Careers in Venture Capital

insider guide
CAREERS IN VENTURE CAPITAL

INDUSTRY TRENDS AND RANKINGS PROFILES OF THE TOP FIRMS TALKING THE TALK: VC LINGO
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Insider
Guide
Careers in
Venture Capital
2011 edition

Careers in Venture Capital
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2011 Edition
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CHAPTER 1 23 1 Venture Capital

at a Glance
5 The Industry 17 The Companies
6 Overview 18 Profiles of Top

Firms
6 How Venture
Capital Works 41 Firm Thumbnails
10 Venture Capital
Today
11 Industry
Breakdown
13 Industry Rankings
13 Industry Trends

4567
47 On The Job 58 The Workplace 67 Getting Hired 75 For Your
Reference
48 The Work 58 Lifestyle and 68 The Recruiting
Culture Process 76 Industry Lingo
48 Key Jobs
58 Hours 69 What It Takes 79 For Further Study
50 Real People
Profiles 58 Workplace 70 Breaking In
Diversity
70 Interviewing Tips
60 Travel
71 Getting Grilled
60 Compensation
72 Grilling Your
61 Career Notes Interviewer
61 The Inside Scoop
64How VC Stacks Up
65 A VCs View
contents
Venture Capital
at a Glance
1
AT A GLANCE
CHAPTER 1
At A Glance Major Minuses

Sink or swim. If you dont produce, youll be kicked
Opportunity Overview out, with skills that are hard to transfer.
THE INDUSTRY
The venture capital industry is small and admits only Be prepared for little upward mobility. Advancing to
CHAPTER 2
a select few newcomers each year. Typically domi- partner level is difficult.
nated by seasoned executives, many firms consist Its not a popularity contest. The entrepreneurs wont
only of general partners and an administrative staff. always love you.
VC firms rarely hire undergrads, though a few larger Its a lonely business. Many insiders miss the sense
firms hire young people to do basic legwork and of teamwork within the companies they left to join
analysis. a VC firm.
THE COMPANIES
The opportunities are only slightly better for MBAs.

The occasional MBA is recruited out of business Recruiting Overview
CHAPTER 3
school or starts his or her own fund. The basic idea is, Dont call us. Well call you. Firms
Some opportunities exist for mid-career professionals rarely interview on campus but will go through busi-
with excellent track records in operating environ- ness schools resume books occasionally. However, your
mentsespecially since venture capitalists want sea- resume alone wont be enough. Venture capital firms are
soned industry veterans with bulging networks and reluctant to hire someone they dont know unless they
specialized knowledge. have a strong recommendation from a trusted busi-
ness associate. The industry is small and firms are very
ON THE JOB
Major Pluses choosy.

CHAPTER 4
Work with some of the smartest people in business.

Witness the formation of cutting-edge businesses
and technologies.
Be relatively sheltered from politicking and
favoritismits the bottom line that counts.
THE WORKPLACE
Make potentially dizzying amounts of money dur-

ing the life of a fund.
CHAPTER 5
GETTING HIRED
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7
2 W E T F E E T I N S ID ER GUID E

The Industry
2
Overview....................................... 6
How Venture Capital Works.......... 6
Venture Capital Today................ 10
Industry Breakdown.................... 11
Industry Rankings....................... 13
Industry Trends.......................... 13

AT A GLANCE
CHAPTER 1
Overview and behavior in business, and excel in some capacity,

says a venture capitalist. Interact with thought leaders,
Sand Hill Road, a sedate four-lane suburban take risks, and succeed where there is something to be
THE INDUSTRY
byway, climbs from the Stanford University Golf gained. Cultivate the contacts you make while in your
CHAPTER 2
Course into the coastal hills. On both sides, low office role and build your network: Relationships are every-
buildings cluster behind signs that read Kleiner Perkins thing in this industry. Finally, if youre hell-bent on a
Caufield & Byers, Mayfield Fund, and Sequoia Capital. career in VC, dont give up. Youll need to be strategic
These inconspicuous offices are the heart of the venture and smart about looking for opportunities, but if you
capital industry, from which companies such as Apple, are, you will find a way to break in.
eBay, Google, Facebook, and Yahoo got the startup
THE COMPANIES
money and advice that helped make them Silicon

INSIDEr SCOOP
Valley legends. The way to gain access to this industry is to do
CHAPTER 3
The industry is a major shaker in the U.S. economy, something great thats visible to people in this
funding companies developing technological and ser- industry. Theres not a lot on your resume that will
tell whether you will do well in venture capital.
vice innovations long before they become mainstream.
Companies that received venture funding between
1970 and 2008 accounted for 12.1 million jobs and
$2.9 trillion in revenuethats more than 12 percent How Venture
Capital Works
of the total U.S. jobs and revenue, according to a study
ON THE JOB
conducted by Global Insight. This is an impressive

CHAPTER 4
impact for what insiders describe as a cottage industry. Underneath their moneyed mystique,
Although VC firms are major shakers in the econ- venture capitalists are essentially glorified middlemen,
omy, they arent major recruiters. General partners and their modus operandi is easily explained. In a
within the VC industry achieve wealth and satisfaction nutshell, a VC firm acts as a broker for institutional or
funding companies in nascent industries and watching limited-partner investors such as pension funds, univer-
THE WORKPLACE
them grow, but breaking into the industry is notori- sities, and high-net-worth individuals, all of which pay
ously difficult. This guide provides a roadmap for those annual management fees to have their money invested
CHAPTER 5
who choose to try. in high-risk, high-potential-yield startup companies.

After amassing a certain sum from the limited-
The Bottom Line partner investorsusually between $10 million and
Venture capital firms are selective, and finding a job $1 billionthe VC firm parcels out the fund to a
with one usually requires an exceptional track record portfolio of fledgling private companies, each of which
and savvy networking, with a healthy dose of luck. Its hands over an equity stake in its business. In other
GETTING HIRED
hard to target a specific VC company for a job because words, the VC industry is predicated on a simple
the firms are small and theres no formula for landing swap of the VCs financing for an ownership stake in a
CHAPTER 6
a positionthese guys dont recruit on campus or set companys success, often before the company has begun
annual recruiting targets like management-consulting generating revenue.
firms and investment banks do. To have a shot at a Because the VC firm has a vested interest in the
job, youll need industry experience, such as operating startups success, partners generally sit on its board of
FOR YOUR REFERENCE
experience at a software or biotechnology firm. Go directors, offering advice and additional resources to
somewhere where you can build a base of judgment help the business grow. If the startup merges with or
CHAPTER 7

AT A GLANCE
CHAPTER 1
is bought out by a larger company or goes public, any
windfall is divvied up between the company, the VC Is VC Right for You?
firm, and the limited-partner investors. Typically, the
THE INDUSTRY
VC firm distributes 70 percent to 80 percent of the VC firms look for a be involved in some
specific profile of the most exciting
CHAPTER 2
return on its investments to the various limited partners
highly business- and stimulating work
and keeps the rest for itself. oriented individuals anywhere. Youll be
with blue-chip back- dealing with bright,
grounds. If you fit motivated people
that ideal and arent intent on turning
The VC industry is predicated afraid of high-risk visions into success-
on a simple swap of the VCs investing, venture ful companies. And
THE COMPANIES
capital may be for youll reap major
financing for an ownership you. Still, once rewards: a hand in
CHAPTER 3
youre in, theres launching innovative
stake in the companys success, no guarantee youll
succeed: For every
companies, an inti-
mate view of intrigu-
often before a company has Facebook, there are ing industries, and, of
plenty of flops most course, healthy finan-
begun generating revenue. people never hear cial compensation
about. However, if and fringe benefits.
you do make it, youll
ON THE JOB
A Game of Risk
CHAPTER 4
Aside from the prospect of stumbling upon the next The Entrepreneurs Perspective
Facebook, what makes venture capital so exciting is that Although VCs like to imagine themselves as the heroes
it comes with no guarantees. Venture capitalists, institu- of the entrepreneurial world, entrepreneurs often have
tional investors, and entrepreneurs must all be wary of a different view. To give you a feel for this love-hate
the risk incurred by investing in startups. Although its dynamic, we interviewed an entrepreneur about her
THE WORKPLACE
not unusual for limited partners to double their money experience working with VC investors.
through venture investments, they generally entrust Shelly (not her real name) conceived of a great idea
CHAPTER 5
only a small portion of their total assets to the VC firm, for a business, put together a plan, borrowed some
so that if the fund tanks, theyll remain solvent. money from her family to get the business going,
On the other end of the deal, entrepreneurs who and worked with contract employees and suppliers
accept venture capital often have to contend with pres- to develop a prototype product. She quickly realized,
sure from their VCs, who have their own ideas about though, that she would need more capital.
whats best for the startup. VC-funded companies that Using contacts she made in graduate school,
GETTING HIRED
manage to get off the ground must go through several Shelly sought advice and potential investors. She
grueling rounds of fundraising to make it to an initial originally targeted private investors, but a VC who was
CHAPTER 6
public offering (IPO). Even then, theres a chance that reviewing her plan called her and said he would match
theyll flop. The savviest venture capitalist must be any private financiers offer. Shelly went for the
patient if he or she hopes to turn a couple of entrepre- VC money because she knew funding from the VC
neurs in a garage into a publicly traded company. VCs firm would bring prestige and credibility and make it much
FOR YOUR REFERENCE
can generally expect to stick around for four to seven easier to raise money in the future.
years before realizing a return on their investment. Why did the VC firm select her project out of the
CHAPTER 7
WET F EET IN S IDER GUIDE 7

AT A GLANCE
Chapter 1
thousands of proposals it received that year? According When sales for the next period came in below fore-
to Shelly, it believed she had the skills and personality cast, things turned ugly. The company cut staff, and
to make it as an entrepreneur. Also, she was introduced after a period of wrangling between the senior man-
THE INDUSTRY
to her investor by a credible source, probably someone agement team (which included a number of people
Chapter 2
well known to the investor. Shelly says that just send- brought in by the board) and Shelly, she gave an ulti-
ing in a proposal to a venture capital firm wont get you matum: Get rid of some of the executives, or Im out.
anywhere. The board backed the other executives, and Shelly left
Negotiations regarding terms went smoothly, except but retained her seat on the board.
for a small dispute about dilution of stocks. She says When the company was flying highest, it looked as
the lesson here is that once the initial terms are laid out, if a public offering or acquisition was on the horizon.
THE COMPANIES
VCs will try to do anything to protect their price. These opportunities disappeared when the company ran
As soon as Shelly got her money, she began hiring. into problems, but the game is not over yet. The firm
Chapter 3
The company got good press and put its product devel- may still reach liquidity if it can retrench.
opment into high gear. The VCs were pleased and kept Shelly offers the following advice for others working
pushing her to hire faster and grow as quickly as pos- with venture capital firms:
sible. Shelly saw she was going to run out of money if Its a great way to go, but make sure you research your
she kept growing at this rate, so she got a bridge loan to VC firm and board members carefully. Conduct due
last her until the next valuation. diligence on them the way you would with top hires.
Nine months after the first round, Shellys board Understand that there are times when you and your
ON THE JOB
decided it needed a new round of venture investment. VCs will have different motivations. VCs are happy
Chapter 4
This time it got offers from multiple firms, but all at the only if the company goes public or is acquired; but
same low valuation, suggesting to Shelly that VC firms for an entrepreneur, not selling out to another com-
talk to each other when bidding on the same company. pany can produce significant returns. VCs have a
She chose firms that were allied with strategic partners portfolio strategy and want to increase their stake
and closed a deal with the partner at the same time she by growing quickly so that winners will pay off in
THE WORKPLACE
closed the financing. a big way.

Armed with more money, the business continued to Dont let your VCs push you around. In the end, the
Chapter 5
grow and hire, but problems cropped up. Many of the company is your creationand your responsibility.
early employees the board hired didnt work out, and
turnover increased. Meanwhile, the companys manage-
ment thought the VC firms attention was directed else-
where; management complained that the VCs added
value was limited mostly to headhunter introductions.
GETTING HIRED
As the company raised an additional and substan-

tially larger round of funding at a much higher valua-
Chapter 6
tion from an outside group of companies, relations with

the management team and original VC firm worsened.
Despite the fact that these second-round companies
had provided much more funding, the original VCs
FOR YOUR REFERENCE
held the balance of power on the board, a common

frustration at many VC-funded companies.
Chapter 7

AT A GLANCE
CHAPTER 1
Does Green Have the Blues?
THE INDUSTRY
Before the global wont bear out in Use Environmental clean tech rose 107
Strategy to Innovate, percent from the first
CHAPTER 2
recession began in the marketplace,
2008, the clean-tech where valuations of Create Value, and quarter to $1.5 bil-
sector was increasing green-energy firms Build Competitive lion, the sectors larg-
in popularity among ran high in 2007 and Advantage. He told est haul on record.
investors. Between 2008. Will stressed The Economist that Obviously, VCs are
2005 and 2006, countries such as while investments putting their money
investments in the Spain and Greece, in wind and solar where their mouths
field rose 45 percent, which had been companies were are. In June 2010,
THE COMPANIES
with investment among the nations likely overvalued solar panel installer
totals in 2005 double clamoring for more prior to the reces- SunRun announced
CHAPTER 3
those of 2004. The solar and wind sion, clean tech is a it had raised $55
market peaked in energy, kill inves- diverse sector, and million in a financing
2008, when invest- tors support for the other technologies round that brought
ments from various sector? are attracting inves- in funds from VC
sourcesventure The results of tor attention. Smart heavyweights
capital, corporate the 2009 United grid and smart Sequoia Capital,
R&D, private equity Nations Climate home technolo- Accel Partners, and
sent $200 billion to Change Conference gies are hotlook Foundation Capital.
clean-tech compa- werent encourag- no further than The announce-
nies. ing. Attendees once Smartsterdam, ment was welcome
ON THE JOB
CHAPTER 4
Since then, again failed to come the name given the news to clean-tech
shares of renewable to an agreement on Dutch capital after entrepreneurs hop-
energy companies significant climate- updates to its public- ing to secure similar
have dropped. The change initiatives, sector services, financing amounts,
depressed mar- and on the domestic such as garbage but enthusiasm
ket plays a role, of front, an energy bill collection, seriously dampened the fol-
course, but its also that went before the incorporated green lowing month with
THE WORKPLACE
time to conduct a U.S. Congress was energy technolo- the volatile reception
reality check. A lot not adopted. Add to gies. Geothermal of electric car-maker
of the enthusiasm such developments energy, cellulosic Tesla and its high-pro-
CHAPTER 5
surrounding clean the steep drop of biofuels, as well as file IPO. In the space
tech in the middle of carbon prices in electric-car innova- of a week, Tesla stock
this centurys first Chicagos voluntary tions, continue to surged 40 percent
decade rested on gov- emission-permits push the investment over its IPO price but
ernmental policies market, and a wan- envelope for clean then fell 47 percent
that supported clean ing interest in clean tech, and U.S. inter- from that high point
techin theory. Now technologies would est in the sector does not long after. The
that governments appear to be the not appear to have mixed reactions to
GETTING HIRED
worldwide are feeling case. abated. In a survey of and developments in
the economic pinch Not so fast, 500 VCs worldwide, green-tech products
CHAPTER 6
(in the cases of Spain says Daniel C. 72 percent of U.S. suggest it will be
and Greece, its more Esty, a professor respondents claimed some time before VCs
like a fiscal punch to at Yale University investment inter- know if there is green
the face), investors and a coauthor of est in the clean-tech in green after all.
are voicing concerns Green to Gold: How industry. And in Q2
FOR YOUR REFERENCE
that those theories Smart Companies 2010, investments in

CHAPTER 7

AT A GLANCE
CHAPTER 1
Venture Capital also were up, with $6.5 billion in venture capital funds
Today
directed into U.S. startups in the second quarter of
2010. That was a 53 percent increase from the same
In June 2007, The New York Times ran an article
THE INDUSTRY
period in 2009, and in another positive development,

CHAPTER 2
that claimed Silicon Valley is back. The proclama- seed and early-stage investments rose, with companies
tion appeared on point. VC volume investment in the at those stages netting more funding than in any quar-
second quarter of that year had posted at its highest ter since mid-2007.
level since 2001, and many in the industry were eager Overall, the technology and health-care sectors
to put the subpar years that followed the dotcom bust received the bulk of funds tallied in the second quar-
at the turn of the last century behind them. When VC ter of 2010, taking in $4.6 billion, according to
THE COMPANIES
firms raised more than $14 billion in the first half of a study conducted by Dow Jones VentureSource.
2008, insiders had greater reason to believe the industry Health care was the greater of the two winners: Of the
CHAPTER 3
would continue to improve. $4.6 billion earned by the two sectors, biopharmaceuti-
The second half of 2008 told a different story. cal startups took in $1.2 billion and health care took in
The housing bubble popped, a credit crisis ensued, $2.7 billion. In technology, software and IT attracted the
and markets around the world plunged. In the U.S., most investments, but web-based startups, especially
the federal government stepped in to halt the rapid those that address online communities, were also of
slide of private financial institutions by establishing interest to investors: Approximately 57 percent of
the Troubled Asset Relief Program (TARP). Initial early-stage funds in the technology sector went to
ON THE JOB
estimates of the programs costs put the total at consumer-facing Web startups, a 4 percent increase
CHAPTER 4
$700 billion, a figure that alarmed many, but similarly from 2009.
drastic measures were being taken elsewhere: Icelands The following table breaks down the industry by
government took control of the countrys three largest investment sector.
banks in order to avoid national bankruptcy.
In the face of such worldwide turmoil, venture
Top Four U.S. VC Investment Sectors
THE WORKPLACE
capital also tumbled. In 2008, just six startups raised

in First Quarter 2010
$460 million, making it the worst year on record for
Amount No. of
CHAPTER 5
the industry since 1975. The following year saw some Industry
($M) Deals
improvement: 13 VC-backed startups raised $1.9 bil- Biotechnology 825 99
lion when they went public in 2009. Still, the figures
were enough to prompt Mark Heesen, president of Software 681 144
the National Venture Capital Association (NVCA), to

Industrial / Energy 674 66
publicly characterize 2009 as a year many venture capi-
GETTING HIRED
talists and entrepreneurs would choose to soon forget. Medical Devices

517 61
Heesens grim tone was indicative of the industrys and Equipment
CHAPTER 6
gloomy outlook, but the mood began to lighten in Sources: MoneyTree Report (PricewaterhouseCoopers/NVCA/
2010 when a study released by the NVCA in conjunc- Thomson Financial), WetFeet analysis
tion with PricewaterhouseCoopers reported cheerier
figures: 17 VC-backed companies had gone public
FOR YOUR REFERENCE
by the second quarter of 2010, which was more than

the total number of IPOs for all of 2009. Investments
CHAPTER 7
10 W E T F E E T I N S I D ER GUID E

