Considered pursuing a career as a Venture Capitalist? This interview will take you through the ups and downs you can expect, what it takes to land the job, what you can expect to earn and more.
I have been a venture capitalist for 27 years. I incorporated my business about 15 years ago. Before forming an LLC, I was part of a partnership with 12 other people.
I would describe what I do as giving people a chance to experience and live the American dream. I meet with individuals and small businesses who claim to have ideas that could provide investors with high rates of return if they could get funding to launch their product or service. Then, my team does some research to try to determine if the ideas we’re presented with will actually be viable in the marketplace. Of course, there’s no way to know for sure before a product hits the shelves, but I try to hedge my bets against losing any money, let alone large amounts of it. The biggest misunderstanding that I would like to correct about what I do is that I am NOT what people often to refer to as an “Angel Investor.” I am not independently wealthy and don’t invest my personal money in other people’s ideas. I invest money that belongs to other people or businesses in business ventures. The deals I work on are usually much bigger than those that Angel Investors tend to participate in.
On a scale of 1 to 10, my job satisfaction is, and has always been, ranked as a 10. I don’t need to change a thing to unleash my full enthusiasm for my job. It’s been unleashed since I got into this business and nothing, not even a bad economy, can temper or contain it.
This job moves me in the sense that it’s really indescribably rewarding to give someone a chance to realize his or her dream, whether that means helping him or her be an entrepreneur or simply financially secure. Everyone has his or her own dreams. It’s even better when someone’s idea is a hit in the market. When that happens, the “inventor” wins, my investors win, and, of course, I do, too. Then we all get to live our own dreams, in a way.
There is nothing unique about my situation. I graduated from a state college and never went to graduate school. I grew up in a blue-collar home and worked my way through school, including high school. I wasn’t born into connections or with a silver spoon in my mouth. Instead, I made my own contacts over time and will buy my own gold spoon if I ever want one.
I got started as a venture capitalist two years after I graduated from college. One of my former fraternity brothers called me to explain he was starting a partnership. He offered me a chance to “buy-in” through sweat equity, meaning me and some others who didn’t have cash did all of the partnership’s grunt work for the first few years while those who had money to invest in different projects drank cognac and smoked cigars. That’s not all they did, but it’s pretty close! Though I wouldn’t have done much differently, I might have told a few people “no” to their requests for money a bit more gently if I could do it all over again.
One thing I learned the hard way in the context of my job is how hard it is for some people to accept the word, “no,” as an answer. I was approached by one man, a business owner, who was in his mid-sixties a few years ago who had an interest in taking his business to what he described as “the next level.” He had no plan, just a hope that we would agree to help him get to this presumed “next level.” We had to turn him down. He called every day for months asking me to change my mind, to sway my team. I was as nice and patient as I could be for a long time – too long. I indulged him, enabled him to keep calling. He ended up threatening me personally and a few members of my staff. He said we were killing him by preventing him from being able to feed his family and put money away for his grandchildren. I never should have taken his follow-up phone call. I never should have let him try to transfer responsibility for the well-being of his family onto me or my company. It’s his responsibility to provide for his family, not mine. He just refused to accept our denial…until my lawyer got in touch with him. Then, he understood that I was serious. He hasn’t tried to contact me again, to my knowledge.
The most important thing I’ve learned about the working world outside of a classroom is that, in terms of success, it doesn’t matter who or what you know. It’s what you do with your contacts and knowledge that will set you apart.
I get up and go to work each day to help people realize their dreams, as I’ve said. I also get up and go to work to make money for myself and those who trust my company to invest their money for them. Out of all the things that I’ve been a part of that have made me feel good, quite a few stand out. I guess the first time I agreed to invest money in a product that produced double-digit returns was special. It sounds good, but it was only a small dollar investment so no one made a lot of money. But, the project did hit its projected rate of return!
One of my biggest challenges is handling investors. Most of them let my company invest their money almost blindly, meaning they don’t care what products or businesses I put their money in as long as they make a certain rate of interest on the project. When one of them wants to get personally involved in an investment decision, it causes me great grief. It’s really frustrating to be told what to do by someone who might have had a lot of success investing in the stock market, but who doesn’t have any hands-on, practical experience in this kind of investing.
At this point of my career, my job isn’t nearly as stressful as it used to be because I’m not very involved with pre-screening and scouting ideas, or recruiting investors. I maintain a very healthy balance between my work and my personal life. I’ve earned the right to have a balance through hard work and by setting up a team I can trust implicitly to handle any situation the same way I would.
My salary varies year-to-year. I took a higher salary when I was involved in the partnership than I do now. I make a piece of the action, so to speak, so my pay depends on how well my company does with its investments. A typical, seasoned venture capitalist can make millions of dollars every year. But, the same person could make much, much less if he chooses to invest money in ideas that fail. It’s like trying to guess how much a well-funded gambler could make playing Craps in Vegas. I make more than enough money for me to enjoy everything that interests me, support my family, and donate money to the charities I believe in.
I take however much vacation I want in a given year, usually about eight weeks. It’s more than enough especially because I can take more if I want to. I think people only think they don’t have enough vacation time when there’s a limit on how much they can take. I have no such constraint. I do have to be careful when I take my vacation, however. I’m always careful to be in the office for big deals and presentations.
You need to have an understanding of how business works and have analytical skills to succeed as a venture capitalist. I don’t believe anyone needs a particular degree, or any degree at all, to succeed more than someone else. You just need to have savvy and I believe that comes from experience, from being in the trenches. Anyone who thinks they know more than they do because they’ve got a degree from such-and-such school or who won’t listen to a mentor, will not succeed in this field. Someone like that will only do harm to his investors’ wallets. Someone like that is, in my opinion, dangerous, and would never work here.
If I had a friend who wanted to get into my line of work and he was a good, trustworthy friend I’d known for a while, I’d tell him to meet me at my office in the morning so he could get started.
I’ve already written my own ticket. I will be doing this same thing until the day I die.