecular Biology when she landed an internship at Uber, just as it was launching its Brisbane operations. Casey worked at Uber for 6 years, across operations and strategy, in a role that took her all over the world, before starting at Square Peg as an Investment Associate.

On the other side of the world, Hannah was studying Science and Chemical Engineering at the University of Southern California. Hannah moved to Australia in 2017 and was a graduate at Aurizon, Australia’s largest rail-based freight operator. Part-time, she completed a Masters of International Economics and Finance, before joining Black Sheep Capital as a Venture Analyst.

Even more credentialed is Joanna, who has a PhD from UNSW. For her postgraduate research, Joanna designed and developed next-generation biomaterials, inspired by the architectural patterns and weaves of naturally occurring tissues. After Uni, Joanna volunteered for an IoT startup platform and freelanced at an early stage proptech, before joining Right Click Capital as a Venture Analyst.

Of the five of us, Abhi is the newest to venture capital; he joined Folklore Ventures as an Investment Analyst last week! Abhi is also the only person among us who actually studied Finance and Business. Abhi began his career at Cambridge Associates, where -he worked with clients to allocate billions of dollars across major asset classes, based on risk/return targets. Abhi then joined the Product and Growth team at fast-growing, early-stage startup Upstreet, before joining Folklore Ventures.

In this article, the five of us distil our insights on the paths that led us to VC; the average day of a VC associate; how to prepare for the interview process; and most importantly - the questions that you should ask yourself to figure out whether a career in VC is one that you would enjoy.  

What was the set of events that led you into VC?

Jessy: I think perhaps, I am too much of a contrarian to be a good management consultant. While the quality of my work was never called into question, I was certainly below-average at falling into line. During my short stint, I received a few slaps on the wrist for my tendency to ‘persist too much’ in putting forward my perspective, and getting too ‘creative’ in my approach. As my enthusiasm for consulting dwindled, I started getting more enamoured with startups - the ultimate upstarts, disruptors, and provocateurs.

I started devouring Y Combinator’s Startup School videos, inhaled Paul Graham’s essays, and binged on episodes of How I Built This and Invest Like The Best. I also attended demo days and pitch nights, and was captivated by the energy in the room. When the opportunity came up to interview with NAB Ventures - a corporate VC bridging the gap between startups and corporates - I jumped! More on the interview and selection process later in the piece…

Casey: Prior to friends mentioning the Square Peg role to me, I hadn’t considered going into VC. At the time, I was working in strategy at Uber, and was planning a move to Tokyo to continue my work in Uber’s Japan and Korea business.

I had an exciting job working with people who I really, really respected. That said, I had joined Uber because of a love of startups and an involvement in the startup community in Brisbane. Uber had become a listed company, and was far from the scrappy company I had joined almost six years earlier.

Over a few weeks, I had three people send me the Square Peg Investment Associate role description, telling me they thought I’d be great.  I didn’t know much about Square Peg, except that they were respected by founders and had invested in some amazing companies, such as Fiverr, Canva, and Stripe, which really excited me.

Still, I thought my friends were silly, and dismissed them each time (me, a VC? Someone with no finance, banking, or consulting experience?). The next time it came up, I decided to contact the team to find out a bit more about the role. The conversation went well, and I started thinking about it more deeply. I started to realise that VC could combine a lot of the things I love. I progressively met more of the team and came to love them as quickly as the role was growing on me. Getting the job was serendipitous and certainly involved a big element of being in the right place, at the right time.

Hannah: I was coming to the end of my Masters in Finance and Economics. After four years at a large corporation, albeit in a variety of teams and roles, I was looking for a change.

I had always had a fascination with all things tech and innovation. When the Venture Analyst role appeared on my LinkedIN, it ticked a lot of my boxes! I applied because my background and experiences also ticked a lot of theirs. In particular, I think my academic background in Chemical Engineering helped me get comfortable with complex scenarios, deep thinking, and crafting the reasonable assumptions you need to solve problems. As it turns out, these skills have served me incredibly well in VC.

Jo: I had just finished a PhD in biomedical engineering, and I was curious to see whether working outside of academia was viable. I started hanging out at the Sydney startup hub, volunteering at an IoT platform, and doing casual work in digital marketing at an early stage proptech. Someone I met at the startup hub knew the partners at Right Click Capital were hiring for an Analyst, and encouraged me to apply. As it turns out, the partners are super techy, and saw my life sciences background as complementary to the team.