AT A GLANCE
CHAPTER 1
Industry Divisions of large corporations, affiliates of invest-
ment banks, buyout firms, venture-leasing compa-
Breakdown nies, small-business investment companies, and other
The venture capital world consists of only a
THE INDUSTRY
wealthy private investors also evaluate, fund, work
CHAPTER 2
few hundred small firms, usually employing two to 40 with, and sell entrepreneurial organizations looking for
people. These firms include the famous playerssuch capital. Heres a breakdown by investment stage and
as Bessemer Venture Partners, Kleiner Perkins Caufield firm type.
& Byers, and Mayfield Fund, and otherssome of
which are listed in the Industry Rankings table that Private VC Firms
follows this section. At first glance, these firms appear Early- to Mid-Stage
THE COMPANIES
to be remarkably similar. They have few employees and Firms in the early-stage to mid-stage segment fol-
lots of money to invest in entrepreneurial ventures, low the classic VC model: Find an entrepreneur with
CHAPTER 3
and they all want to be part of the next phenomenally a great idea for a business in a fast-growing sector of
successful startup. Although the firms compete aggres- a large market, bake for several years, then sell for
sively for deals, they also often combine into syndicates a hefty chunk of change. VCs have various ways of
and invest in favored startups as teams. weighting the timing, technology/processes that offer
Despite these shared characteristics, each firm has a competitive edge, and the quality of the team. Seed
adopted its own approach to succeeding in the competi- and early-stage investments are the riskiest because
tive and risky world of startup financing. Firms differ many startups tank. Still, they often provide the high-
ON THE JOB
in fund size, regional focus, industry focus, and stage est returns because investors coming in early can pay a
CHAPTER 4
of investing. lower price for a given share of equity.
INSIDEr SCOOP Mid- to Late-Stage

This is a relationship business. Its knowing entre- Mid- to late-stage firms, many of which also operate
preneurs, its knowing venture capitalists, so that at the seed level, provide funds to established compa-
THE WORKPLACE
when something interesting comes along, youre in niesthose that have a product, sufficient employees,
the deal.
and perhaps even revenue. At these stages, firms inject
CHAPTER 5
more capital into the company to help it become profit-
You can find venture capital firms in cities as varied able so that it will attract enough interest to be acquired
as Austin, Texas; Fort Lee, New Jersey, and Kirkland, by a larger company or to go public.
Washington. But northern California (Silicon Valley)
VC firms have been responsible for the greatest number Growth Buyout Funds
of investments, followed by those in greater New York Some VCs have moved into growth buyouts of larger
GETTING HIRED
and New England. private companies or divisions of public companies.
Although some firms specialize in low-tech invest- These funds invest larger amounts of capitalup to
CHAPTER 6
ments, most VC firms have focused on technol- $100 millionin exchange for a significant minority
ogy-intensive fields such as software, biotechnology, or majority position in the company. By focusing on
telecommunications, and energy. Every year, firms stable, growing, and often profitable companies, buyout
tend to shift focus, targeting newly emerging sectors funds dont have to wait long before they can cash in on
FOR YOUR REFERENCE
such as clean technologies. the companys IPO or sale. Theres less risk, unless mar-
ket factors lead to the delay of an IPO, for example. The
CHAPTER 7

AT A GLANCE
CHAPTER 1
funded company and its earlier investors benefit from Corporate Funds
having a prestigious late-stage investor add credibility As opposed to private funds, whose primary goal is
on Wall Street come IPO time. monetary gain, corporate funds have the added goal
THE INDUSTRY
of strategically investing in companies whose business

Financial Services Firms
CHAPTER 2
relates in some way to the corporations own. Microsoft,

Where theres money, of course youll find investment for instance, invested in Qwest Communications, a
bankers. Banks such as Citicorp and Morgan Stanley telecom company that was building a fiber-optic net-
will invest in the later stages. The aim is pretty much the work, to help it deliver Windows NTbased software.
same as that of the VCs: Make a killing through an IPO The following tables break down the industry by
or an acquisition. stage of development.
THE COMPANIES
Investments by Stage of Development, 200809

CHAPTER 3
Stage 2008 ($M) 2008 Deals 2009 ($M) 2009 Deals
Startup/seed 1,648 499 1,656 331
Early stage 5,263 1,072 4,650 907
Expansion stage 10,347 1,222 5,524 823

ON THE JOB
CHAPTER 4
Later stage 10,754 1,201 5,952 807
Sources: MoneyTree Report (PricewaterhouseCoopers/NVCA/Thomson Financial)
VC Investment by Stage, First Quarter 2010

THE WORKPLACE
Share of Total
Stage Amount ($M)
CHAPTER 5
VC Invested (%)
Startup/seed 422 9
Early stagev 1,006 21.3
Later stage 1,544 32.7
Expansion stage 1,754 37.1

GETTING HIRED
Sources: MoneyTree Report (PwC/NVCA/Thomson Financial), WetFeet research

CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Industry Rankings Industry Trends
Companies in the venture capital arena arent as
easily ranked as companies in other industries are. One The Hammer Descends
THE INDUSTRY
reason is that VC firms are fairly secretive about their Even as corporate leaders were receiving federal funds
CHAPTER 2
results, and as privately held companies, arent required for their troubled businesses at the start of the recession
to disclose them. in 2008, media outlets were reporting lavish expenses
This table shows the firms that were most active in rung up by those same companies. For instance, days
the first quarter of 2010. after insurance giant AIG was offered an $85 billion
bailout by the federal government, executives ran up
a tab of $440,000 at a luxury resort in California dur-
Most Active Venture Investors, Q1 2010
THE COMPANIES
ing a weeklong company retreat. Such stories were not
Number
Firm
of Deals received well by taxpayers, and public opinion turned
CHAPTER 3
viciously against big-money corporate earnings. Swayed
Draper Fisher Jurvetson 18
by their constituents and a revenue shortfall caused by
First Round Capital 17 the federal bailout, politicians have since taken a harder
stance toward large businesses and, more specifically,
New Enterprise Associates 16
their largesse.
Kleiner Perkins Caufield & Byers 14 Venture capital has been no exception. After years of
Menlo Ventures 14
successfully defeating efforts to curb VC profits, lobby-
ON THE JOB
ists were unable to stop such legislation in 2010, when
CHAPTER 4
Polaris Venture Partners 13 regulators passed what critics called the enterprise
Rho Capital Partners 12 value tax. This means profits from the sale of partner-
ship shares will be taxed at a rate of 75 percent instead
Benchmark Capital 11
of the capital gains rate of 15 percent at which they had
Domain Associates 11 been taxed for years. In addition, partnership interest
THE WORKPLACE
rates held for more than five years will be taxed at a
Foundation Capital 11
rate of 50 percent capital gains and 50 percent ordinary
CHAPTER 5
North Bridge Venture Partners 11 income. Related legislation applies the same tax split to
Redpoint Ventures 8
carried interest, the percentage of pay that investment
managers earn from their clients portfolios. The regula-
ARCH Venture Partners 8 tory changes are expected to raise $14 billion in revenue
Atlas Venture 8 for the federal government.
Thats great for Uncle Sam, but VCs are decidedly
Canaan Partners 8
GETTING HIRED
less enthusiastic. Partnership sales had generated signifi-
Morgenthaler Ventures 8 cant profits for VC firms for years. For example, when
CHAPTER 6
Blackstone Group went public in 2007, the deal netted
Oak Investment Partners 8
its partners $4.7 billion. The recent legislation changes
U.S. Venture Partners 7 the math dramatically, and although revisions to the
Accel Partners 7
bills reduce the tax rates on investments held for several
FOR YOUR REFERENCE
years, VCs still grumble at the outcome.

Source: MoneyTree Report (PwC/NVCA/Thomson Financial)
CHAPTER 7

AT A GLANCE
CHAPTER 1
However, the government has stepped up its sup- offer better products, and that benefits consumers.
port of research and development, facilitating a stronger The changes will be good for the industry in the long
investment culture as entrepreneurs take advantage of run, but in the short term, VCs are acclimating to the
THE INDUSTRY
the federal funds to build their fledgling enterprises. smaller figures that characterize venture capital.
CHAPTER 2
When Smaller Is Better

The recent legislation, which minimizes VC profits,
follows a trend within the industry: contraction. The
number of firms is shrinking, and less money is flowing
into venture capital funds. Often, the amounts being
THE COMPANIES
raised are smaller, and fewer IPOs are occurring.

Although such developments have their draw-
CHAPTER 3
backswith fewer venture dollars to go around, inves-

tors tend to focus their money on later-stage startups,
thus reducing opportunities for less experienced entre-
preneurs and, some argue, innovationobservers
believe the developments could lead to internal correc-
tions desperately needed within the industry. Take, for
instance, fund sizes today. More often than not, firms
ON THE JOB
boast overlapping funds that put more than $1 billion

CHAPTER 4
under managementor maybe its a single fund that Exit? What Exit?
totals $500 million or more. Compare that to 1995, VCs make money in two ways: An IPO or an acquisi-
when $250 million was considered a megafund. tion. An initial public offering is the preferred choice,
The pressure to invest the huge sums needed to pro- promising the greatest possible return on investment for
duce dizzying returns inflates valuations, experts argue. investors and entrepreneurs. Plus, when the IPO mar-
THE WORKPLACE
It also keeps investment focus on later-stage startups, ket is healthy, it raises the cost of acquisitions, the next
which carry less risk, thus allowing firms to put more preferred exit for a VC.
CHAPTER 5
money into play. But sure returns attract other inves- But with 2008 and 2009 yielding just 19 IPOs,
tors, and as profits split between multiple stakeholders, when VCs averaged 120 per year during the 1990s, no
its more difficult to achieve the exorbitant returns to one is describing the market as healthy. Anemic is
which investors have become accustomed. more apt, and thats good news for business giants such
These developments suggest venture capitalists will as Microsoft and Google, which have a track record of
have to recalibrate their expectations, which some old- growing through acquisitions in troubled economies.
GETTING HIRED
timers believe is for the best. As Norm Fogelsong of Such companies are aware of that history too, and so
Institutional Venture Partners told the San Jose Mercury hold prices down when sellers come knocking.
CHAPTER 6
News, Those of us who are varsity players are glad to None of these developments is VC-friendly,
see the venture industry getting back to a state of equi- but the industry may be turning a corner, albeit at
librium. According to Fogelsong, too much money 25 mph. IPOs in the second quarter of 2010 numbered
had been spent chasing too few good ideas. The new 17, marking the strongest quarter by number of deals
FOR YOUR REFERENCE
environment in which VCs find themselves will instill and dollar volume since the fourth quarter of 2007.
discipline and force investment banks to pursue and More encouraging, the U.S. Securities and Exchange
CHAPTER 7

AT A GLANCE
CHAPTER 1
Commission tallies 98 venture-backed companies as
having filed IPOs for 2010.
Movin On Out
THE INDUSTRY
CHAPTER 2
While the IPO market is beginning to show signs of
life, few expect a speedy recovery. That fact, along with
new disadvantageous tax regulations and policies, has
depressed the American VC community. In a global
survey of 500 venture capitalists by the NVCA and
Deloitte in 2010, many U.S. respondents said they
THE COMPANIES
expected the stateside market to contract for the next
five years. They instead anticipate growth in emerging
CHAPTER 3
markets, such as Brazil, India, and China. More than
90 percent of North American and European respon-
dents also expect the number of venture firms to shrink
in the same time period.
VC counterparts in Brazil, India, and China
reported rosier outlooks, with an overwhelming num-
ber of respondents from each nation expecting the
ON THE JOB
number of venture firms in their respective countries to
CHAPTER 4
grow between 2010 and 2015. They also believe limited
partners are more likely to invest in their countries.
Given such attitudes, its no surprise that ven-
ture firms are taking global markets more seriously.
More American firms are opening branches overseas,
THE WORKPLACE
especially in China and India, a sharp contrast to
their approach in 2007, when NVCA president Mark
CHAPTER 5
Heesen, in the Global Venture Capital Survey, described
it as dabbling.
GETTING HIRED
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

The Companies
3
Profiles of Top Firms................... 18
Firm Thumbnails........................ 41
The venture capital firms listed

here are merely representative of the many
firms in business. For information on oth-
ers, see Pratts Guide to Private Equity and
Venture Capital Sources at your library or
visit www.nvca.org.

AT A GLANCE
CHAPTER 1
Profiles of Top Firms

THE INDUSTRY
ARCH Venture Partners

CHAPTER 2
ARCH Midwest ARCH Northwest

8725 West Higgins Road, Suite 290 1000 Second Avenue, Suite 3700
Chicago, IL 60631 Seattle, WA 98104
Phone: 773-380-6600 Phone: 206-674-3028
Fax: 773-380-6606 Fax: 206-674-3026
THE COMPANIES
ARCH Southwest ARCH West

CHAPTER 3
6300 Bridgepoint Parkway 1700 Owens Street, Suite 535

Building One, Suite 500 San Francisco, CA 94158
Austin, TX 78730 Phone: 415-565-7103
Phone: 512-795-5830 Fax: 415-565-7107
Fax: 512-795-5849
www.archventure.com
ON THE JOB
With offices in Austin, Texas; Chicago; San Francisco; on attracting investors representing some of the largest
CHAPTER 4
and Seattle; ARCH goes where few venture firms U.S., Asian, and European interests, including corpo-
dare to treadthe ivory towers of academia and the rations, university endowments, public institutions,
cluttered realms of national major pension funds, and private foundations. ARCH
laboratories. The firm, counts among its success stories Reef Point Systems,
key numbers
which was spun out of which makes integrated optical components for com-
financials
THE WORKPLACE
the University of Chicago, munications-related businesses; Fast Track Systems,

Capital under
builds companies on ideas which creates Web-based software for clinical trials and
management: More
CHAPTER 5
than $1.5 billion that emerge from universi- was acquired by Medidata Solutions in March 2008;
Minimum investment: ties. The firm also has been and NeurogesX, a biopharmaceuticals company.
Not available successful doing deals with
Preferred investment: research programs at large [ Highlights]
Expects to commit
$10 million to $15 mil- corporations, such as Array Focuses on information technology, life sciences,
lion to a company during BioPharma, which ARCH and physical sciences.
GETTING HIRED
the life of a deal helped spin out of Amgen. 95 percent of investments at seed/startup stage.
ARCH manages seven Initially was a part of ARCH Development
CHAPTER 6
PERSONNEL
Number of profession- funds totaling more than Corporation.
als: Six managing $1.5 billion, with invest-
directors, two princi- ments in more than 120
pals, two associates,
companies. Its most recent
and six venture partners
FOR YOUR REFERENCE
fund of $400 million was

closed in 2007 and focuses
CHAPTER 7

AT A GLANCE
CHAPTER 1
THE INDUSTRY
Accel Partners
CHAPTER 2
428 University Avenue 16 St. Jamess Street
Palo Alto, CA 94301 London SW1A 1ER
Phone: 650-614-4800 United Kingdom
Fax: 650-614-4880 Phone: +44-20-7170-1000
Fax: +44-20-7170-1099
THE COMPANIES
#21/1-1, Nawab Towers, Level 2, Elegance Tower
Cunningham Road Jasola, Mathura Road
CHAPTER 3
Bangalore - 560 052, India New Delhi - 110 025, India
Phone: +91-80-4123-2551/6552/6553 Phone: +91-11-4060-1153
Fax: +91-80-4123-8853
www.accel.com
With Jim Breyer and J. Peter Wagner leading the way, strategy, which includes overseas investments in China,
ON THE JOB
Accel Partners has enjoyed spectacular returns with Israel, and Europe. A year later, Accel teamed with
CHAPTER 4
several successful IPOs, including that of UUNET, Madison Dearborn Partners to acquire a major inter-
a Web service provider and one of the first Internet est in antenna systems network NextG Networks. Also
companies backed by a VC firm. Accel has been in 2009, Accel made more than $1 billion by selling
in business for more than two of its major investments: social gaming company
25 years and has had a Playfish to Electronic Arts and AdMob to Google. In
THE WORKPLACE
key numbers hand in more than 200 2010 Accel invested $60 million in Atlassian, a software
financials companies. With inves- development company based in Sydney, Australia.
CHAPTER 5
Capital under manage- tors that include promi-
ment: More than nent companiessuch [ Highlights]
$3 billion
as Dell, Disney, General Focus of its companies includes computing and stor-
Minimum investment:
Less than $100,000
Motors, and Microsoftit age infrastructure, consumer Internet and media,
Preferred investment: has worked with a variety energy, enterprise software and services, health
No preference of IT startups, including care and biotech, mobile, networking systems,
GETTING HIRED
RealNetworks, and enter- retail consumer, security, semiconductors, and tech-
PERSONNEL
prise software players such nology services.
Number of profession- CHAPTER 6
als: 16 investment part- as Agile and Remedy. Invests in all stages.
ners in Silicon Valley, In 2008, Accel Accels Arthur Patterson ranked 31st on the Forbes
9 in London, and 8 in expanded globally to form 2009 Midas List of top tech VC investors.
India; 7 development
partners in Silicon Valley
Accel India Venture Fund.
FOR YOUR REFERENCE
and 1 in London The move aligns with

the firms global outreach
CHAPTER 7

AT A GLANCE
CHAPTER 1
Battery Ventures
THE INDUSTRY
CHAPTER 2
Reservoir Woods 2884 Sand Hill Road, Suite 101

930 Winter Street, Suite 2500 Menlo Park, CA 94025
Waltham, MA 02451 Phone: 650-372-3939
Phone: 781-478-6600 Fax: 650-372-3930
Fax: 781-478-6601
THE COMPANIES
6 HaChoshlim Street, Sixth Floor

Herzliya 46724, Israel
CHAPTER 3
Phone: +972-9-972-4300
Fax: +972-9-950-9484
www.battery.com
Battery was founded in 1983. Unlike some of its major investing in all stages of a companys growth. About a
competitors, who rely heavily on partners for deal flow, third of its capital goes to startups, a third to emerg-
ON THE JOB
Battery Ventures has an active group of associates and ing companies, and a third to later-stage deals such as
CHAPTER 4
analysts pounding the pavement to generate and evalu- buyouts. In 2008, Battery added a partner to focus on
ate a large number of investment leads. It has invested investments in India and opened an office in Mumbai
in more than 200 compa- as part of its goal of expanding its global investment
nies, including Allegiance platform. Battery invests across the U.S., and in
key numbers Telecom (acquired by Canada, Europe, Israel, India, and China.
THE WORKPLACE
XO Communications),
financials
Akamai Technologies,
Capital under manage-
CHAPTER 5
Infoseek (now a part of [ Highlights]

ment: $4 billion
Minimum investment: Disney), Fore Systems Focuses on communication services, software, infra-
$300,000 (merged into Marconi structure technologies, Internet and digital media,
Preferred investment: Communications), Focal semiconductors and components, financial ser-
$5 million to $100 mil-
Communications, HNC vices, tech-enabled businesses, industrial technolo-
lion
Software, Nextel, and gies, and clean-tech and advanced materials.
GETTING HIRED
PERSONNEL Witness Systems. In 2007, Invests in all stages.

