Crossing the Rubicon and joining an emerging venture firm

How to weigh up the opportunity to work at an emerging venture firm if you don’t have the typical venture background

You have a higher chance of winning an Olympic medal or becoming a runway model, than you do of landing a job in venture.   Sadly, there are roughly 600 analyst or associate roles that are offered in institutional venture capital firms globally each year. There are even fewer principal roles (below partner) available.  

As a result, the top end branded firms (think Sequoia, KKR, Accel, Bessemer, Battery, NEA, Insight …. you know the names) often have their pickings of the candidate pool and they can, and justifiably are, incredibly tough to get into. These firms can stipulate only the highest GPA scores and schools for their graduate intake, or only take associates who have at least three years institutional investing or top tier investment banking experience.  Or sometimes they will only take founders who have delivered a certain profile of exits. 

Which means, if you come from a non-traditional background (eg out of corporate or industry, without an investing track record, or some other background that does not strictly fit the mold) these premier firms are often not open to you. That’s not to say you don’t have a role in venture, or can’t have a successful investing career, but if you want to get into venture capital, you are going to need to change your thinking.

The funds that will hire you are typically newer firms, less proven, less well-known, with less assets under management than their more established siblings. These firms often can’t afford to pay at the top end, and the value of any carry component is often less in real terms (simply because the size of their managed capital pot is proportionately smaller). And yet these firms offer a very different experience from their “top tier” cousins. They can be less rigid in their expectations, staff are often given significantly more varied work and responsibility, and there is certainly a much greater ability to influence how the firm operates and its future strategy. If you prove that you can do the work, you can accelerate to more senior roles as the firm grows and considers its next tier of talent when forming subsequent funds.

If you are a non-traditional candidate, and agonizing over whether to the take the offer in front of you from the emerging firm, versus the hypothetical offers you don’t have from a group of top-tier firms that you would like to work at, be careful that you don’t pass up the chance of a lifetime. Here’s how to make the decision:

  • Stop obsessing about brand: You need to stop focusing on the “brand strength” of the firm in your decision making as this is largely irrelevant if you are not a candidate for the top tier firms. There is very little difference in brand equity between joining a well-known, tier 2 firm, versus joining a relatively unknown new firm.
  • Focus on the partners: In a small, emerging firm, it is essential you work with the highest caliber people. If you do not feel that every person in the firm is head and shoulders smarter than you, then this is the wrong room for you. You need to be working for exceptional thinkers, who can challenge your own analysis because they see ley lines you don’t see, and who you will listen to and respect because they are brilliant.
  • Consider the firm’s capacity to teach: If you do not come from a venture investing background, it’s essential that this role teaches you the business. That’s not just how to source deals, but also how to diligence them properly, negotiate terms, value different opportunities, manage startup crises, and ultimately learn the fundraising. Look carefully at the exact role you are walking into - will the partners be teaching you the ropes or are you simply one of the worker bees on the phones? Will you learn in this role the skills and networks you need to get a more senior role in this, or another, firm?
  • Make sure there’s a tone fit:  You need to ensure you are working with people who share your values and work ethic. Emerging venture firms by their nature are small teams. You are going to be working closely with each person, over long hours, and often under stressful conditions. The people in the team have often made significant investments in the firm (as well as opportunity sacrifices) to be there. As they deeply care about the outcomes, you are going to see each of these individuals at their very best and their very worst. If as a team, you do not share a compatible work tone, values and style, the relationship can sour quickly!
  • Make sure they have crossed the Rubicon[1]: Despite the headlines, it is very difficult to succeed in venture. Firms where investing partners have a full-time or part-time gig doing something that is unrelated to the business of the firm, generally do not succeed. You need to work in a firm where all members of the team have crossed the Rubicon, and have no choice but to succeed or die. No one can have any backup plan other than making investors great returns and raising the next fund.  Make sure that the partners are deeply and exclusively committed to the firm’s success and their venture reputations.  It is exceptionally hard to be successful without this dedication.

Finally, in order to break into venture as a non-traditional candidate, you are going to need to learn to take risks - on the firm, on the compensation path, and on your own ability to learn and succeed in this ecosystem. Unless you work for a corporate venture capital group, working in venture will never give you the job security of working for a big brand. If you are struggling to take the risk of jumping into an emerging firm despite all the other elements being there, venture capital may not be the right home for you.

Venture capital is the riskiest asset class there is. And every venture firm founder took significant risks to start and run their firms.  Just remember as you look at your offer - there’s no such thing as a sure bet. Breathe deeply. Then jump!

[1] When Julius Caesar’s led a legion to cross the Rubicon River in 29BC to make his way to Rome, he deliberately broke the law on imperium which forbad a general entering Italy which exercising command of an army. The penalty for this infraction was death for the general and for all troops following their command. By crossing the Rubicon, Caesar and his troops passed the point of no return. They needed to succeed or die. The same is true of the most successful venture firms. 

About the Authors

Claudia Iannazzo (@claudiaiannazzo) is a managing partner and co-founder of AlphaPrime Ventures, a New York based venture capital firm investing in technologies that protect people and assets. Claudia has been investing in and working with technology companies for over 20 years, and has facilitated more than $10 billion of acquisitions, divestments, IPOs, investments, alliances and partnerships for public companies and new ventures around the globe.

Since starting her first company in compliance management while at University, Claudia’s career has spanned 5 continents, working on a broad range of safety and security initiatives, ranging from patrol boats in Vietnam, to remote location logistics, to NATO and other defense programs as Head of Commercial for the Weapons Systems division of BAE Systems. She has also been a commercial executive with numerous multinational companies, including Infosys Technologies, Tabcorp Holdings and Fosters Group.

Today, Claudia lives in New York with husband, daughter and two dogs, and spends her days investing in the next generation of innovations that keep her family, friends and city safer from emerging threats. Claudia is also a co-founder and Board member of Parity Partners, an organization driving diversity and inclusive leadership in the investment industry.