The decision to step outside of academia was one of the hardest and best decisions I’ve ever made. To step outside my comfort zone, I needed to summon faith and conviction. But, you never know what you might learn, who you might meet, and what new skills you may develop!

Abhi: When I first applied for a role at Folklore Ventures in 2020, I wasn’t successful. I was working at Cambridge Associates back then, and the Folklore team encouraged me to think about gaining some more experience in startups, perhaps in an operational role. I decided to take their advice - I left my role at Cambridge and started work on Product and Growth at Upstreet, an early-stage FinTech based in Sydney.

I stayed in touch with the Folklore team, and a few months ago they got back in touch, and invited me to interview again. They gave me a case study, which I found eye-opening, challenging, and imminently enjoyable. This time, I got the role.

This experience taught me: 1) timing plays a big role when it comes to landing a job in VC; 2) calculated risks pay off - and if you want to become an early-stage investor, you’ll need to get comfortable taking these! 3) relationships are key - but don’t network with any expectations in mind.  

How does your background help you with your current job?

Jo: Coming from academia, I’m used to ingesting data, and then analysing and critiquing it. This skill comes in handy when you’re assessing investment opportunities, scanning for fit against our investment mandate and principles. But, I think having an open mind about technology is equally, if not more helpful. At Uni, I helped to run a science and technology podcast, where I explored various research projects happening around the University. Having a broad understanding of science and technology comes in handy when dipping into various opportunities, and helps me have deeper conversations with founders.

Hannah: I think it was immensely valuable to work across several functions at a large corporation. You become familiar with organisational processes and structures, which has been really useful when evaluating companies' operating models, and also when helping portfolio companies to develop their business processes.

Casey: It’s a running joke at Square Peg that I have a relevant Uber story for every situation. While I didn’t join Uber in the very earliest days, in 2015 it still felt like it was a startup of its own in Australia, so plenty of my experiences feel analogous to that of early-stage startups.

My time in Operations helps me to understand the many moving pieces that founders have to juggle at any one time, while my time in Strategy and Planning helps me to think critically about what makes an exciting business. The Strategy and Planning teams also helped to manage everything from reporting forums and OKRs (objectives and key results) to organisational structures and reorganisation efforts; important things to get right, in a world where time and talent is a precious commodity.

What is an average day in the life of a junior at a VC?

Jo: There is no such thing as an ‘average’ day - one of the best things about working in VC is the variety of tasks that come your way, and the speed at which you’re expected to shift gears. At a smaller VC fund, it’s quite common to switch between reviewing decks, meeting founders, performing due diligence, and supporting portfolio companies, all in the space of a few hours! Other days there may be tasks that take larger chunks of time, such as writing investment memos or LP updates. I personally love the thrill of the variety, the pace, and the unknown.

Casey: VC is a big mix of tasks; that’s why it’s great for those of us who get bored of routine! My build here is that the day-to-day of a role can differ depending on the size of the fund you work for. Generally, the larger the fund, the more focused the role. The smaller the fund, the more varied the role. If you’re applying to different funds, spend time understanding their size and how this may influence your role. This is relevant to joining startups, too! Larger businesses offer more specialised roles due to their larger organisational structures.

What kinds of questions do VC firms ask in an interview?

It’s important to note that most questions asked in VC interviews are geared towards sparking a conversation, and gauging the extent of your interest in technology, startups, and investing.

Here are some of the questions we were asked:

• Where do you get your tech news from?
• Tell us about some of the apps on your phone. Which ones do you use most frequently? Tell us what you like about them.
• What is your favourite product? What makes it good?
• What’s your favourite Australian startup, and why? (There are no wrong answers, but if you want to stand out, pick a lesser-known startup)
• What are some of the big opportunities you see for tech innovation?
• What is a VC fund that you admire, and why? (Again, lesser known VC funds make for more interesting answers. VCs love to hear about things they haven’t come across!)
• Is there a startup in our portfolio that particularly excited you?
• Tell us about a time you f**ked up / were wrong. What happened?
• What are you curious about?
• What is the last thing you spent time learning about? Why did you bother to spend the time?
• How would you approach a problem that had a lot of unknowns?
• Think about the personal and professional experiences you’ve had. What can you offer that would give your employer an edge?