Number of profession- MetroPCS, which Battery Two-thirds of all Battery investments have
CHAPTER 6
als: 11 general partners,

12 partners/principles/ invested in early, went pub- yielded profitable returns, resulting in a record
venture partners, 18 lic in a $1.15 billion IPO. of consistent top-quartile performance within the
investment profession- The firm closed a $750 mil- VC industry.
als, two entrepreneurs-
lion ninth fund in 2010.
in-residence, and 13
FOR YOUR REFERENCE
operations professionals Battery takes a balanced

approach to investing,
CHAPTER 7

AT A GLANCE
CHAPTER 1
Benchmark Capital Management
THE INDUSTRY
CHAPTER 2
2480 Sand Hill Road, Suite 200 9 Hamanofim Street
Menlo Park, CA 94025 Herzliya Pituach 46725, Israel
Phone: 650-854-8180 Phone: +972-9-9617600
Fax: 650-854-8183 Fax: +972-9-9617601
www.benchmark.com
THE COMPANIES
CHAPTER 3
Benchmark was founded in 1995 to challenge the 2008, Balderton made two of the largest venture-
industry status quo. Among its founders are Andy backed acquisitions of the year when it sold open-
Rachleff, a veteran VC of AOL and Nortel Networks, source company MySQL AB to Sun Microsystems for
and Robert Kagle, who made $170 million on eBay. $1 billion, and social networking service Bebo to AOL for
The Benchmark partners work as a team rather than in $850 million.
the typical model in which partners invest and oper- In 2008, Benchmark closed its sixth U.S. fund
ate independently. Benchmark immediately hit the big for $500 million, investing in early-stage technology
ON THE JOB
time with Ariba, eBay, and Palm. Today its high-profile companies. In 2009, Benchmark sold social media
CHAPTER 4
clients include Yelp, Zillow.com, Zipcar, and Twitter. aggregator service FriendFeed to Facebook for approxi-
Most of the firms limited partners are drawn mately $50 million, and sold enterprise software com-
from charitable foun- pany SpringSource to VMWare for approximately
dations and university $420 million, proving that even in a recession the firm
key numbers endowments, including can generate investment returns. In 2010, Google
THE WORKPLACE
the Ford Foundation, the acquired Benchmark-backed Metaweb, though the
financials
Capital under
Hewlett Foundation, and acquisition price was not disclosed
CHAPTER 5
management: $3 billion Yale University. In 2006,
Minimum investment: Peter Fenton from Accel
$100,000 Partners joined Benchmark [ Highlights]
Preferred investment: as a general partner and Invests in early-stage companies in enterprise
$3 million to $5 million
initially; $5 million to has been instrumental in software and services, communications, semi-
$15 million during the doubling the size of the conductors, mobile computing, consumer and
life of a company
GETTING HIRED
firms entrepreneurs in financial services.
residence. Benchmarks Maintains a high partner-to-capital ratio by limiting
PERSONNEL CHAPTER 6
Number of profes- London-based firm the number of companies in which it invests.
sionals: nine general became independent in Three partnersKevin Harvey, Alexandre Balkanski,
partners, two alumni 2007 and is now known as and Peter Fentonmade the Forbes 2009 Midas
partners, two venture
partners, and two entre- Balderton Capital. The two List of the best tech investors (ranking 15th, 36th,
FOR YOUR REFERENCE
preneurs in residence firms continue to invest and 50th, respectively).

in each others funds. In
CHAPTER 7

AT A GLANCE
CHAPTER 1
Bessemer Venture Partners

THE INDUSTRY
CHAPTER 2
83 Walnut Street 535 Middlefield Road, Suite 245

Wellesley Hills, MA 02481 Menlo Park, CA 94025
Phone: 781-237-6050 Phone: 650-853-7000
Fax: 781-237-7576 Fax: 650-853-7001
1865 Palmer Avenue, Suite 104 #71 Free Press House, 7th Floor
Larchmont, NY 10538 Free Press Journal Road
THE COMPANIES
Phone: 914-833-9100 215 Nariman Point

CHAPTER 3
Fax: 914-833-9200 Mumbai - 400 021, India

Phone: +91-22-6616-2000
Fax: +91-22-6616-2001
www.bvp.com
Bessemer traces its roots back to 1911, when steel Playdom, Criteo, and ACTIV Financial Systems Inc.
titan Henry Phipps founded Bessemer Securities. Its seventh global fund, for more than $1 billion, was
ON THE JOB
Phipps, Andrew Carnegies business partner, left oversubscribed and closed in July 2007. In 2008, the
CHAPTER 4
behind a sizable stash of money to be invested. company realized three IPOs and six acquisitions.
Today, the partners dont have to spend any time
raising cash because funds come from the Phipps [ Highlights]
familys endowment. Focuses on clean tech, cloud computing, data secu-
Bessemer prefers to lead rity, financial services, health care.
key numbers
THE WORKPLACE
the first institutional round One of the longest-standing VC firms in the country,
financials of equity, but sometimes Bessemer has invested in a wig company, a french-
CHAPTER 5

participates in later rounds fry company, and the Lahaina, Kaanapali & Pacific
ment: More than
$2 billion and makes seed-stage Railroad.
Minimum investment: investments. Some of its The firm played a role in establishing or building
$100,000 successes include Blue Nile, such heavyweights as Ingersoll-Rand, International
Preferred investment: HotJobs, Skype, Staples, Paper, and W.R. Grace.
$4 million to $10 million
and VeriSign, but it has also Six partners from Bessemer made the Forbes 2009
GETTING HIRED
PERSONNEL had some notable mistakes; Midas List of top tech VC investors: Robert Stavis
Number of check out its website for its (27th), Robert Goodman (33rd), Felda Hardymon
CHAPTER 6
professionals: 16 part-
anti-portfoliocompa- (38th), J. Edmund Colloton (46th), David J. Cowan
ners, 7 operating part-
ners, 6 vice presidents, nies including Apple, eBay, (67th), and Rob S. Chandra (88th).
3 entrepreneurs in resi- FedEx, and Googlethat
dence, 7 associates, it could have invested in
FOR YOUR REFERENCE
7 analysts, and
5 operations staff but didnt. Current invest-
ments include LinkedIn,
CHAPTER 7

AT A GLANCE
CHAPTER 1
CCMP Capital Advisors
THE INDUSTRY
CHAPTER 2
245 Park Avenue, 16th Floor St. Jamess House
New York, NY 10167 23 King Street
Phone: 212-600-9600 London SW1Y6QY
Fax: 212-599-3481 United Kingdom
Phone: +44-207-389-9100
Fax: +44-207-839-2192
24 Waterway Avenue, Suite 750
THE COMPANIES
The Woodlands, TX 77380
CHAPTER 3
Phone: 281-363-2013
Fax: 281-363-2097
www.ccmpcapital.com
Formerly serving as the buyout and growth equity arm [ Highlights]

of J.P. Morgan Partners, CCMP Capital was spun off Focuses on industrial; energy; health-care infra-
ON THE JOB
from its parent in August 2006 along with Panorama structure; media and telecom; and consumer, retail
CHAPTER 4
Capital, which focuses on biotech and high-tech invest- and services.
ments. The firm still specializes in private equity, and Key investments include AMC Entertainment,
focuses on five core industries: consumer, retail, and ser- 1-800-FLOWERS.COM, Hanley Wood, Warner
vices; energy; health-care infrastructure; industrial; and Chilcott, JetBlue Airways, Kinkos, and Seagate
media and telecom. Since 1984, the principals of the Technology Holdings.
THE WORKPLACE
firm (under the J.P. Morgan Invests in companies in North America, Europe, and
Partners banner until this Asia.
CHAPTER 5
key numbers year) have invested more
financials than $10 billion in more
Not available than 375 buyout and
growth equity transactions.
PERSONNEL
CCMP portfolio com-
Number of
professionals: Five panies Kraton Polymers
GETTING HIRED
managing directors, and Generac Holdings
four principals, three went public in 2009 and
executive advisers, 14 CHAPTER 6
associates, two office 2010, respectively. Also in
managers; the firm has 2010, CCMP purchased
additional staffing for marketing information and
finance and legal,
research services company
investor relations,
FOR YOUR REFERENCE
and administration Infogroup for approxi-

mately $635 million.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Crosspoint Venture Partners

THE INDUSTRY
CHAPTER 2
The Pioneer Hotel Building

2925 Woodside Road
Woodside, CA 94062
Phone: 650-851-7600
Fax: 650-851-7661
THE COMPANIES
www.cpvp.com
CHAPTER 3
Crosspoint was founded by John Mumford in 1970

while he was still in business school at Stanford. The key numbers
company saw major profits from many of its Web- financials
related ventures, including Juniper Networks, though Capital under manage-
unlike many other funds, it had the foresight to stay ment: Approximately
away from consumer e-commerce companies. $2 billion
ON THE JOB
Mumford is on record saying he hopes to retire Minimum investment:

CHAPTER 4
Not available
soon, and there have been some questions about the
Preferred investment:
firms succession planning. Crosspoint is not accepting Up to $50 million
new project proposals.
PERSONNEL
[ Highlights] Number of profes-
sionals: One chief
THE WORKPLACE
Prefers to invest in early-stage e-business services administrative partner,

and broadband infrastructure companies. two general partners,
CHAPTER 5
Crosspoints values include Seek the truth no mat- one general partner
emeritus, one founding
ter how painful, Do something inspiring, and
partner, two managing
Our dreams are ridiculous, so laugh and enjoy partners
them.
With its office in northern California, the firm con-
centrates its investments on the West Coast.
GETTING HIRED
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Greylock partners
THE INDUSTRY
CHAPTER 2
1 Brattle Square, Fourth Floor 2929 Campus Drive, Suite 400
Cambridge, MA 02138 San Mateo, CA 94403
Phone: 781-622-2200 Phone: 650-493-5525
Fax: 781-622-2300 Fax: 650-493-5575
10 Abba Eban Boulevard
THE COMPANIES
Building C, 9th Floor
PO Box 12298
CHAPTER 3
Herzliya Pituach 46733, Israel
Phone: +972-9-958-0007
Fax: +972-9-958-0009
www.greylock.com
Greylock was founded in 1965 by Bill Elfers and Dan stage investments in clean tech, consumer services,
ON THE JOB
Gregory. Initially, six prom- software, Internet, semiconductor, and enterprise infor-
CHAPTER 4
inent families and seven mation technologies. It invests in Israeli, Chinese,
key numbers universitiesDartmouth, Indian, and American companies. Recent investments
Duke, Harvard, MIT, include Data Robotics, Digg, Facebook, Imperva,
financials
Princeton, Stanford, LinkedIn, Palo Alto Networks, Pandora, Picarro,
ment: More than and Yalecommitted Redfin, Workday, and Zipcar.
THE WORKPLACE
$2.2 billion $9 million to Greylock.
Minimum investment: In 2009, the firm closed [ Highlights]
CHAPTER 5
$500,000
its 13th fund, the Focuses on clean tech, consumer and services, enter-
$20 million $575 million Greylock XIII prise infrastructure, enterprise software, and semi-
Fund. Portfolio successes conductor technologies at early stage development.
PERSONNEL include DoubleClick, Greylock partner Aneel Bhusri was ranked eighth on
Number of profes-
sionals: U.S. offices Red Hat, CipherTrust, the Forbes 2009 Midas List of top tech VC investors.
include ten partners, RightNow Technologies, Greylock has supported 300-plus companies, more
two venture partners,
GETTING HIRED
and Media Metrix. than 150 of which have become publicly held and
two associate partners,
The firm takes an more than 100 of which have merged with other
one principal, and one CHAPTER 6
professional. The Israel approach in which the companies.
office includes six part- entrepreneur is the star
ners, one principal, and and the firm is the invited
one associate. The com-
pany as a whole counts guest, focusing on capi-
FOR YOUR REFERENCE
four operations staff. tal-efficient businesses.

Greylocks focus is on early-
CHAPTER 7

AT A GLANCE
CHAPTER 1
Hummer Winblad Venture Partners

THE INDUSTRY
CHAPTER 2
1 Lombard Street, Suite 300

San Francisco, CA 94111
Phone: 415-979-9600
Fax: 415-979-9601
www.humwin.com
THE COMPANIES
CHAPTER 3
Established in 1989 by John Hummer and Ann [ Highlights]

Winblad, Hummer Winblad Venture Partners was the Invests in software companies at all stages, though
first venture capital firm to invest solely in software prefers early stage.
companies. Yet, in addition to working with many Portfolio company Omniture went public in May
companies that develop applications, infrastructure, 2007, and acquired Adobe in 2009.
business and consumer networks, retailers, and utility
software, Hummer Winblad joined the e-commerce
ON THE JOB
rush as well. The firm suffered some highly visible fail-

CHAPTER 4
ures, such as Napster, Gazoontite, and Pets.com, and

Hummer is on record as calling the firms 1999 fund
a disaster. The firms seventh and current fund, with
approximately $200 million, closed in 2007.
Active investments include Karmasphere, a big
THE WORKPLACE
data analytics company, in April 2010; Ace Metrix, an

on-demand TV ads ana-
CHAPTER 5
lytics business; and social

key numbers
marketing platform Crowd
financials
Factory in December
2008. In July 2010, Dell
ment: More than
$500 million announced it would acquire
Minimum investment: Scalent Systems, a privately
GETTING HIRED
$100,000 held, data-center software

Preferred investment: company backed in part
CHAPTER 6
$100,000 to $5 million
by Hummer Winblad. The
PERSONNEL acquisition price was not
Number of profession- disclosed.
als: Seven managing
FOR YOUR REFERENCE
directors and one

principal.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Institutional Venture Partners
THE INDUSTRY
CHAPTER 2
3000 Sand Hill Road Shelterpoint Business Center
Building 2, Suite 250 591 Redwood Highway, Suite 3280
Menlo Park, CA 94025 Mill Valley, CA 94941
Phone: 650-854-0132 Phone: 415-765-9393
Fax: 650-854-2009 Fax: 415-434-1903
THE COMPANIES
www.ivp.com
CHAPTER 3
In 1952, after receiving his MBA from Stanford, [ Highlights]
Reid Dennis invested $20,000 in Redwood Citys Invests in late-stage companies.
Ampex. Twenty-two years later, Dennis raised Focuses on communications and wireless, Internet
$19 million from six institutions and formed and digital media, and enterprise IT companies.
Institutional Venture Associates, which became IVP. Has funded more than 300 companies, 85 of which
IVP has backed more than 200 companies, including have gone public.
ON THE JOB
more than 80 that have completed IPOs and 25 that Four IVP partnersStephen Harrick (58th), Todd
CHAPTER 4
have been acquired successfully. The firm closed its 12th Chaffee (64th), Dennis Phelps (65th), and J. Sanford
fund in 2007, a $600 million later-stage fund and the Miller (90th) were ranked on the Forbes 2009 Midas
largest in the firms history List of top tech VC investors.
IVP boasts a historical portfolio of successes
such as the chip companies Cirrus Logic and MIPS
THE WORKPLACE
Technologies, hard drive company Seagate Technology,
networking company
CHAPTER 5
Wellfleet Communications
key numbers
(absorbed into Nortel
financials
Networks), and Foundry
ment: More than
Networks. It has backed
$2.2 billion startups that include Ask
Minimum investment: Jeeves (bought out by IAC/
Not available
GETTING HIRED
InterActiveCorp), Biopsys
Preferred investment: (acquired by Johnson &
$5 million to $10 million CHAPTER 6
Johnson), LSI Logic, and
PERSONNEL Netflix. In 2006, its portfo-
Number of profession- lio company Vonage went
als: Five general partners
and six investment
public. In 2009, the firm
FOR YOUR REFERENCE
professionals. invested an undisclosed

amount in Twitter.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Intel Capital
THE INDUSTRY
CHAPTER 2
2200 Mission College Boulevard

Santa Clara, CA 95054-1549
Phone: 408-765-8080
www.intel.com/capital
THE COMPANIES
CHAPTER 3
Intel Capital, Intel Corporationss investment arm, has [ Highlights]

developed into a powerhouse in technology investment Invests in clean tech, consumer Internet, digital
since the 1990s. Since its founding, it has invested enterprise, digital home, mobility, software and ser-
more than $9 billion in more than 1,000 companies. vices, manufacturing, memory, and health.
Of those, approximately 160 have been acquired and Invests just about everywhere: the U.S., Asia,
approximately 150 have gone public. Intel Capitals Europe, South America, and Israel.
broad purpose is to grow the Internet economy, in par-
ON THE JOB
ticular technologies that provide rich content, such as

CHAPTER 4
gaming deals, optical components, network manage-

ment, and Web services. Today, Intel Capital has invest-
ments around the world in more than 1,000 companies
and has offices in more than 25 countries.
In the first decade of this century, the firm began
THE WORKPLACE
to invest more heavily overseas. In 2005 and 2006,

Intel Capital created $50 million venture capital funds
CHAPTER 5
for Brazil, the Middle East, and Turkey, as well as a

$250 million venture capital fund for India. It also
boosted its investment
in China, announcing
key numbers in 2010 a collaboration
financials with China Investment
GETTING HIRED
Capital under manage- Corporation to identify

ment: almost $2 billion and support technologi-
CHAPTER 6
Minimum investment:
Not available
cal innovations worldwide.
Preferred investment: That same year, portfolio
Not available company CrucialTec Co.
went public, marking the
FOR YOUR REFERENCE
PERSONNEL
Not available firms 10th IPO of 2010.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Kleiner Perkins Caufield & Byers
THE INDUSTRY
CHAPTER 2
2750 Sand Hill Road Unit 2101, BEA Finance Tower
Menlo Park, CA 94025 66 Hua Yuan Shi Qiao Road
Phone: 650-233-2750 Pudong, Shanghai 200120, PRC
Fax: 650-233-0300 Phone: +86-21-3383-0688
Fax: +86-21-3383-0699
Unit 2705, Tower C Office Building,
THE COMPANIES
YINTAI Centre
No. 2 Jianguomenwai Avenue
CHAPTER 3
Chaoyang District, Beijing 100022, PRC
phone: +86-10-8517-1799
Fax: +86-10-8517-115
www.kpcb.com
Established in 1972 by Eugene Kleiner, a founder high-profile IPOs as Amazon.com, Extreme
of Fairchild Semiconductor, and Thomas Perkins, a Networks, Google, Juniper Networks, and Netscape.
Hewlett-Packard veteran, Kleiner Perkins Caufield In March 2008, KPCB announced its iFund, a
ON THE JOB
& Byers (KPCB) emerged as the premier name in $100 million initiative to fund inventors who develop
CHAPTER 4
venture capital during the applications, services, and components for Apples
tech boom at the end of iPod and iPad platforms. In 2010, the company dou-
key numbers the 20th century, when bled that investment to $200 million. In May 2008,
financials it racked up annualized KPCB announced KPCB XIII, which will invest about
Capital under manage- returns of more than 30 $700 million during a three-year period in innovations
ment: $2 billion
THE WORKPLACE
Minimum investment:
percent during about two and entrepreneurs focused on green tech, life sciences,
$500,000 decades. With early invest- and information technology. In a separate announce-
CHAPTER 5
Preferred investment: ments in Genentech and ment that year, the firm introduced its Green Growth
$1 million to $5 million Tandem (acquired by Fund, a $500 million investment in solutions that
PERSONNEL Compaq), it has shown respond rapidly to the climate change crisis. A
Number of profes- a knack for picking win-
sionals: The firm has ners. Over the years, its [ Highlights]
thirty-one partners, one portfolio has included just Invests in green-tech, information-technology, and
operating partner, five
GETTING HIRED
affiliated partners, two about every marquee name life-sciences companies at all stages.
strategic limited part- in technology, including Believes its keiretsua Japanese term for its net-
CHAPTER 6
ners, six partners emer- Intuit, Lotus, Macromedia, work of more than 100 companies and thousands
iti, and two operations
staff members in the
Sun Microsystems, and of executives who share resources and knowledge
U.S. It has five partners, Sybase. distinguishes it from other VC firms.
one venture partner, one A very big fish in Al Gore is a Kleiner Perkins partner.
FOR YOUR REFERENCE
senior adviser, and 12 the VC pond, KPCB Partner L. John Doerr was ranked first in Forbes
team members in China.
has scored with such 2009 Midas List of top tech VC investors.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Matrix Partners
THE INDUSTRY
CHAPTER 2
1000 Winter Street, Suite 4500 260 Homer Avenue, Suite 201
Waltham, MA 02451 Palo Alto, CA 94301
Phone: 781-890-2244 Phone: 650-798-1600
Fax: 781-890-2288 Fax: 650-798-1601
Ceejay House #306 2 Park Avenue, Fourth Floor

THE COMPANIES
Annie Besant Road, Worli New York, NY 10016

Mumbai - 400 018, India Phone: 646-524-9292
CHAPTER 3
Phone: +91-22-67680000
Fax: +91-22-6768-0001
Suite 2910, Citigroup Tower, No 33
Suite 2901, Nexus Center, No 19A Hua Yuan Shi Qiao Road
East 3rd Ring Road North Pudong, Shanghai 200120, China
Chaoyang District, Bejing 100020, China Phone: +86-21-6121-0600
Phone: +86-10-6500-0088 Fax: +86-21-6121-0660
Fax: +86-10-6500-0066
ON THE JOB
CHAPTER 4
www.matrixpartners.com
Founded in 1977 by Paul Ferri and Warren Hellman, $600 million. It was one of few funds to exit success-
the firm had early success with a late-stage investment fully that year, able to sell portfolio company PostPath
in Apple that returned $16 million. In 1982, it opened to Cisco Systems. Other portfolio companies include
THE WORKPLACE
a Silicon Valley office and Aruba Wireless Networks, Diligent Technologies,

became Matrix Partners. Kalido, Winphoria Networks and Consera Software.
key numbers
CHAPTER 5
In the 1990s, Matrix nar-

financials rowed its investment focus [ Highlights]
ment: More than
to technology, including Focuses on enterprise software and services,
$2.5 billion software, communications networking and communication, hardware and
Minimum investment: equipment, semiconduc- systems, Internet and consumer services, semicon-
$100,000 tors, storage, Internet, and ductors and components, clean tech and energy,
GETTING HIRED
wireless. In August 2006, and mobile and wireless technologies.

From $2 million to
it became the first lead- In 1998, Matrix paid 20 cents a share for the
CHAPTER 6
$10 million
ing VC firm to establish optical networking company Sycamore Networks,
PERSONNEL a fund in India, closing then sold it two years later at $107 a sharea
Number of profession-
als: Eleven partners, one
the multistage, multisector 53,400 percent gain.
administrative partner, fund at $150 million. In Four partners from Matrix, Rob Soni, David Skok,
FOR YOUR REFERENCE
and one venture partner. July 2009, Matrix Partners Shirish Sathaye, Paul Ferri, made the Forbes 2009
closed its ninth fund at Midas List of top tech VC investors.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Mayfield Fund
THE INDUSTRY
CHAPTER 2
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Phone: 650-854-5560
Fax: 650-854-5712
www.mayfield.com
THE COMPANIES
CHAPTER 3
Founded in 1969 by the late Tommy Davis, the public on the Indian stock market. It also led a $21.5
Mayfield Fund has invested in more than 470 health- million round for SolarCity.
care, Internet, and communications companies, tak-
ing more than 100 of them public. Mayfield has strong [ Highlights]
ties to universities, including MIT, Stanford, and UC Focuses on consumer, enterprise, energy tech, com-
Berkeley. The Mayfield Fellows Program at Stanford munication service providers, and chips and compo-
and Berkeley selects engineering students to learn about nents in all stages.
ON THE JOB
entrepreneurship and leadership through coursework Founded the Entrepreneurs Foundation, which
CHAPTER 4
and internships with Silicon Valley startups. helps entrepreneurs develop a plan to give back
The firm has made suc- to their community; has contributed more than
cessful investments in Advent $250,000 to the community since its inception.
key numbers Software, BroadVision, Citrix One managing director, Janice Roberts, is a woman.
financials Systems, Compaq (acquired by
THE WORKPLACE
Capital under manage- Hewlett-Packard), LSI Logic,
ment: More than Millennium Pharmaceuticals,
$2.8 billion
CHAPTER 5
Minimum investment:
Redback Networks, Silicon
$1 million Graphics, and 3Com, among
Preferred investment: others. Portfolio companies
$1 million to $3 million include Actona Technologies,
PERSONNEL BeVocal, Cytokinetics,
Number of profession- SolarCity, and Gigya.
GETTING HIRED
als: Six managing direc- Mayfield also empha-
tors, three partners, sizes a global approach,
two venture partners, CHAPTER 6
four partners emeriti, with investments in Europe,
two entrepreneurs in China, and India. In 2008,
residence, one venture Mayfield closed Mayfield
fellow, three venture
advisers, and one opera-
XIII, with $400 million.
FOR YOUR REFERENCE
tions team member In 2010, Mayfield-backed

Persistent Systems went
CHAPTER 7

AT A GLANCE
CHAPTER 1
Menlo Ventures
THE INDUSTRY
CHAPTER 2
3000 Sand Hill Road

Building 4, Suite 100
Phone: 650-854-8540
Fax: 650-854-7059
www.menloventures.com
THE COMPANIES
CHAPTER 3
One of the original Sand Hill venture firms, Menlo [ Highlights]

Ventures has invested in more than 300 compa- Invests in communications, digital media, con-
nies since 1976. It closed its $1.5 billion sumer, enterprise software, networking, security,
Menlo Ventures I fund in July 2000, with plans to tar- semiconductor, mobile and Internet, and storage
get communications, Internet, and software compa- and computing companies at all stages.
nies. Successful investments include Ascend (acquired One Menlo Ventures partner made the Forbes 2009
by Lucent), Hotmail (now a part of Microsoft), LSI Midas List of top tech VC investors: John W. Jarve
ON THE JOB
Logic and UUNET (absorbed into MCI, now part of (66th).

CHAPTER 4
Verizon). The firms most recent 10th fund capitalized at

$1.2 billion and will
focus on emerging growth
key numbers companies within the
financials technology sector. Its
THE WORKPLACE
Capital under manage- investments include

ment: More than DigitalPath, MobiTV,
CHAPTER 5
$4 billion
PassMark Security, YuMe,
Minimum investment:
$1 million and MOG.
Preferred investment: Menlo takes pride in
Under $5 million at being active with its port-
startup stage and up to folio companies, serving
$20 million or more at
later stages on more than 85 percent
GETTING HIRED
of the companies boards.

PERSONNEL
CHAPTER 6
als: Nine managing
directors, one venture
adviser, three associates
and analysts, one chief
FOR YOUR REFERENCE
financial officer, and one

controller
CHAPTER 7

AT A GLANCE
CHAPTER 1
Mohr Davidow Ventures
THE INDUSTRY
CHAPTER 2
3000 Sand Hill Road
Building 3, Suite 290
Telephone: 650-854-7236
Fax: 650-854-7365
www.mdv.com
THE COMPANIES
CHAPTER 3
Mohr Davidow Ventures is a prominent Silicon Valley [ Highlights]
venture capital firm focused on early-stage invest- Focuses on health care, digital technologies, and
ments, primarily in IT startups. Mohr Davidow pre- energy.
fers to take an active role in the companies in which it Mohr Davidow has investments in hi5, a social net-
invests. After investing in a company, Mohr Davidow work, and Pacific Biosciences, which is working on a
provides hands-on help with recruiting management DNA sequencing product.
team members and strategic development in the areas of
ON THE JOB
marketing, customer base, and market tactics. The firm
CHAPTER 4
also offers its portfolio companies workshops in topics
such as product design and employee benefits. Two of
the firms partners are well-known authors of business
books: Bill Davidow wrote Marketing High Technology
and cowrote Total Customer Service and The Virtual
THE WORKPLACE
Corporation. Geoffrey Moore wrote Crossing the Chasm,
Inside the Tornado, and Living on the Fault Line.
CHAPTER 5
Mohr Davidow raised its
ninth fund, for $580 mil-
key numbers lion, in 2007. The firms
financials successful investments
Capital under manage- include Agile, Brocade,
ment: $2 billion ONI Systems (acquired by
Minimum investment:
GETTING HIRED
Ciena), Pivotal Technologies,
Not available
and Infusionsoft, which
Preferred investment: CHAPTER 6
Not available was named the 2009
Communications Solutions
PERSONNEL
Product of the Year by
als: 23 partners and four Technology Marketing
FOR YOUR REFERENCE
executives in residence Corporation.

CHAPTER 7

AT A GLANCE
CHAPTER 1
New Enterprise Associates

THE INDUSTRY
CHAPTER 2
C-59, G Block, first Floor, Platina

Bandra Kurla Complex, Bandra (East)
Mumbai - 400 051, India
Phone: +91-22-4223-5600
www.nea.com
THE COMPANIES
CHAPTER 3
Founded in 1978, New Enterprise Associates (NEA) since 2007. The new capital commitments raise NEAs
has established itself as a major player in health care, total to more than $11 billion across all its funds.
energy consumer, and enterprise technology. More than
165 NEA companies have gone public, and more than [ Highlights]
265 have been successfully acquired. The firm counts Prefers to invest in early-stage companies.
among its success stories Ascend Communications Focuses on energy, health care, and information
(now part of Lucents InterNetworking Systems technology.
ON THE JOB
unit), Juniper Networks, multimedia software ven- Unlike many VC firms, NEA has been known to give
CHAPTER 4
dor Macromedia, workstation manufacturer Silicon associates who have spent a few years at the firm
Graphics, TiVo, and Internet service provider UUNET 15 to 20 percent of a partners share of the proceeds
(absorbed into MCI, now part of Verizon). NEA was from a deal.
the sole backer of Teracent, Typically invests in 20 to 30 companies per year; has
which Google acquired in 550 companies in its portfolio.
key numbers
THE WORKPLACE
2009 for an undisclosed Five partners from New Enterprise Associates made
financials sum. Additional portfolio the Forbes 2009 Midas List of top tech VC inves-
CHAPTER 5
Capital under manage- companies include Vuze, tors: Peter Barris (20th), Peter Morris (21st) Scott
ment: $11 billion ISGN Technologies, and Sandell (37th), Harry Weller (55th), and Ryan Drant
Minimum investment:
23andMe. (71st).
Less than $200,000
Preferred investment: In early 2010, the
More than $200,000 to company announced the
$40 million official close of its 13th
GETTING HIRED
PERSONNEL funda $2.5 billion fund.

Number of profession- Investments in the fund
CHAPTER 6
als: one managing gen- began in May of the previ-

eral partner, 15 general ous year and, according to
partners, 12 partners, 14
venture partners, 7 prin- NEA, represented 17 per-
cipals, one senior associ- cent of all VC funds raised
FOR YOUR REFERENCE
ate, and four associates in the U.S. in 2009 and the

single largest fund raised
CHAPTER 7

AT A GLANCE
CHAPTER 1
Norwest Venture Partners
THE INDUSTRY
CHAPTER 2
525 University Avenue, Suite 800 701/705 Dalamai House
Palo Alto, CA 94301 Nariman Point
Phone: 650-321-8000 Mumbai - 400 021, India
Fax: 650-321-8010 Phone: +91-22-6150-1111
15th Floor, Concorde Towers 6 Hachoshlim Street Seventh Floor
THE COMPANIES
UB City, 1 Vittal Mallya Road PO Box 12242
Bengaluru - 560 001, India Herzelia 45724, Israel
CHAPTER 3
Phone: +91-80-4030-0456 Phone: +972-77-410-7090

www.nvp.com
Since its inception in 1961, Norwest Venture

Partners has invested in more than 450 companies. key numbers
The Wells Fargo affiliates successes include Brocade financials
ON THE JOB
Communications Systems, PeopleSoft (acquired by
CHAPTER 4
Oracle), and Siara Systems (merged with Redback ment: More than
Networks). In 2006, the firm closed its 10th fund at $3.7 billion
Minimum investment:
$650 millionits largest to date. It also began invest- $1 million
ing in India, inking deals with Yatra, the countrys Preferred investment:
first travel booking website, and classifieds company $10 million to $15
THE WORKPLACE
Sulekha. In December 2009, NVP raised its largest million
fund to date at $1.2 billion, which will help the firm PERSONNEL
CHAPTER 5
expand its portfolio and geographical reach. In addition Number of profession-
to continued investments in the U.S. and India, NVP als: Two managing
plans to invest in Israel and China. directors, seven general
partners, two managing
partners, two partners,
[ Highlights] one executive direc-
Focuses on early- to late-stage investments in soft- tor, two principals, one
administrative partner
GETTING HIRED
ware, services, Internet and consumer, and systems
and chief financial offi-
and IT infrastructure in all stages cer, one senior associate, CHAPTER 6
Norwest general partner Promod Haque made the nine associates, one vice
Forbes 2009 Midas List of top tech VC investors, president of marketing,
one director of market-
ranking 96th. ing, one vice president of
recruiting, one vice presi-
FOR YOUR REFERENCE
dent and controller, and

one general counsel
CHAPTER 7

AT A GLANCE
CHAPTER 1
Oak Investment Partners

THE INDUSTRY
CHAPTER 2
525 University Avenue, Suite 1300 4550 Wells Fargo Center

Palo Alto, CA 94301 90 South Seventh Street
Phone: 650-614-3700 Minneapolis, MN 55402
Fax: 650-328-6345 Phone: 612-339-9322
Fax: 612-337-8017
One Gorham Island
THE COMPANIES
Westport, CT 06880
Phone: 203-226-8346
CHAPTER 3
Fax: 203-227-0372
www.oakinv.com
Oak Investment Partners has invested in more than [ Highlights]

435 companies since it was founded in 1978. The firm Invests in communication and outsourced services,
started investing when integrated-circuit and office- design automation, partnerships, storage infra-
ON THE JOB
automation technologies were hot, taking stakes in structure, clean energy, financial services technolo-
CHAPTER 4
companies such as Compaq, Parametric, Seagate, and gies, Internet/new media, Internet infrastructure
Synopsys. In the 1980s, the firm invested in Genzyme, and services, biotechnology and medical devices,
Office Depot, PetSmart, and ViroPharma. Portfolio communication/network equipment, enterprise
companies include Baja Fresh Mexican Grill (a brand application software and services, and health-care
of Wendys International), information and services in all stages.
THE WORKPLACE
Exodus Communications Has a network of 250 affiliates, including entrepre-

key numbers
(dissolved in 2002), Filenes neurs and technical and industry experts.
financials
CHAPTER 5
Basement, Genzyme, Venture partner Ann Huntress Lamont made the

ment: $8.4 billion Inktomi (acquired by Forbes 2009 Midas List of top tech VC investors,
Minimum investment: Yahoo), P.F. Changs China ranking 25th.
Not available Bistro, and Qpass. In 2006,
Preferred investment: an oversubscribed Oak
$25 million to $150 mil-
Investment Fund XII raised
lion, depending on stage
GETTING HIRED
$2.56 billion, the larg-

PERSONNEL est VC fund ever raised.
CHAPTER 6
Number of profession- In 2008, the firm invested

als: Four managing
partners, five general $25 million in The
partners, eight venture Huffington Post, the online
partners, and eight media outlet, and by mid-
FOR YOUR REFERENCE
investment
professionals
2010 had raised $750 mil-
lion for its Fund XIII LP.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Panorama Capital
THE INDUSTRY
CHAPTER 2
2440 Sand Hill Road, Suite 302
Phone: 650-234-1420
Fax: 650-234-1437
www.panoramacapital.com
THE COMPANIES
CHAPTER 3
Formerly the biotech and high-tech investment arm
of J.P. Morgan Partners, Panorama Capital was spun key numbers
off to form its own firm in August 2006. It focuses
financials
ON THE JOB
on life sciences and technology investments, combin-
CHAPTER 4
Not available
ing companies from both sectors into one portfolio.
The firm chooses investments based on what it calls a PERSONNEL
stage-agnostic approach, meaning it looks for com-
als: Four managing direc-
panies to invest in that show the greatest promise of tors, two principals, two
return, regardless of what stage they may be in. In 2009 associates, one partner,
THE WORKPLACE
the firm backed intelligence-software company Narus, one assistant vice presi-
dent, one controller, one
which Boeing acquired a year later. The company typi- senior financial analyst,
CHAPTER 5
cally invests from $6 million to $18 million during the and one chief financial
life of a company and concentrates on building domain officer
expertise in the sectors it focuses on.
[ Highlights]
Investments include Axiom Legal, Aristos Logic,
GETTING HIRED
BelAir Networks, Cedar Point, FlowCardia, Renovo,
and Yipes.
CHAPTER 6
Investment portfolio valued at $800 million.
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Redpoint Ventures
THE INDUSTRY
3000 Sand Hill Road 11150 Santa Monica Boulevard, Suite 1200
CHAPTER 2
Building 2, Suite 290 Los Angeles, CA 90025

Menlo Park, CA 94025 Phone: 310-477-7678
Phone: 650-926-5600 Fax: 310-312-1868
Fax: 650-854-5762
1366 Nanjing Road West

Plaza 66, Tower 2, Suite 3205
THE COMPANIES
Shanghai 200040, China

Phone: +86-21-6288-7757
CHAPTER 3
Fax: +86-21-6288-7797
www.redpoint.com
Although Redpoint Ventures is among the newer VC MySpace (acquired by News Corp.), TiVo, and WebTV
firms on the block, its founders are anything but inex- (acquired by Microsoft) are some of its previous invest-
ON THE JOB
perienced. Redpoint was started in 1999 by three part- ments. In early 2010, Redpoint closed a $400 million
CHAPTER 4
ners (including industry heavy hitters John Walecka fund, Redpoint IV, which will focus on investments
and Geoff Yang) from two of VCs most respected in clean technology, the social and mobile Internet,
firms: Institutional Venture and cloud computing. Current investments include
Partners and Brentwood BigBand Networks, MobiTV, Scribd, and SimpleGeo.
key numbers Venture Capital. This was
[ Highlights]
THE WORKPLACE
an important merger of
financials
the Internet infrastructure Invests in broadband infrastructure; enterprise
CHAPTER 5
ment: $2 billion departments of two firms software and cloud computing; interactive media,
Minimum investment: that between them backed content, and advertising; consumer Internet ser-
$100,000 30 of the top 50 infrastruc- vices and applications; semiconductor materials
Preferred investment: ture deals of the 1990s, and devices; and energy and environment in seed
$100,000 to $20 million
including Avici Systems, stage or first-round financing.
PERSONNEL Juniper Networks, and Portfolio company Solyndra, a maker of cylindrical
GETTING HIRED
Number of profession- Netflix. solar cells for flat-roofed buildings that has received
als: Six founding part-
Rather than investing a lot press for its innovative panels, scrapped an IPO
CHAPTER 6
ners, seven partners,

three associates, one in companies that develop in 2010.
principal, one vice presi- niche products that can be
dent, one chief financial sold to Cisco Systems or
officer, and one special-
ist and chief technology Intel, Redpoint seeks the
FOR YOUR REFERENCE
officer next blockbuster start-

ups. Foundry Networks,
CHAPTER 7

AT A GLANCE
CHAPTER 1
Sequoia Capital
THE INDUSTRY
3000 Sand Hill Road Room 3606 Room 4603, Plaza 66 Tower 2
CHAPTER 2
Building 4, Suite 250 China Central Place Tower 3 1366 Nanjing West Road
Menlo Park, CA 94025 Jianguo Road Jingan District
Phone: 650-854-3927 Beijing 100025, China Shanghai 200040, China
Fax: 650-854-2977 Phone: +86-10-8447-5668 Phone: +86-21-6288-4222
Fax: +86-10-8447-5669 Fax: +86-21-6288-4350
www.sequoiacap.com
THE COMPANIES
Founded in 1971 by Don Valentine, one of the fathers Indian venture capital firm, which took Sequoias
CHAPTER 3
of VC, Sequoia established itself by backing Apple name and closed its Growth Fund III at $861 mil-
Computer, Cisco Systems, and Oracle. Partner Michael lion. In 2010, Sequoias China Foreign Currency Fund
Moritz raised the profile of the firm by backing Yahoo, closed at $1 billion; Zynga bought Sequoia-backed
which used Sequoias offices as its original headquarters. Challenge Gamesnow Zynga Austinand portfolio
Having financed more than 350 companies, includ- company Green Dot, which issues prepaid, reload-
ing Google, MP3.com, and PayPal, Sequoia is one of able MasterCard and Visa cards, held an IPO in which
the Sand Hill Road mainstays. Along with Matrix and directors and executives sold shares, finishing its first
ON THE JOB
Kleiner, it is one of three firms that produced two funds day of trading with a valuation of $1.8 billion. Sequoia
CHAPTER 4
boasting an internal rate of return in excess of 100 per- Capital, which holds Class B shares, did not sell, giving
centits 1992 fund returned 110 percent and its 1995 it a 35 percent voting stake in the company.
fund earned 175 percent,
according to information [ Highlights]
key numbers released by the University Invests in energy, financial health care, Internet,
THE WORKPLACE
financials of Michigan. The firms consumer, mobile, and outsourcing technologies
Capital under manage- 1999 fund did poorly, with from the very early to growth stages.
ment: $10 billion
CHAPTER 5
Minimum investment:
a 11 percent internal rate Four partners made the Forbes 2009 Midas List
$50,000 of return in early 2003 of top tech VC investors: Michael Moritz (2nd),
Preferred investment: thanks to investments in Roelof Botha (26th), Douglas Leone (39th), and
$50,000 to $50 million eToys, Scient, and Webvan. Greg McAdoo (69th).
PERSONNEL In 2005, Sequoia began Keeps 30 percent of a funds profits, the most in the
Number of profes- branching out overseas, industry.
GETTING HIRED
sionals: Twenty-two focusing on China and Green Dots offering price of $36 represented prof-
partners, one CFO, one India. It raised $200 mil- its in excess of 800 percent for Sequoia and Walmart
director of partner- CHAPTER 6
ship operations, one lion for its Sequoia Capital Stores, which was another early investor; Sequoias
executive director, two China Principals Fund I share was valued at about $436 million.
associates, two execu- that year and invested in
tive assistants, and nine
administrative
10 Internet-related compa-
FOR YOUR REFERENCE
assistants nies there. In mid-2006,