The final step of a VC interview process will often include a case study. Most commonly, you’ll have to evaluate a pitch deck and prepare an investment memo, or build a model to value a later-stage startup, or perform some other form of technical analysis such as a cohort-based retention analysis.

To prepare, it’s worth reading a few investment memos (AfterWork has some detailed write-ups on its investments here), and familiarising yourself with the key metrics for evaluating a startup: unit economics, ARR (annual recurring revenue), CAC (customer acquisition cost), ACV (average contract value), CLV (customer lifetime value), churn, and gross margins.

Most importantly… the questions that you should ask yourself, to figure out whether a career in VC is going to be something you enjoy!

Jessy: In my experience, being a VC can easily bleed into your identity. It can be hard to erect clear barriers between work and life, when befriending other investors, attending pitch nights, and taking late-night calls from portfolio companies is all part of the job. Your LinkedIN and Twitter presences become beacons for prospective founders and LPs (limited partners); your podcasting, reading, and Twitter feed becomes heavy with startup and investing related content; and you’re always on the lookout for new companies making waves. Granted - the extent to which this happens falls on a spectrum - and the nature of my role at AfterWork Ventures means I probably lie at one extreme.

However, if you highly value clear delineations between your professional and personal life, I would encourage you to think about the impact that a career in VC might have on these delineations. On the flip side, if you enjoy a high degree of integration between your career and the rest of your life, working in VC can be a great way to immerse yourself in the world of startups and innovation.

Other questions to ask yourself are:

• Do you find it exciting to imagine worlds where things are radically different?

• Are you willing and able to contort yourself to see the world from a founders’ point of view?
• Are you willing to champion a contrarian viewpoint?

Jo: Working in VC can be analogised to being a bird on the hunt for shiny objects. VCs need to be hungry; driven to keep searching for new opportunities, motivated by a fair amount of FOMO. To do this well, you need to spend time (often outside of office hours) in the startup ecosystem, and you need to be mentally open to having your perspective challenged and changed by the startups you encounter. If you find working in the blur of unrealised opportunities thrilling, then it’s an indication that a career in VC might be for you.

Other questions to ask yourself are:  

• Does having an unpredictable calendar make you uncomfortable?
• Can you critique without being critical?
• Can you wrap your mind around technical concepts and new technologies?
• Are you willing to hustle?

Hannah:

• Do you love to learn?
• Do you like networking, and meeting new people on a daily basis? Many people don’t realise how much of VC comes down to networking - not only with startups, but also with other VC funds, angels, and accelerators. It’s essential to realise that you will need to put significant time and effort into networking to be an effective VC.

Casey: There have been times in my (short) career, where I’ve unwittingly stunted my own growth by suggesting I wasn’t something enough to take a punt, and avoided going after something I wanted as a result. So, if you love technology and startups, don’t let the  questions above discourage you from continuing to explore a career in VC. That being said, I hope these questions give a sense of the kind of attributes that go well with being a VC investor.

• How do you feel about ambiguity? What about making decisions with incomplete information?
• How do you feel about hard conversations? You’ll need to say no to people…  a lot.
• Do you feel comfortable having an opinion that goes against the grain?
• Are you able to work autonomously to drive yourself forward, even when there are slow feedback loops?

Lastly, it’s worth mentioning that VC is a small (but growing) industry. There is a wealth of extraordinary roles in startups that will equip you for a breadth of roles - VC being just one of them. At Square Peg we have a jobs board (in fact, lots of VC funds do) and it’s a great resource for anyone thinking about new opportunities.

Abhi:

• Do you get so excited about certain topics or industries that you enjoy going down a rabbit hole?
• How comfortable are you with being wrong? Are you good at unpacking your mistakes, and learning from them?

If you’re excited by the sound of VC… go for it!

Despite the headline (it was clickbait, sorry), the aim of this article was not to be an authoritative guide on getting into VC. Instead, it was to demonstrate that many paths can lead to a career as a venture capital investor.

At the end of the day, what the five of us have in common is not the path that led us to VC, but curious minds, an admiration for startups, and the daring to grab opportunities by the horns.

‍