Sequoia merged with a top
CHAPTER 7

AT A GLANCE
CHAPTER 1
THE INDUSTRY
Sutter Hill Ventures

CHAPTER 2
755 Page Mill Road, Suite A-200

Palo Alto, CA 94304-1005
Phone: 650-493-5600
Fax: 650-858-1854
www.shv.com
THE COMPANIES
CHAPTER 3
Sutter Hill brings a dignified presence to Silicon Valley

venture capital, having invested in more than 300 com- key numbers
panies since 1964. Although Sutter Hill likes early-stage
financials
startups, it takes a decidedly conservative approach Capital under manage-
to investing. The firm took only 12 companies public ment: $500 million
in 1999 and 2000, when the rest of the industry was Minimum investment:
IPO crazed. The firms partners have engineering back- Not available
ON THE JOB
grounds and significant industry experience. Sutter

CHAPTER 4
Not available
Hills portfolio companies includes Farecast, Shutterfly
(went public in 2006), FeedBurner (acquired by Google PERSONNEL
in 2007), Overstock.com, Return Path, and Ruckus Number of profession-
als: Ten managing direc-
Wireless tors, one special limited
partner, and one CFO
[ Highlights]
THE WORKPLACE
Paul Wythes, founding partner of Sutter Hill,

CHAPTER 5
received the Venture Capital Associations Lifetime

Achievement Award in 2003.
Invests in health care, software, consumer, market-
ing and computer technology, and business and
financial services.
Partner James White ranked 56th on the Forbes
GETTING HIRED
2009 Midas List of top tech VC investors.

CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Firm Thumbnails
THE INDUSTRY
Advanced Technology Ventures Apax Partners
CHAPTER 2
485 Ramona Street 601 Lexington Ave., 53rd Floor
Palo Alto, CA 94301 New York, NY 10022
Phone: 650-321-8601 Phone: 212-753-6300
Fax: 650-321-0934 Fax: 212-319-6155
www.atvcapital.com www.apax.com
THE COMPANIES
Locations: Silicon Valley; Waltham, Massachusetts Locations: New York, Europe, Hong Kong, India, Israel
Stage: Early Stage: Buy-out, growth capital, late venture
CHAPTER 3
Industry focus: IT, health care, clean tech Industry focus: Media, tech and telecom, health
care, financial and business services, retail, consumer
Advent International
75 State Street Austin Ventures
Boston, MA 02109 300 West Sixth Street, Suite 2300
Phone: 617-951-9400 Austin, TX 78701-3902
Fax: 617-951-0566 Phone: 512-485-1900
ON THE JOB
www.adventinternational.com Fax: 512-651-8500
CHAPTER 4
Locations: Boston, New York, Europe, Asia-Pacific, www.austinventures.com
Latin America Location: Austin, Texas
Stage: Late/private equity Stage: All
Industry focus: Business services, financial services, Industry focus: Business services and supply chain,
health care, industrial, retail, consumer and leisure, financial services, new media, Internet, information
THE WORKPLACE
technology, media, telecoms services, software, and special Texas situations
CHAPTER 5
Alta Partners BAML Capital Partners
1 Embarcadero Center, 37th Floor 100 North Tryon Street, 25th Floor
San Francisco, CA 94111 Charlotte, NC 28202
Phone: 415-362-4022 Phone: 704-386-4710
Fax: 415-362-6178 Fax: 704-386-6432
www.altapartners.com www.bacapitalinvestors.com
GETTING HIRED
Location: San Francisco Locations: Charlotte, North Carolina; Chicago; New
Stage: Early York; Silicon Valley; Latin America; London; Milan;
CHAPTER 6
Industry focus: Biopharmaceuticals, Mumbai, India
medical technology, IT Stage: All
Industry focus: Consumer products and retail,
energy and power, financial services, health care,
FOR YOUR REFERENCE
industrials, IT and business services, media and enter-

tainment, telecom
CHAPTER 7

AT A GLANCE
CHAPTER 1
Clearstone Venture Partners Foundation Capital

1351 4th Street, Fourth Floor 250 Middlefield Road
Santa Monica, CA 90401 Menlo Park, CA 94025
THE INDUSTRY
Phone: 310-460-7900 Phone: 650-614-0500

CHAPTER 2
Fax: 310-460-7901 Fax: 650-614-0505

www.clearstone.com www.foundationcapital.com
Locations: Santa Monica, California; Silicon Valley; Location: Silicon Valley
Mumbai, India Stage: Early
Stage: Seed and early Industry focus: Software and services,
Industry focus: Enterprise software, consumer, semiconductor and EDA, networking and
THE COMPANIES
communications, data center infrastructure, consumer, clean tech

CHAPTER 3
Crescendo Ventures General Atlantic

600 Hansen Way 3 Pickwick Plaza
Palo Alto, CA 94304 Greenwich, CT 06830
Phone: 650-470-1200 Phone: 203-629-8600
Fax: 650-470-1201 Fax: 203-622-8818
www.crescendoventures.com www.generalatlantic.com
Locations: Silicon Valley Locations: Greenwich, Connecticut; New York;
ON THE JOB
Stage: Early Silicon Valley; Dsseldorf, Germany; Hong Kong;

CHAPTER 4
Industry focus: Software, system, component, London; Mumbai, India; So Paulo; Beijing
and service companies Stage: Early, mid, late
Industry focus: Financial services, energy and
Draper Fisher Jurvetson resources, media and consumer, health care, business
2882 Sand Hill Road, Suite 150 services and technology
THE WORKPLACE

Phone: 650-233-9000 Great Hill Partners
CHAPTER 5
Fax: 650-233-9233 1 Liberty Square

www.dfj.com Boston, MA 02109
Location: Silicon Valley; Shanghai, China; Bangalore, Phone: 617-790-9400
India Fax: 617-790-9401
Stage: Seed, early www.greathillpartners.com
Industry focus: Communications and enabling Location: Boston
GETTING HIRED
technologies, consumer (media and advertising), Stage: All

consumer (services and transactions), energy and Industry focus: Business services, consumer
CHAPTER 6
clean technology, enterprise applications and services, education, financial technology, health care,
services, health care and life sciences, mobile Internet, logistics, media/communications, software,
and wireless. transaction processing
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Kodiak Venture Partners Polaris Venture Partners
Bay Colony Corporate Center 1000 Winter Street, Suite 3350
1000 Winter Street, Suite 3800 Waltham, MA 02451
THE INDUSTRY
Waltham, MA 02451 Phone: 781-290-0770
CHAPTER 2
Phone: 781-672-2500 Fax: 781-290-0880
Fax: 781-672-2501 www.polarisventures.com
www.kodiakvp.com Locations: Waltham, Massachusetts ; Seattle
Location: Waltham, Massachusetts Stage: Seed, early, middle
Stage: Early Industry focus: Technology, health care, digital
Industry focus: Emerging communications and media, e-commerce, consumer products and services,
THE COMPANIES
wireless, semiconductor and equipment, software and business services
services, Internet and new media, life technology
CHAPTER 3
Sevin Rosen Funds
Lightspeed Venture Partners 2 Galleria Tower
2200 Sand Hill Road 13455 Noel Road, Suite 1670
Menlo Park, CA 94025 Dallas, TX 75240
Phone: 650-234-8300 Phone: 972-702-1100
Fax: 650-234-8333 Fax: 972-702-1103
www.lightspeedvp.com www.srfunds.com
ON THE JOB
Location: Silicon Valley Locations: Dallas; Austin, Texas; Silicon Valley
CHAPTER 4
Stage: Early Stage: Early
Industry focus: Clean tech, communications, Industry focus: Internet, media, software and
digital media and wireless, enterprise automation services, technology and communications
and infrastructure, Internet media and commerce, infrastructure, life science and health care,
semiconductors materials and energy
THE WORKPLACE
Mobius Venture Capital Sierra Ventures
CHAPTER 5
1050 Walnut Street, Suite 210 2884 Sand Hill Road, Suite 100
Boulder, CO 80302 Menlo Park, CA 94025
Phone: 303-642-4000 Phone: 650-854-1000
www.mobiusvc.com Fax: 650-854-5593
Locations: Boulder, Colorado www.sierraven.com
Stage: Early Location: Silicon Valley
GETTING HIRED
Industry focus: Communications software and Stage: All
services, communications systems, components, Industry focus: Communications, consumer
CHAPTER 6
consumer and small-business services, enterprise technology, emerging technology, semiconductors,
application software, health care IT, infrastructure services, software
services and software, professional services
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
Split Rock Partners TGF Management

10400 Viking Drive, Suite 550 111 Congress Avenue, Suite 2900
Eden Prairie, MN 55344 Austin, TX 78701-4098
THE INDUSTRY
Phone: 952-995-7474 Phone: 512-322-3100

CHAPTER 2
Fax: 952-995-7475 Fax: 512-322-3101

www.splitrock.com www.tgfmanagement.com
Locations: Minneapolis; Silicon Valley Location: Austin, Texas
Stage: Early Stage: Late
Industry focus: Health care, software, Industry focus: Manufacturing, distribution, con-
Internet services struction-related, industrial and outsourced business
THE COMPANIES
services, food and consumer products.

Summit Partners
CHAPTER 3
222 Berkeley Street, 18th Floor Trident Capital

Boston, MA 02116 505 Hamilton Avenue, Suite 200
Phone: 617-824-1000 Palo Alto, CA 94301
Fax: 617-824-1100 Phone: 650-289-4400
www.summitpartners.com Fax: 650-289-4444
Locations: Boston; Silicon Valley; London www.tridentcap.com
Stage: Late Locations: Silicon Valley; Westport, Connecticut
ON THE JOB
Industry focus: Business and financial services, com- Stage: All

CHAPTER 4
munications technology and services, consumer and Industry focus: Enterprise software and services,
industrial products, education, energy, health care, life health-care IT, Internet, clean tech
sciences, Internet and IT, media and entertainment,
semiconductors and electronics U.S. Venture Partners
2735 Sand Hill Road
THE WORKPLACE
TA Associates Menlo Park, CA 94025

John Hancock Tower, 56th Floor Phone: 650-854-9080
CHAPTER 5
200 Clarendon Street Fax: 650-854-3018

Boston, MA 02116 www.usvp.com
Phone: 617-574-6700 Location: Silicon Valley
Fax: 617-574-6728 Stage: Early
www.ta.com Industry focus: IT, life science, climate change
Locations: Boston; Silicon Valley; London; Mumbai mitigating technologies
GETTING HIRED
Stage: All
Industry focus: Technology, health care, Venrock Associates
CHAPTER 6
consumer, financial and business services 3340 Hillview Avenue

Palo Alto, CA 94304
Phone: 650-561-9580
Fax: 650-561-9180
FOR YOUR REFERENCE
www.venrock.com
Locations: New York City; Cambridge,
CHAPTER 7

AT A GLANCE
CHAPTER 1
Massachusetts; Silicon Valley; Israel J.H. Whitney & Co.
Stage: Early 130 Main Street
Industry focus: Technology, health care, energy New Canaan, CT 06840
THE INDUSTRY
Phone: 203-716-6100
Versant Ventures
CHAPTER 2
Fax: 203-716-6122
3000 Sand Hill Road www.whitney.com
Building 4, Suite 210 Location: New Canaan, Connecticut
Menlo Park, CA 94025 Stage: Mezzanine, late
Phone: 650-233-7877 Industry focus: Consumer, health care, specialty
Fax: 650-854-9513 manufacturing, business services
www.versantventures.com
THE COMPANIES
Locations: Silicon Valley; Newport Beach, California; Worldview Technology Partners
CHAPTER 3
San Francisco 2207 Bridgepointe Parkway, Suite 100
Stage: Early San Mateo, CA 94404
Industry focus: Medical devices, biotechnology and Phone: 650-322-3800
pharmaceuticals, health care services, health-care IT Fax: 650-322-3880
www.worldview.com
Vesbridge Partners Locations: Silicon Valley, Tokyo
601 Carlson Parkway Stage: All, but focuses on early
ON THE JOB
Suite 1160 Industry focus: Communications, semiconductors,
CHAPTER 4
Minnetonka, MN 55305 enterprise infrastructure, software
Phone: 952-995-7499
Fax: 952-995-7493 @Ventures
www.vesbridge.com 1100 Winter Street, Suite 4600
Locations: Minnetonka, Minnesota Waltham, MA 02451
THE WORKPLACE
Stage: Early Phone: 978-658-8980
Industry focus: Wireless mobility, digital media, www.ventures.com
CHAPTER 5
web services, security/data center Locations: Waltham, Massachusetts; Silicon Valley
Stage: Early
Village Ventures Industry focus: Clean tech: alternative energy,
430 Main Street, Suite 1 energy storage and efficiency, advanced materials,
Williamstown, MA 01267 water purification
Phone: 413-458-1100
GETTING HIRED
Fax: 413-458-0338
www.villageventures.com
CHAPTER 6
Locations: Williamston, Massachusetts; New York City
Stage: Seed, early
Industry focus: Financial services, media, health care
FOR YOUR REFERENCE
CHAPTER 7

On the Job
4
The Work.................................... 48
Key Jobs...................................... 48
Real People Profiles..................... 50

AT A GLANCE
CHAPTER 1
The Work point). Deals can be structured in many different ways.

A venture capitalists work can be broken Venture capitalists learn how to negotiate things such as
down into three different phases: the percentage of equity they get, antidilution clauses,
THE INDUSTRY
1. Sourcing and picking investments and number of board seats, with an eye toward protect-
CHAPTER 2
2. Doing deals ing their investments and preserving mutually benefi-

3. Managing investments cial propositions with their entrepreneurs.
Finding potential investments has never been a Managing investments is the stage at which venture
problem for venture capitalists; most firms are con- capitalists can sometimes make the difference between
stantly approached by entrepreneurs trying to raise the success and failure of a startup. Venture capitalists
capital. However, finding the best investments before with years of experience and a stable of investments can
THE COMPANIES
your competitors do is much trickier. Thats why ven- create relationships among companies, help startups
ture capitalists must have an especially strong web of find professional management, introduce companies to
CHAPTER 3
contacts. When the VP of engineering at a big Silicon potential customers, and help companies raise further
Valley firm leaves to start her own company, the best financing. Having someone like KPCBs John Doerr
venture capitalists know about it before the entrepre- sitting on your board of directors is somewhat akin to
neurs family does. having a wise uncle help you along the road to a suc-
Picking the best investments is what separates the cessful IPO.
wheat from the chaff among venture capitalists. Unlike
investment bankers, venture capitalists dont spend a
Key Jobs
ON THE JOB
lot of time building complex financial models to assess

CHAPTER 4
potential investments. After all, for those who are

investing at early stages, revenue estimates are guess- Staffing needs and titles vary greatly from one
work at best. Instead, venture capitalists must know firm to the next. Many funds consist solely of partners
everything about the market, the technology, and the and support staff. Others hire a limited number of
entrepreneurs. One of the most important aspects of undergraduates and MBAs as analysts and associates
THE WORKPLACE
due diligence is uncovering the emotional and intellec- with the expectation that most will return to get their
tual makeup of the people in whom the venture capital- business degrees or join startups within a few years.
CHAPTER 5
ist is investing. (Keep in mind that while the terms analyst and associ-
ate usually refer to undergrads and MBAs or experi-
enced hires, respectively, at some firms the two titles
INSIDEr SCOOP are reversed.)
Theres no limit to the number of great ideas VCs
hear about every day. The question is: Are you the
person or company that can build the great idea General Partner
GETTING HIRED
into a great business? VCs choose the plans they These are the people with their names on the door.
do because of the team and the validation of the General partners raise the money for the fund and
CHAPTER 6
companys ability to execute.

decide which companies to invest in. General partners,
the professional members of a venture capital firm, usu-
Doing the deals is a tricky, complicated process, but ally are required to contribute a small amount of their
it can be learned without too much difficulty. Thats own money to their fund. They manage the funds
FOR YOUR REFERENCE
why partners will let up-and-coming associates do deals investments and generally take a 20 to 30 percent cut of
with supervision (or support, depending on your view- the carry from the fund. General partners are expected
CHAPTER 7

AT A GLANCE
CHAPTER 1
to provide a wealth of business advice and industry con- as training for general partnerships, and junior partners
tacts to the entrepreneurs they back. They often sit on perform similar duties on a reduced scale. Their per-
the boards of many companies and are deeply involved sonal stakes in the funds also are reduced.
THE INDUSTRY
in decisions about exit strategiesthat is, when to cash
VP or Associate
CHAPTER 2
out by taking the company public or selling it.
The work of a partner depends very much on the Some firms hire MBAs or people with business experi-
phase the investment fund is in. When a fund has just ence (usually in leveraged buyouts or investment bank-
been raised, partners spend most of their time trying ing) as vice presidents or associates. The work of an
to track down and analyze new investment oppor- associate can vary. In some firms, the work they do is
tunities. When most of the fund has been invested, similar to that of analysts: screen business plans, make
THE COMPANIES
partners will spend more than half their time manag- cold calls regarding prospective investments, and occa-
ing portfolio companies. Our industry insiders break sionally make onsite visits to portfolio companies. In
CHAPTER 3
down the workload of a partner who is in a steady other firms, associates do work similar to that of part-
statesome funds invested but still seeking other ners, but dont make final decisions or take a major
investmentsas follows: share of the carry. At this level, compensation, while still
Managing existing portfolio (50 percent): Talking tied to the overall performance of the fund, can take
to other potential investors, interviewing potential the form of a flat bonus rather than a percentage of the
executive staff hires, studying company financials, fund. Before taking a job, make sure you know whether
talking to customers, discussing IPO timing with its on the partner tracknot all are.
ON THE JOB
I-bankers, and attending board meetings. A heavy
CHAPTER 4
load of boards for a partner would include six or
seven early-stage companies that require more over- INSIDEr SCOOP
Some associate roles are explicitly not partner
sight, or 10 to 12 later-stage companies.
track. You should be clear on whether it is or not
Sourcing and doing new deals (30 percent): before moving in.
Reading business plans, doing background research
THE WORKPLACE
on the entrepreneurs, visiting the companies, social-
izing with the company founders, listening to Analyst
CHAPTER 5
pitches, and putting together syndicates for invest- Most venture capitalists have advanced degrees.
ments. However, a few venture capital fundsgenerally those
Keeping abreast of the firms main industry (10 that are more established or are later-stage investors
percent): Attending industry conferences, keeping hire undergraduates as analysts. Analysts screen business
up with trade publications, and talking to experts in plans before passing them on to senior staff and con-
the field. This is good weekend work. duct due diligence, or research, on promising industries
GETTING HIRED
Firm administrative work (10 percent): Working and entrepreneurs. A background in finance and an
on quarterly reports to the limited-partner investors, outstanding college internship or business experience
CHAPTER 6
working on the firms website, and attending partner are musts, but venture capitalists also stress the interper-
meetings. sonal and networking skills that are essential to anyone
working in VC. The typical stay for an analyst at a VC
Junior Partner firm is three years, after which most get an MBA, work
FOR YOUR REFERENCE
Junior partners are just thatjunior versions of the for a portfolio company, or move to another VC firm.
general partners. Usually, junior partnerships are viewed Analysts do a lot of the background work on poten-
CHAPTER 7

AT A GLANCE
CHAPTER 1
tial investments. According to one insider, there are two Consultants

paths for undergrads. Most typically focus on sourcing, Former management consultants have problem-solving
but those with some consulting or I-banking experience skills that may be used when a portfolio company needs
THE INDUSTRY
may add duties related to those of their previous jobs. advice. They also focus on due diligence to gauge an
CHAPTER 2
Keep in mind that VC firms tend to be small, so you investment opportunitys industry position. Naturally,
can expect to wear a lot of hats. they also do many of the deal-sourcing activities that
other analysts do.
INSIDEr SCOOP
At the end of the day, venture capitalists back
management and markets. The responsibility of an Real People
THE COMPANIES
analyst is to evaluate markets both quantitatively

and qualitatively. Profiles
CHAPTER 3
Managing Partner Profile

Undergrad Hires Years in business: Seven
As they learn the VC business, people straight out of Age: 36
college typically focus on deal sourcing. They attend Education: BS in electrical engineering, MS in
trade shows such as Comdex, the Consumer Electronics electrical engineering, MBA
Show, or Internet World to search out new companies Hours per week: 75; 7:00 a.m. to 8:00 p.m. at office
ON THE JOB
and meet with prospective entrepreneurs. In addition, and 9:30 to 11:30 p.m. at home; working lunch
CHAPTER 4
they often attend investment-bank-sponsored industry Size of company: Seven employees

conferences, which help them stay ahead of industry Annual salary: Total compensation of $185,000
trends. Analysts read industry journals to learn about
markets and possibly discover new companies. Working How did you get your job?
from lists of startups gathered from a wide variety of I worked at a consulting firm that catered to private-
THE WORKPLACE
sources, they also cold-call and screen potential invest- equity firms. I developed a lot of relationships there,
ment targets before passing them on to higher-ups. As and eventually went to work with one of my clients.
CHAPTER 5
analysts become more experienced, they start perform- From there, I transferred to a VC firm as a principal.
ing due diligence and working more closely with port- Finally, a B-school classmate at my current partnership
folio companies. called me to join him and his partners in raising a new
fund. He and I have known each other for several years
I-Bankers and had worked together on a couple of transactions
In addition to the previously listed analyst responsi- while I was at my first private-equity firm.
GETTING HIRED
bilities, people coming from investment banking put

their analytical skills to work crunching numbers for What are your career aspirations?
CHAPTER 6
partners in preparation for deals. At the later stages To be a great investor. If I had as much money in the
of investment, they might gather Dun & Bradstreet bank today as I could ever spend in my life, I would still
data on private companies and do some basic financial do what Im doing today. I might be getting more sleep,
modeling. but Id be doing exactly the same thing. Now I just
FOR YOUR REFERENCE
focus on building great companies. Most of this is find-

ing great entrepreneurs who need and want my help.
CHAPTER 7

AT A GLANCE
CHAPTER 1
What kinds of people do well in this field? ments by private-equity firms, both sides are dealing
Youve got to be a team participant. If youre going to from a position of some strength to reach a reasonable
help companies through your advice, youve got to deal. Portrayals like Barbarians at the Gate just make us
THE INDUSTRY
be good at delivering that advice in such a way that all look like idiots in private equity, like its all about ego
CHAPTER 2
theyll listen. You cant be driven to have your name and doing the biggest, highest-visibility deal and treat-
plastered all over The Wall Street Journal. Ninety-nine ing people like they dont mean anything. If we find
percent of the people in this business, youve never people like that, we dont ever do business with them.
heard of. Your job is to help CEOs become heroes. For bankers, the common misconception is that the
Youre not the hero. Youve also got to be inspired by principal people like me dont work a lot of hours. Sure,
the whole notion of capitalism, because what were I dont have the stresses of a client hanging over me, but
THE COMPANIES
doing is at the root of what makes this whole system I dont get any extra sleep.
work: the American dream.
CHAPTER 3
How can someone get a job like yours?
I think there are two common routes. One is a
INSIDEr SCOOP consulting or operating background: Figure out how
If youre not excited by that merging of great businesses work, how to improve them, and how to
people, great ideas, and growth capital, venture
recruit and motivate management teams. The other
capital will never get your juices flowing.
is the financial side: Spend a couple of years as an
analyst at an investment bank. In either avenue, try
What do you really like about your job?
ON THE JOB
to begin developing your relationships with people in
CHAPTER 4
The best part about it is the people I get to work the private-equity world. Get to know other entrepre-
withfrom CEOs and management teams to neurs investors. If youre in I-banking, get to know the
other investors to bright and creative lawyers and private-equity firms your bank does business with. Plan
other service providers. on getting an MBA if you dont have one. Consider it
a long-term job search process. Its probably going to
THE WORKPLACE
What do you dislike? take you years before your contacts and an appropriate
The travel can sometimes be difficult. So is removing opening come together.
CHAPTER 5
somebody who has put their heart into a business
but who isnt suited to lead it. Thats the worst. Even Describe a typical day.
when everyone agrees that its the right thing to do, 6:00 a.m. Put on my new running shoes and run
its not easy. the Dish behind Stanford. As I reach the
top of the hill and look back toward the
What is the biggest misconception about smog hovering over the Valley, my mind
your job?
GETTING HIRED
becomes clear, and I start sifting through
People outside of the money world sometimes use the potential deals.
CHAPTER 6
phrase vulture capitalist to describe us. This implies
that were stealing businesses away from entrepreneurs. 7:00 a.m. Breakfast meeting to interview a market-
Nobody is ever going to agree to sell a company or a ing VP candidate for a portfolio com-
portion of one unless they want to. Our firm doesnt do pany, my latest project. The guy is late
FOR YOUR REFERENCE
turnarounds or bankruptcies or other distressed-invest- and half asleep. Im not impressed.

ment situations. In 95 percent or more of the invest-
CHAPTER 7

AT A GLANCE
CHAPTER 1
8:00 a.m. Hop in my Lexus and drive down Sand 12:00 p.m. I rush out of the pitch meeting and
Hill to the office. I call my voicemail head over to the Woodside Bakery for
from the cell phone as I am driving. lunch with a portfolio companys CEO.
THE INDUSTRY
There are four messages from a CEO Before the board meeting this afternoon,
CHAPTER 2
begging for help rounding up some new I want to put some ideas in his head
financing. I figure that the company has about slowing down his growth and his
finally run its course, and the CEO had burn rate.
better understand that the well is dry.
1:00 p.m. Drive over to Mountain View for the
8:20 a.m. Pull out my BlackBerry to check my board meeting. On the way, Im paged
THE COMPANIES
appointments for the day. Plug it by one of my colleagues, who wants to

into my PC and update my sched- get my reactions to the pitch meetings.
CHAPTER 3
ule. Then check email. I plow through I call him back and tell him to wait for
the usual messages until I get to one the partner meeting on Friday, though I
titled Danger, Danger from a CFO cant help but express some enthusiasm
of an Internet game company that I for the third pitch I heard today.
am encouraging to go public in three
months. I read through her worries 1:30 p.m. Board meeting. The meeting starts with
about cash flow and am not alarmed; the engineering VP conducting a demo
of the prototype. He walks in wear-
ON THE JOB
Ive been in this situation before. I give

CHAPTER 4
her a call and calm her fears. ing cutoffs and Birkenstocks. He looks
exhausted, but rises to the occasion and
9:00 a.m. Pitch meetings. The first pitch is a dud. gives an energetic demo. I am pleasantly
Strong engineers, but their business plan surprised with how much progress they
has no barriers to entry, and they have have made in just three weeks. I realize
THE WORKPLACE
never done a startup before. Lack of I had better get the marketing VP on
experience can be overcome, but a weak board fast, as the product is on sched-
CHAPTER 5
business plan spells doom. The second ule and the marketing and selling effort
pitch is more promisingan intranet must begin.
service firm started by some ex-IBMers.
They will need help refining their plan, 4:00 p.m. Drive back to the office. Spend an hour
but they have some promise. The third is on the phone returning phone calls from
compelling: a new consumer electronics management of my portfolio companies.
GETTING HIRED
technology. Its not an original idea, but

the management team has strong experi- 5:00 p.m. Leave early today to catch my daughters
CHAPTER 6
ence and theyve spelled out in excruci- soccer game.

ating detail how they were able to get
their cost of goods down enough to hit a
consumer price point and still return the
FOR YOUR REFERENCE
required marginsthe best pitch Ive

heard in three months.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Analyst Profile up to me. I also like the number of incredibly intelli-
Occupation: Associate gent and motivated VCs and entrepreneurs I get to talk
Years in business: Six months to at every turn.
THE INDUSTRY
Age: 26
What do you dislike?
CHAPTER 2
Education: BS in business administration
Hours per week: 55; 8:30 a.m. to 7:00 p.m.; There are not enough hours in the day. It can be very
working lunch hectic, especially when theres travel. Honestly, there
Size of company: 18 professionals can often be many more things to do than you have
Annual salary: $75,000 plus deal bonuses time for, and that causes you to pass up opportunities
you dont have the time to devote enough attention to.
THE COMPANIES
How did you get your job?
While I was in I-banking, I told a friend at another pri- What is the biggest misconception about
CHAPTER 3
vate-equity firm that I wanted a job in VC. He told me your job?
about an opening at this firm, and I sent in my resume. That every deal you do is a winner and that its easy to
get good deals. Theres a lot of hard work and dumb
luck that goes into making an Amazon or an eBay. Its
INSIDEr SCOOP not easy to take an unpolished startup and have it turn
You cant just throw money at a startup and expect
it to succeed.
into a big name.
How can someone get a job like yours?
ON THE JOB
CHAPTER 4
What are your career aspirations? There are two tracks. First, the analytical side: Get
To become a partner in a venture firm or to take the experience at an I-bank, a top-tier consulting firm, or
knowledge that Ive learned through my involvement at a research firm like Gartner or Yankee. Then theres the
a VC firm to get involved with an early-stage company. industry side, especially technology. A lot of VCs have
experience in industry, either at a startup or a big player.
THE WORKPLACE
What kinds of people do well in this field? Most hiring is done by personal introduction and
You have to marry three abilities: You have to know the on a case-by-case basis. VC openings are few and far
CHAPTER 5
tech and business side to evaluate new technologies; you between. Find opportunities to meet VCs through per-
have to have a basic understanding of how financing sonal introductions or at VC events. VCs often talk to
and growing a company works; and most important, other VCs about possible hires, so the important thing
you have to be very good at talking and listening to peo- is to meet some and network from there.
ple to draw on their knowledge to increase your own.
You cant hope to learn everything by reading things off Describe a typical day.
GETTING HIRED
the Web or in magazines.
7:15 a.m. Take the T from my one-bedroom in
CHAPTER 6
What do you really like about your job? Harvard Square to downtown Boston,
The very high level of independence. I am really respon- where I walk past the Freedom Trail
sible for a lot of what happens to get deals in front of on the way to the office. I try to slam
the partners. The only thing Im judged on is whether through back issues of Fast Company on
FOR YOUR REFERENCE
Im bringing quality deals to the partnership. How I do the way.

that and how I spend my time day to day is completely
CHAPTER 7

AT A GLANCE
CHAPTER 1
8:00 a.m. Get into the office and check email company and its technology to see what
to see what the partners have in store I can bring up.
for me today. Messages include a new
THE INDUSTRY
cold-call list from one of the partners, 2:30 p.m. Run downstairs again to get a latte
CHAPTER 2
a request from another partner for a before the cafeteria closes.

Comdex write-up by the end of the
day, and a note from my father asking 2:45 p.m. Knowing that I have a deadline, I put
how my business school applications aside research and get to work on that
are going. Comdex report. I grab the huge folder
of brochures I collected and pull out my
THE COMPANIES
9:00 a.m. Take a 15-minute break to check out detailed notes. I try to bring all of the
People.com. information together in some kind of
CHAPTER 3
coherent fashion.
9:15 a.m. Work my way down the latest cold-call
list. I need to leave a message at about 6:30 p.m. I finish a draft of my Comdex report. I
half of the firms. At three of them, I talk spend the next 90 minutes finishing up
to one of the founders, but I rule out the Comdex report, then email it to the
these companies potential 10 minutes partner who is waiting for it. At the end
into each call. Finally, I have a break- of my email, I attach a reminder that
ON THE JOB
through: I talk to the CEO of a new the recommendation hes writing for me
CHAPTER 4
startup with a product that lets mobile is due at Stanford Graduate School of
Internet users access websites faster. Business by the end of next week.
10:30 a.m. Secretary brings in five FedEx pack- 8:00 p.m. Trudge back to the T. The wind has
ages. They are filled with new business picked up now and is blowing the red
THE WORKPLACE
plans that I will not get to until tomor- and orange leaves around. On the train,
row, so I toss them into my inbox and I wonder what microwave masterpiece I
CHAPTER 5
keep calling. can pull together tonight.
12:00 p.m. Head down to the building cafeteria

and grab a turkey sandwich and a low-
fat brownie for lunch. I head back to
my computer and spend some money
GETTING HIRED
on Amazon.com while eating lunch at

my desk.
CHAPTER 6
12:30 p.m. I call everybody I know who might

know about caching: MIT classmates,
my neighbors dad, a guy I got drunk
FOR YOUR REFERENCE
with at Comdex. I then go to the library

and search the online databases on this
CHAPTER 7

The Workplace
5
Lifestyle and Culture................... 58
Hours.......................................... 58
Workplace Diversity.................... 58
Travel.......................................... 60
Compensation............................. 60
Career Notes............................... 61
The Inside Scoop......................... 61

How VC Stacks Up..................... 64
A VCs View................................ 65

AT A GLANCE
CHAPTER 1
Lifestyle capital, saying, VCs are barraged with email, voice-
and Culture
mail, and business plans. You cant be completely reac-
tive. You have to manage the flow of business plans
THE INDUSTRY
The lifestyles of venture capitalists vary and requests.

CHAPTER 2
widely. The field is filled with workaholics who toil Another insider calls the hours manageable for
around the clock to stay ahead of fast-changing tech- anyone who can thrive in a cyclical, multitasking work
nology industries. Your calendar is a slight represen- environment. Unlike investment banking and busi-
tation of what you end up doing. My entire day is ness consulting, where youre more or less working on a
interrupt-driven, says one venture capitalist. My time single project but the work is heavy, in a VC firm youre
is my most valuable asset. Youve got to switch contexts, working on several projects. With startup businesses,
THE COMPANIES
issues, and frameworks all the time. Some people like there are certain times when they need lots of attention
that; some people hate it. Insiders say once a venture and lots of help, and other times where you dont hear
CHAPTER 3
capitalist is established, the lifestyle can be better than from them for a week or two. The phone doesnt turn
in similar hard-driving, high-paying industries. off; your email doesnt turn off.
The VC culture is much harder to peg. Because On weekends, you are likely to work at home
most VC firms are small, the partners set the tone, so reading business plans and industry publications.
culture at firms varies widely. Partners more focused on Sometimes you may need to spend a half day of your
doing deals will take a hard-line, almost I-banking-like weekend traveling to or from an industry conference.
approach. Partners who spend more time working with However, in most cases, your work life will leave some
ON THE JOB
entrepreneurs might have a more informal attitude. room for a personal life. Youll just have to make the lat-
CHAPTER 4
However, because there is so much competitionand ter fit around the former.
because moving to another firm isnt the easiest thing to
domake sure you know the culture of the firm youre
considering and that you can fit into it.
Workplace
Diversity
THE WORKPLACE
VC is one of the WASP-iest industries. African

Hours
CHAPTER 5
Americans and Latinos are largely absent, says one

Hours are completely self-determined and partner in a Silicon Valley firm. In fact, the only minor-
based on what you think you need to do to bring in ities that appear even nominally represented are Asians
a good internal rate of return (IRR) on your invest- and Indians. One partner blames an educational system
ments. Some VCs work 20 hours a day managing their that fails to give minorities the tools they need to make
portfolio companies and staying ahead of the industry. it into the MBA club in numbers sufficient to have an
GETTING HIRED
Others lead a more sane life, fitting in lots of golf, ten- impact on the rarefied VC industry: Were at the end
nis, and skiing. of the pipeline.
CHAPTER 6
In general, the junior members of the firm work The Kauffman Fellows Program at the Center for
more hours than the partners, though there are plenty Venture Education in California, designed to train
of workaholic partners. Industry insiders tell us that future VCs and company leaders, is slowly remedying
if there were a typical workweek, it would be 10 to that situation. It counts at least eight black VC general
FOR YOUR REFERENCE
12 hours per day on weekdays. One partner calls time partners as former fellows, one of whom credits the
management the most challenging aspect of venture program for his success. As he told The New York Times
CHAPTER 7

AT A GLANCE
CHAPTER 1
in 2007, Kauffmans ability to place him at a VC firm neurs segueing into the VC field after playing a role in
let him circulate within the industrys generally closed business operations.
circle. Without access to these networks, he said, I
THE INDUSTRY
would not be in this industry. Period. Opportunities for Women
CHAPTER 2
VC is a predominantly white male industrya classic
good-ol-boys club. Preliminary data in 2010 from a
My time is my most valuable forthcoming study by The Diana Project, a multiyear,
multi-university study of women in business, found
asset, says a venture capital- that only 10 percent of venture capitalists are female
ist. Youve got to switch con- about the same number as in 1995. The Forbes Midas
THE COMPANIES
List, which ranks the industrys top VCs, included just
texts, issues, and frameworks six women among the 100 top VCs when it last came
all the time. Some people like
CHAPTER 3
out in 2009. Thats not all: Women-led companies raise
that; some people hate it. far less money than those led by men: Although about
41 percent of private companies in the U.S. are owned
by women, only 3 to 5 percent of them get venture
funding, according to the Center for Womens Business
Some VC leaders are realizing that todays global- Research.
izing market demands a diversified workforce. Steve Despite these numbers, women weve talked to dont
ON THE JOB
Jurvetson of Draper Fisher Jurvetson has said his firm cite discrimination as a problem. I dont feel like its
CHAPTER 4
consciously works to diversify by partnering with orga- a disadvantage or an advantage to be a woman, says
nizations like Kauffman and that there are clear and one. Some female venture capitalistsincluding Ann
compelling reasons to do so: If the VC industry is about Winblad of Hummer Winblad Venture Partners, Mary
connections, then a greater mix of people and net- Jane Elmore of Institutional Venture Partners, and
works add and deepen the entrepreneurial class, ensur- Nancy Schoendorf of Mohr Davidoware major play-
THE WORKPLACE
ing the industrys enhanced future on the world stage. ers in the industry.
Kauffman gets that point: Of the 27 fellows enrolled in Many women are working to change the situa-
CHAPTER 5
its program in 2009, nine worked with firms outside tion through their everyday work and by publicizing
the U.S.; five of those were in locations no Kauffman how effective women-led businesses can be. Illuminate
fellows had been assigned before (Brazil, Colombia, Ventures, a VC firm founded by Cindy Padnos, pub-
Ireland, Mexico, and Palestine). lished a report called High Performance Entrepreneurs:
A report titled Minorities and Venture Capital: A Women in High Tech, that found more women are
New Wave in American Business by Timothy Bates of serving as officers of VC-backed companies with suc-
GETTING HIRED
Wayne State University and William Bradford of the cessful exits; high-tech companies built by women are
University of Washington found that investments in more capital-efficient than the norm; and, despite their
CHAPTER 6
minority business enterprises generated profits equal capital constraints, women-owned businesses are more
to, if not slightly higher than, those made in more likely to survive the transition from startup to estab-
mainstream businesses. That finding, along with other lished company than the average. Read a summary of
encouraging signs flagged in the report, may boost the report at www.illuminate.com/whitepaper/.
FOR YOUR REFERENCE
investing in minority-owned businesses, which may Nevertheless, theres significant room for improve-
increase the number of successful minority entrepre- ment in increasing the number of women in the VC
CHAPTER 7

AT A GLANCE
CHAPTER 1
industry and increasing VC investments in women-led

businesses. Venture capitalists are the gatekeepers for Compensation
high-tech, fast-growth startups, but in nearly 15 years VC firms are tight-lipped about salary ranges
THE INDUSTRY
of tracking the industry, weve seen a lot of talk about for specific roles. Analysts are likely to start out in the
CHAPTER 2
bringing more women into the industry and supporting range of $70,000 to $125,000 in total compensation;
more women-led businesses, but precious few results. associates in the $90,000 to $300,000 range, including
bonuses; and senior associates, vice presidents, or prin-
cipals somewhere in the $200,000 to $400,000 range.
Travel An executive assistant might start in the $50,000 to

$80,000 range, and a CFO brings in about $400,000
THE COMPANIES
Travel is the one area in which venture capital- in total compensation, after bonuses. This is good
ists have a large advantage over other hard-driving busi- money, but it pales in comparison to what partners
CHAPTER 3
nesspeople, such as management consultants. Many can make.

firms restrict their investments to a regional area near Compensation for partners is relatively standard in
their offices. Silicon Valley VC firms, for instance, gen- the venture capital industry. Partners split an annual
erally invest only in Silicon Valley or Pacific Northwest management fee paid by limited partners equal to
companies. Other regional firms, such as the Texas 2 to 3 percent of the assets of the fund. They also split
Growth Fund, are chartered to invest in a given region. 20 to 25 percent of the returns on their investments.
East Coast VC firms tend to spread out investments The investors get the rest.
ON THE JOB
more because the opportunities in their region are not Lets work out some of these figures to see how
CHAPTER 4
so concentrated geographically. When firms decide to much a venture capitalist can make. Take a firm that
invest in new locations, they often open new offices has six partners and $200 million under manage-
in those areas, reducing travel time. Firms also often ment. The 2.5 percent management fee amounts to
invest in tandem with other firms; the firm closer to $5 million. Expenses of about $1 million are paid
the portfolio company generally takes a more hands-on out of that $5 million, leaving $4 million to be split
THE WORKPLACE
approach so the other firm need not make the trek to among the six partners. That works out to $667,000
the companys offices. in annual salary per partner regardless of how their
CHAPTER 5
investments perform.
Venture capitalists make their really big money in
INSIDEr SCOOP the profit-taking from successfully performing funds.
Youre working with extremely bright, incredibly
motivated, driven people. Youre not going to find
This compensation is cyclical and not spread evenly
that in the masses of the Fortune 500. from one firm to another, but lets take a look at what
an accomplished partner can make in carry. Again,
GETTING HIRED
assume our firm has six partners and $200 million

That said, partners often spend their days moving under management. A successful fund might return
CHAPTER 6
among their portfolio startups in their given regional three times the investment, so lets say that our fund
areas. One insider says that a typical day might involve nets $400 million. Our firm takes 25 percent of
six meetings in different locations. Although you wont $400 million, or $100 million, and returns the
spend four days each week living out of a suitcase, you other $300 million to the investors. Lets assume the
FOR YOUR REFERENCE
may spend four hours a day in your car. $100 million is paid out during six years, an average
fund length, so profits work out to $16.7 million per
CHAPTER 7

AT A GLANCE
CHAPTER 1
year. Finally, we need to divide the carry among our six
partners, so they each get $2.8 million annually. Thats a The Inside Scoop
nice chunk of change. What Employees Really Like
THE INDUSTRY
Of course, a firms profits can vary wildly depending Intellectual Stimulation
CHAPTER 2
on how well the investments do. But as a general rule Industry insiders tell us they love working with some of
today, VCs are looking at a return ranging from three to the smartest people in the world. Not only are your col-
ten times the original investment. leagues the best and the brightest, some of the entrepre-
neurs are too. Its capitalism at its purest, one insider
says. I run around finding great people to hitch my
Career Notes wagon to. Im not making a widget or writing software.
THE COMPANIES
I work with people so passionate about a vision that
Undergraduates theyre not going to put up with failure. In VC, youll
CHAPTER 3
Working at a venture capital firm as an analyst can be be exposed to a broad range in interesting ideasits
a great way to get a toehold in the industry. Youll learn rarely dull.
from extremely smart, experienced businesspeople in
a smaller, more humane work environment than you Focus on the Bottom Line
would on Wall Street. Insiders tell us that you shouldnt Venture capitalists, unlike management consultants,
expect to stay more than a couple of years, but its a have a financial stake in the success of the companies
good way to learn about entrepreneurship from the with which they work. There are no gray areas in deter-
ON THE JOB
financing side before you go back to business school or mining the internal rate of return of your investments,
CHAPTER 4
into industry. so theres less room for politicking and favoritism. Its an
individual effort in a team context, with the team being
MBAs a fairly small group of people, and with meritocratic
Venture capital has become a much-sought-after career advancement. At the same time, though it may be hard
for MBAs, especially for those who have industry expe- to get a venture capitalist to admit it, a good deal of sat-
THE WORKPLACE
rience. The intellectual challenges, the mixture of finan- isfaction comes from telling entrepreneurs how to run
cial and strategic skills required, and potential financial their businesses.
CHAPTER 5
rewards have made this a top job choice for the few who
are lucky enough to get in. Unless you have a proven Cutting-Edge Exposure
business track record in a specific industry, an MBA is In venture capital, you see the formation of cutting-
a must for a partnership in venture capital. Insiders tell edge businesses and technologies daily. And if youre
us you can expect to make partner in three to five years. lucky or good at what you do, you get to play a role
If you dont, youll have to take an associate position at in making them successful. The best part of the job is
GETTING HIRED
another firm or move on to a different career. working with the companies weve funded, an insider
says. I am always learning new things.
CHAPTER 6
INSIDEr SCOOP Helping Build Firms

VC firms tend to be small and have tangible goals.
Theres a lower degree of politics: They tend to be The greatest feeling for a venture capitalist is to see a
meritocracies. firm that she has backed for years complete a successful
FOR YOUR REFERENCE
IPO or grow into a thriving company. Not only does

this confirm she backed the right horse, its also excit-
CHAPTER 7

AT A GLANCE
CHAPTER 1
ing to be around a startup when it takes off. One insider to begin with, you might be better off pursuing other
speaks for many when he says: I get to observe and career opportunities.
participate in the growth of startups, the excitement of
THE INDUSTRY
watching one get its first customer, make its first mil- Concrete Ceiling
CHAPTER 2
lion, have a successful IPO. All along, I can make a Venture capitalists are measured by the return on the
meaningful impact. investments they back and may find themselves out of
work if they dont produce in the early years. If you
Birds-Eye View dont have the returns, youll totally disappear, says one
Because you dont have to deal with the operational insider. Furthermore, the skills picked up in VC are not
details of running a business and are evaluating new easily transferred to other industries. Its difficult to go
THE COMPANIES
business proposals in a given industry constantly, you on and take an operational role [after leaving VC], one
get a broad view of how an industry is changing and insider says. Theres a fork in the road, and you have
CHAPTER 3
developing. As one insider says: You come out of busi- to be confident that you want to take [the VC] path.
ness school thinking that running a business will be
your main function in the business world. In venture Necessary Evils
capital, thats not the case. Its hard to find a venture capitalist who doesnt firmly
believe that he has added loads of value to entrepre-
Money neurial startups and to the world at large. But its rela-
Although the income can be more deferred than in tively hard to find a true entrepreneur who doesnt look
ON THE JOB
other industries, its pretty darned good. One insider at venture capital with some significant reservation, if
CHAPTER 4
says dryly, It might take a few years before a venture not worse. Starting and funding companies is a high-
capitalist gets wealthy. Successful venture capitalists stakes business. Venture capitalists are often criticized
can make huge amounts of money with less risk, and for pushing companies too hard to grow too fast and go
less chance of burnout, than entrepreneurs can. public too soon. Its not uncommon for them to step on
toes and use their ownership stake to force a company
Watch Out!
THE WORKPLACE
to make controversial moves.

Not The Hills
CHAPTER 5
As one partner put it to a group of starry-eyed MBAs, In a Lonely Place

Many of you will choose not to believe me, but I assure Many insiders report that this can be a lonely business,
you that VC is not a glamorous industry. We watch our not unlike sales, where it is up to you to discover and
own costs closely; unlike investment banks or consult- nurture new investmentssometimes in competition
ing firms, we have no clients to whom we can pass on with your partners. One insider says that even at port-
travel and entertainment costs. So if creature comforts folio companies, where youll expend a good amount
GETTING HIRED
are what you crave as a sign of success, there are alterna- of your energies, you wont directly witness success.
tives, but VC is not one of them. Youre, in a sense, an outsider.
CHAPTER 6
No Vacancy Its a Mans, Mans, Mans World

Its really hard to break into the VC industry. Although VC is not a haven of diversity. Although some firms do
MBAs can and do find homes in venture capital, many have women partners, venture capital has been a club
FOR YOUR REFERENCE
people spend a lot of time chasing jobs that never for white males.
materialize. If you dont have some stellar credentials
CHAPTER 7

AT A GLANCE
CHAPTER 1
INSIDEr SCOOP
You take care of your own board seats, and you
dont get pats on the back. Its like were all coaches
THE INDUSTRY
on staff at Stanford. But we each coach a different
sportone coaches swimming, one tennis, one
CHAPTER 2
basketball, and so on.
Not Every Idea Flies

VCs have a real financial stake in their businesses. And
among the many startup successes, there will always be
THE COMPANIES
failures. People are less aware of it in the good times,
says one insider, but losses are a reality. There are pain-
CHAPTER 3
ful stories of layoffs and dreams that didnt work out.
Theyre the ones that keep you up at night.
A Different Kind of Operator

As a venture capitalist, youre advising companies, but
youre not operating them. Some people may prefer
the hands-on work that goes on within an organiza-
ON THE JOB
tion. People with operating backgrounds may not be
CHAPTER 4
satisfied in the role, an insider says. They may miss
working on products and having an impact. Youre not
in there running the company on a day-to-day basis.
If you like to have that impact, it might not be as sat-
isfying [to go into venture capital]. Its an interesting
THE WORKPLACE
quandary for VC associates, because you need that
operating background to break in.
CHAPTER 5
GETTING HIRED
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
How VC Stacks Up ent. In investment banking, a premium is placed on the

number of deals made, whereas in VC, choosing the
Industry insiders say that what they like right deals is the key. In investment banking, compa-
THE INDUSTRY
about venture capital is that it combines the finan- nies are judged mostly on the numbers, and financial
CHAPTER 2
cial analysis of investment banking with consultings modeling skills are key. In venture capital, it is more
knowledge of a companys inner workings. Most of our important that you understand the key changes in a
insiders compared venture capital favorably to manage- given industry and be able to read the entrepreneurs.
ment consulting, stressing that your financial rewards Financial analysis mostly comes into play when the
are directly linked to the success of the companies with deal is actually being cut. The financial rewards in ven-
which you work. And the travel burden is considerably ture capital are more delayed and more dependent on
THE COMPANIES
lighter than that of consulting. the success of the fund, but can be larger in the long
Although investment banking and venture capital run. Heres a tongue-in-cheek breakdown of the three
CHAPTER 3
may seem similar, insiders tell us they are very differ- careers:
Venture Capital Management Consulting I-Banking
Work with entrepreneurs Work with clients Work with numbers
Make the right deals Dont make any deals Make a lot of deals
Work alone or in partnership Work in teams Work late

ON THE JOB
CHAPTER 4
Satisfaction: building companies Satisfaction: promoting change Satisfaction: finding time for a nap
Work five days a week Work seven days a week Work 24/7
Little travel Lots of travel Dont budge
Work with young companies Work with struggling companies Work with numbers and lawyers
THE WORKPLACE
Learn about several industries Learn about several industries Learn about I-banking
CHAPTER 5
Reputation develops over time Quick impression, then move on Dont screw up
Compensation deferred Compensation great Compensation mind-blowing

No time to go to the vending
No time for lunch or dinner No time for lunch
machine
Exit at age 56 Exit at age 49 Exit at age 28
GETTING HIRED
Check to see if the dogs will Dog eat dog

Suggest the dog eat different dog food
eat the dog food
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
A VCs View
One perspective on venture capital is to con-
THE INDUSTRY
sider it in the context of other routes one may follow in
CHAPTER 2
financial services. The following 2x2, devised by a part-
ner at a prominent Silicon Valley VC firm, provides a
window into how the venture capital investors compare
to other types of investors. If you like subjective, non-
consensus decision-making, youre probably a VC type
of person, the VC says. Those who prefer hard facts are
THE COMPANIES
better suited for Wall Street. The best venture capital-
ists lead with their nose and intuition. The best bankers
CHAPTER 3
lead with financial accounting.
Type of Investor
Instinct
Subjective, consensus;
Subjective,
momentum investing
ON THE JOB
nonconsensus
CHAPTER 4
Type of investor:
Type of investor: VC
public/private
Majority Minority
Objective, consensus Objective, nonconsensus
Type of investor: public Type of investor: public
markets, long positions markets, short positions
(buy and hold) (short sellers)
THE WORKPLACE
CHAPTER 5
Hard data
GETTING HIRED
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

Getting Hired
6
The Recruiting Process................ 68
What It Takes............................. 69
Breaking In................................. 70
Interviewing Tips........................ 70
Getting Grilled............................ 71
Grilling Your Interviewer............ 72

AT A GLANCE
CHAPTER 1
The Recruiting then moving to Texas to become a partner in a new
Process
fund, and then getting hired by one of the elite Boston
firms. An executive we spoke with in a technology
THE INDUSTRY
Venture capital firms hiring needs, unlike law firm was offered a partnership without any previ-
CHAPTER 2
those of investment banks or consulting firms, are ous experience in VC. Another insider used an old-
so specialized and limited that firms dont have to do fashioned method to land a Silicon Valley position: He
much recruiting. When they are looking to hire, they sent out cover letters that included a credible reference
often keep it quiet so they wont be bombarded with known to the firms partners and followed up with a
resumes. A few of the larger firms may show up at a series of phone calls. A lot depends on the specifics of
specific campus (Stanford, Harvard) and conduct some the venture firm, one insider says. Every venture firm
THE COMPANIES
interviews, but generally, firms will approach people is different. Theres definitely a track going into consult-
with the specific skill sets they want based on referrals ing, getting an MBA, getting into startups, and jump-
CHAPTER 3
from sources they trust. Remember, in many ways, the ing in on the associate level. Thats one way to do it.
venture capital business is all about networking, and
this applies as much to firms hiring procedures as it
does to their business practices. INSIDEr SCOOP
Down cycles have been a good time, albeit with a
That said, insiders report getting venture capital jobs rare set of opportunities, to enter this business. If
through a few methods. One insider with a pre-busi- asked to grow in a partner direction, you learn all
ness-school venture background had a fortunate meet- the right skills at the right time.
ON THE JOB
ing with a private investor who was looking for some

CHAPTER 4
MBAs to start a firm and manage a fund he was putting

together. Another insider reports that a Silicon Valley If youre in a position thats not a partner track
VC firm called her based solely on her resume, which and the vast majority are not partner trackthen you
it had gotten from her business schools job office. She need to figure out where this is a stepping stone to: a
also says the firm hired her after interviewing more than big corporation, a startup, or another role in private
THE WORKPLACE
200 people during a five-year period. equity, says an insider.

CHAPTER 5
Undergrads
None of the venture capital firms we contacted reported
The time to join a VC firm hiring undergraduates right out of college. Instead, they
is soon after its raised a new tended to poach their analysts from consulting firms,
fund. Thats when partners brokerage houses, or investment banks that do work in
the area in which they were trying to hire.
leave and firms hire.
GETTING HIRED
MBAs
CHAPTER 6
Its possible to get a venture capital job right out of busi-

One person we talked to started as an analyst only ness school. But dont be too picky; its almost unheard
a couple of years out of college, then was promoted to of to get multiple offers from VC firms. Firms tend to
associate. Another insider moved up from the minors be interested in the same five to seven resumesspecifi-
FOR YOUR REFERENCE
to the majors, starting right after business school as an cally in those people who show strong technology oper-
associate with a smaller, less elite firm in New Jersey, ating experience with clear progress and success. If you
CHAPTER 7

AT A GLANCE
Chapter 1
desperately want to get into the industry and you get an hires them. If you have an MD or PhD, combined with
offer from a second-tier firm, take it. Another option high-level industry experience, you might be able to get
is to get an operating role and excel. You need a lot of your foot in the door.
THE INDUSTRY
years of experience with private equity, or a lot of startup VCs looking to take on new people also look for
Chapter 2
experience, or a senior role in a large corporation, says a host of personal characteristics. Intelligence, good
a VC. If youre in business school today and youre a judgment, a quality network, and the ability to pro-
year or two from graduating, find a firm that just raised mote yourself are essential. An excellent educational
a new fund. Theres always going to be a need for associ- background and track record in your jobsas well as
ates, analysts, even a principal, depending on your back- a well-regarded champion who is known to members
ground. The time to join a firm is soon after its raised a of the VC firmare critical for establishing credibility.
THE COMPANIES
new fund. Thats when partners leave and firms hire. Intuition also is important.
Chapter 3
Whom do YOU knoW? > TIP
Many firms hire when they raise
money for a new fund. One
VC is a small indus- and we send it to
strategy for landing a job is to
trysome insid- them. Some people
find out where firms are in their
ers refer to it as a respond, and we run
fund-raising cycles, and start
cottage industry them through an
building relationships at those
and gaining entry interview process.
likely to hire soon.
ON THE JOB
depends largely on So the trick is being
Chapter 4
whom you know. top of mind for us
When we look while were writing
for an associate, up the specifications, Remember, there are opportunities beyond the top-
our process is very or being one degree tier private Silicon Valley and Boston funds. Chicago,
simple, one VC says. removed from the
We think of all the people we just sent
Los Angeles, New York, Philadelphia, and many small
people we know, we that mail to. Thats cities also offer opportunities in venture capital. Dont
THE WORKPLACE
put together a list how youre going to forget to look in areas with high entrepreneurial
of job requirements, get a shot at the job.
growth, such as Colorado, Minnesota, North Carolina,
Chapter 5
Texas, Utah, and the Pacific Northwest. Also, your hori-
zon will broaden if you include university funds, small-
wHAT IT TAkes business investment companies (known as SBICs), and
VentURe Capital iSnt the type of industry venture divisions of corporations in your job search.
that hires a slew of college grads each year. Rather, most If you have a choice of firm, pick one in which you
firms are top-heavy. Many have only general partners can learn from experienced VCs. When you look at
GETTING HIRED
and administrative staff, though some larger firms also venture capital, the base material it shares is people
have associates and analysts. However, even large firms who are trying to do something very hard, a VC says.
Chapter 6
may have only one associate for every three partners. Venture is a craft business. You want to learn from
The venture capital industry typically has been open people who know how to do it well and have a track
only to people with certain elite characteristics: A tech- record to prove it. What history says is that people
nical BS, an MBA from Harvard or Stanford, 10 or who have been successful in our business will continue
FOR YOUR REFERENCE
more years of high-tech or other industry experience, to be successful, an insider says. Firms that have closed
and previous business dealings with the VC firm that new funds and are deploying money are the best bets
Chapter 7

AT A GLANCE
CHAPTER 1
for jobs. Study the websites of the firms and the back- Breaking In
grounds of the partners. One entry strategy is to iden- Getting a job at a VC firm is notoriously difficult;
tify firms that lack the specific expertise you can bring here are three tips for positioning yourself to get an interview:
THE INDUSTRY
them, such as optical networking or biotech, and sell 1. Do a project. Because VC firms dont hire many
CHAPTER 2
them on how you can fill this gap. people on a full-time basis, you may need to get your
Once in, people skills are paramount. VC is a service foot in the door by doing a project for one of them.
industry. If you lack the ability to schmooze, youll Alternatively, you might use a class project as a pretext
have a hard time convincing investors to put their to get an interview.
money where your mouth is. As one VC puts it: I 2. Get industry experience. The best way to get
know a lot of VCs who arent gregarious, but they must into a VC firm may be to have a meaningful experi-
THE COMPANIES
be real go-getters. You cant take no for an answer. VCs ence in a specific industry. Insiders tell us that people
tend to be impatient. at middle or senior levels in high-tech firms, usually
CHAPTER 3
with engineering backgrounds, are the most attractive

candidates.
INSIDEr SCOOP 3. Apply to and network with firms that genu-
Young people going into VC require a special at-
titude. You have it or you dont; its not something inely interest you. Being liked can be a big factor in
that can be taught. In this business, you take a lot getting a job at a VC firm. To save yourself the trouble
of hits. You need a certain emotional maturity or of having to fake it, make sure you choose firms that
stability to take a hit. Its like rock climbingyou
are genuinely interesting to you. Chances are youll get
cant let your emotions get in the way of the tacti-
ON THE JOB
along better with people who have similar interests.

CHAPTER 4
cal and strategic decisions to be made.

Having a passion for whatever the firms focus is will
come across in an interview and make you someone
Almost all the venture capitalists we talk to offer the theyll want to have on their team.
same piece of advice for people who want to get into
VC: Get some specific industry experience before you
Interviewing Tips
THE WORKPLACE
try to work in venture capital. It is the network of con-

tacts and the insiders knowledge of technology trends Because VC firms hire so few people, you must be a
CHAPTER 5
that really make the difference in being a good ven- standout or have exceptional connections. Insiders who did
ture capitalist. If you cant get a job in venture capital, find their way in offer the following suggestions:
go work for a venture-backed startup. Youll get great 1. Show off your research abilities. A lot of the
industry experience, and if youre lucky and take the ini- work at a venture capital firm involves gathering infor-
tiative, youll get to know some VCs in the meantime. mation about companies and industries, so this should
be part of your interview prep. At a minimum, know
GETTING HIRED
the VC worlds terrain like the back of your hand, and

INSIDEr SCOOP
nail the characteristics that distinguish the firm with
CHAPTER 6
Where most people make the mistake is confusing

our industry with other industries. We are a high- which you are talking.
touch, high-service craft. It takes years to learn the 2. Know why you want to work at that firm. Your
business. research will come in handy here. Make sure your story
is compelling and explains why the firms style, culture,
FOR YOUR REFERENCE
and approach match where you want your life to go.

3. Demonstrate your facility with numbers. Youll
CHAPTER 7

AT A GLANCE
Chapter 1
be expected to have strong skills working with numbers What will your sources of deal flow be? (More than
and a thorough familiarity with financial models. You any other industry, VC thrives on connections. If
should be able to understand and work with IRRs, you can bring in networks not already available to
THE INDUSTRY
ROIs, and NPVs without batting an eye. the firm but within the appropriate lines of business,
Chapter 2
4. demonstrate your initiative. VC involves a lot your value to the firm skyrockets. Your sources can
of long-term projects with not much close supervision, be relatives, friends from your MBA program, or
so you need to impress upon your interviewer that you customers and suppliers from previous jobs.)
are an independent self-starter. Where is the best place to invest right now? (Thats
the bottom line.)
GeTTInG GrIlled What do you think about Company X, Company
THE COMPANIES
Y, and Company Z? (Shows how up-to-date you are
VentURe CapitaliStS HiRe people who will on startups.)
Chapter 3
make good investing decisions. Unlike consulting How many deals do you expect to work on during
interviews, which focus on seeing how your mind the first six months you would be working here?
works, venture capital interviewers want to find out What do you expect your level of responsibility
how well you understand a particular industry, how to be? (They want to make sure you have realistic
good a judge of people you are, and what your instinct expectationsdont expect to make big investment
is for picking the right horses. Expect specific questions decisions right away.)
about your opinion of particular startups and about the Why do you want to work in venture capital? Why
ON THE JOB
industry in which you have expressed an interest. Here do you want to work at this firm? (In venture
Chapter 4
are some samples: capital, as in other industries, enthusiasm goes a
Tell me about the industry segment or segments long way.)
in which youd like to work and what your back- Give me an example of a team on which you have
ground is in this industry. (The key is specialization. served and the role you played. (VC firms are small,
Rather than saying communications, zero in on so team chemistry is key.)
THE WORKPLACE
optical switching technology or something equally
arcane. The theory is that you can always broaden,
Chapter 5
but true depth is more useful and more difficult
to obtain. Depth is knowing a field inside out:
the key players, historical developments, products
and customers, informed theories on the future of
the business, pets owned by industry leadersyou
get the idea.)
GETTING HIRED
Ive got people from the best business schools in the
country who want to work here. Why should I hire
Chapter 6
you? (This question is from a venture capitalist who
made $7 million one year.)
What has your reaction been to the other people
who have interviewed you so far? (Remember that
FOR YOUR REFERENCE
being a good judge of people is an important VC

skill.)
Chapter 7

AT A GLANCE
CHAPTER 1
Grilling Your Well Done
Interviewer
Will I get any partners carry?
What is the worst investment decision you have ever
THE INDUSTRY
The following are good generic questions made, and why do you think it worked out badly?
CHAPTER 2
that will fit most venture capital interviews. However, Have you ever invested in a firm and discovered that
you should devise others that specifically pertain to the the pressure on it to return your investment caused
company with which youre interviewing. A word to it to act against its own long-term interests?
the wise: We have grouped our questions according to
risk. Those in the rare section are meant to be innocu-
ous, and the questions in the well-done section will
THE COMPANIES
put fire to your interviewers feet.

CHAPTER 3
Rare
What are the most successful investments youve been
involved in, and why do you think they succeeded?
Where are you in your fund cycle?
What do you like best about your job, and what do
you dislike?
When you decide to back a company, how much
ON THE JOB
are you backing the industry opportunity, and how

CHAPTER 4
much are you backing the track record of the found-

ers?
Which do you enjoy most: picking new investments,
doing deals, or managing your portfolio?
How often are you the lead investor as opposed to the
THE WORKPLACE
follow-on investor?
Is the fundraising duty shared by partners or carried
CHAPTER 5
out by one person?
Medium
If you were competing with three other firms to be
the lead investor in a hot deal, how would you pitch
yourself to the entrepreneurs?
GETTING HIRED
How many boards does each partner sit on?

What do you see as the biggest strategic challenges for
CHAPTER 6
your firm during the next three to five years?

How often do you need to replace company founders
with professional management?
If you hire me as an associate, what are the chances
FOR YOUR REFERENCE
Ill ever make it to partner?

CHAPTER 7

For Your
Reference
7
Industry Lingo............................ 76
For Further Study........................ 79

AT A GLANCE
CHAPTER 1
Industry Lingo Cash-on-cash return

The total cash return from a fund. If a $50 million fund
Angels returns $75 million, the cash-on-cash return is $75 mil-
THE INDUSTRY
An important alternative to a VC for startup financing. lion. (See internal rate of return.)
CHAPTER 2
Angels typically have made a killing somewhere else

and now are investing in seed-stage entrepreneurial ven- Check if the dogs will eat the dog food
tures, typically at $25,000 to $250,000 a pop. Note to Determine whether customers will buy a startups prod-
entrepreneurs: Before you jump on the VC bandwagon, uct or service. A curious phrase considering dogs will
consider angels. They are an attractive alternative for eat pretty much anything.
many funding needs.
THE COMPANIES
Clawback
At the end of the day A clause often buried in the contracts investors and ven-
CHAPTER 3
Venture capitalists love this expression, because at the ture capitalists sign that require VCs to give back past
end of the day they are judged on bottom-line results. profits if a fund loses so much money that the investors
At the end of the day, it doesnt matter that Rex is a col- original investment is jeopardized.
lege buddy of Carters. Well still take a big hit on that
one if the supercomputer market is as dead as I think Deal flow
it is. Venture capitalists and serious private investors love
to talk about deal flow, meaning the number of deals/
ON THE JOB
Bandwidth business plans they are regularly seeing. Since I funded

CHAPTER 4
Capacity or time. Its bastardized use is as follows: Yahoo, Ive had more Internet deal flow than I can
Genexs CEO needs to focus better. His people just handle.
dont have enough bandwidth to implement all of his
crazy ideas. In other words, Genexs people dont have Deliver against
the time or capacity because of workload or other con- What venture capitalists want their startups to do. When
THE WORKPLACE
straints to carry out his ideas. talking to a CFO, you might say: Well, Bill, do you
think your team can deliver against those projections?
CHAPTER 5
Burn rate
How fast a company is using up its capital. Theyve got Dial for deals
$2.4 million cash in the bank and no more coming in Some larger venture capital firms have been hiring
the near future. At their current burn rate of $800,000 young sharpies to do a lot of the initial scut work to get
per month, theyve only got three months left. an edge on the competition. One of these tasks includes
calling up hundreds of startup companies to discover
GETTING HIRED
Carry potential winners. A partner might say, I heard that

The portion of returns from an investment fund that Summit just hired four more 23-year-olds away from
CHAPTER 6
is distributed among the general partners (non-VCs McKinsey so they can dial for deals.
would probably use the more mundane word profits
instead). Possible usage: When you are interviewing Due diligence
for an associate position, find out whether you will get The research that must be done to fully understand and
FOR YOUR REFERENCE
any carry in the fund. determine the worth of any investment opportunity.
Critical factors include the state of the industry (includ-
CHAPTER 7

AT A GLANCE
CHAPTER 1
ing competition) and the strengths and weaknesses of Internal rate of return
the management team. VCs will sometimes hire con- The IRR is the most common measure of the success
sultants to conduct due diligence, but it is also a routine of a fund or a partner. Its the discount rate at which
THE INDUSTRY
internal function. the present value of future cash flows of an investment
CHAPTER 2
equals the cost of that investment. More simply, think
Exit of it as the profits of the fund or investment expressed
VC firms (and investors in general) tend to fixate on a in percentage terms.
companys exit, or liquidity event. This event, typi-
cally an IPO or acquisition, lets the VC realize a return Kick the tires
on investment. Perform due diligence. The implication is that perform-
THE COMPANIES
ing due diligence is as routine as buying a Mercedes. A
General partners and limited partners partner might say to an associate, Ill need you to really
CHAPTER 3
General partners, the professional members of a ven- kick the tires on this prospect before I present it to the
ture capital firm, are usually required to contribute a rest of the firm.
small amount of their own money to their fund. They
manage the funds investments and generally take a Liquidation/liquidity
20 to 30 percent cut of the carry from the fund. How fast you can get the cash. Even if you own 40 per-
Limited partners are the passive investors in a venture cent of a company worth $100 million, it doesnt mean
capital fund who ante up the cash. They often include much until you can get somebody to pay for it. From
ON THE JOB
wealthy individuals and organizations, such as pen- the VC perspective, liquidity usually comes from going
CHAPTER 4
sion funds and universities. Prohibited from playing an public with an IPO or being acquired by a third party.
active role in the management of the fund, they gener-
ally get 70 to 80 percent of the carry. Living dead
Companies in which VCs have invested that dont have
Getting traction a chance of going public or being bought out, but that
THE WORKPLACE
Generating ideas for good investments and then suc- wont die either.
cessfully executing them; generally used as a term of
CHAPTER 5
praise. Shes only been at Smith Ventures for eight Long tail
months but shes been getting good traction. One of This refers to a trend in e-commerce that makes it prof-
the companies she brought to us had a fantastic IPO, itable to serve niche markets. Think iTunes or Amazon,
and were excited about two others shes brought to our which vastly expand the array of consumer choices and
attention. carefully target products to highly specialized audiences.
In this way, e-commerce makes it possible to offer more
Hockey stick
GETTING HIRED
choices for less while helping people filter out what they
What the graph of projected revenue looks like in most dont want and find what they do want. The long tail
CHAPTER 6
business plans submitted to venture capitalists, with refers to this shift away from mass markets toward niche
initially flat revenues (the blade of the hockey stick) ones, theoretically increasing demand and unlocking
suddenly enjoying a sustained, sharp rise (the handle). new sources of revenuewithout adding costs by
Have a look at this business plan. This companys creating better options for more people.
FOR YOUR REFERENCE
hockey stick is supported by existing sales and a strong

management team.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Mezzanine (or bridge) financing Preferred stock

Financing for companies with imminent IPOs, usually Corporations have several types of stock, referred to as
within six months or a year; the proceeds can be used classes, with different rights attached to them. From the
THE INDUSTRY
to repay it. investors perspective, the most significant group is the

CHAPTER 2
preferred stockholder class, which has higher-priority

Move the needle claims on a companys assets, both at dividend time and
Impact earnings. An opportunity that cant gener- in the event of a bankruptcy. Venture capitalists almost
ate sufficient play doesnt move the needle. Strangely always take their equity as preferred stock.
enough, Company X didnt even move the needlewe
sold it for only $50 million. Premoney and post-money
THE COMPANIES
Lets say a company is valued at $4 million and you

Net present value invest $1 million for a 20 percent share in the company.
CHAPTER 3
NPV is one of the most common measures for evaluat- The premoney valuation would be $4 million, and the
ing an investment. post-money valuation would be $5 million.
New money Return on investment

In the second and subsequent rounds of investment, an The ROI is generally an indicator of a companys prof-
entrepreneurial firm will often bring in new investors, its or savings. ROI is often used to measure how well a
generally referred to as new money. Keep in mind that company is doing.
ON THE JOB
new money generally hates to buy out the shares of old

CHAPTER 4
money (early-round investors) because doing so doesnt Rounds

contribute to the financing of the business itself. Financing for startup ventures usually comes in rounds.
I hear that Network Devices is having trouble raising
Over the transom its third round, because its second-round lead investor
The generic arrival route of all unsolicited opportu- is balking at the new valuation. Its not unusual for an
THE WORKPLACE
nities. Usually I get my leads from my friends, but entrepreneurial firm to raise several rounds of capital
Philinx came in over the transom and turned out to before reaching profitability or going public.
CHAPTER 5
be one of the greatest deals I ever made. Most venture

capitalists are not interested in information that comes Seed investment
in over the transom; theyd rather get referrals from An investment in the early stages of a startup, typically
their network of contacts. when the company is little more than an entrepreneur
with an idea and a plan.
Paradigm shift
GETTING HIRED
A change in basic assumptions. Youll hear this term in Source

many business contexts, but its particularly overused Used as a verb: to find likely candidates for investment.
CHAPTER 6
in venture capital, because its what all venture capital- Methods include wading through piles of business
ists yearn to recognize and exploit. The movement to plans submitted by entrepreneurs, devouring stacks of
direct sales of memory upgrades represents a paradigm trade journals, scouting trade shows, and scouring your
shift in distribution for this industry. The idea here is phone book for brains to pick.
FOR YOUR REFERENCE
that companies that successfully anticipate a paradigm

shift will reap exceptional financial rewards.
CHAPTER 7

AT A GLANCE
CHAPTER 1
Super angel entrepreneurs need to be as selective about their VCs as
An angel investor with a proven track record of partici- VCs are with the companies they choose.
pating in seed-stage investments. Jeffrey Bussgang (Penguin Group, 2010)
THE INDUSTRY
Type 1 errors Capital Rising: How Capital Flows Are
CHAPTER 2
Investments a VC made that dont pay off. Changing Business Systems All Over the
World
Type 2 errors With European and North American VCs anticipat-
Investments a VC passed on that hit the jackpot. ing investments in emerging overseas markets to grow
between now and 2015, this book provides a timely
THE COMPANIES
Valuation analysis of which strategies and management practices
The dollar value of a company, as determined by might best maximize the changing capital flows of the
CHAPTER 3
the price investors are willing to pay for the stock. global economy. Its authors teach business students at
Assigning a value to a startup is notoriously subjective. Babson College, and Peter Cohan has firsthand experi-
I hear that Zipdot raised its valuation from $5 million ence in the VC field as president of his own manage-
to $10 million in six months. That shows you what the ment consulting and venture capital firm. He and U.
addition of a marketing guy on the investor relations Srinivasa Rangan put their backgrounds to good use
team will do! here, weaving case studies, interviews with practitio-
ners, and academic texts for an informed look at capital
ON THE JOB
and globalization.
CHAPTER 4
For Further Study Peter Cohan and U. Srinivasa Rangan (Palgrave Macmillan, 2010)
Books and Journals Entrepreneur Journeys

Mastering the VC Game: A Venture Now up to its fourth volume, this series by well-tested
Capital Insider Reveals How to Get from entrepreneur, Forbes columnist, and blogger Sramana
THE WORKPLACE
Start Up to IPO on Your Terms Mitra takes on a multitude of topics close to the hearts
Written by Jeffrey Bussgang, this book combines of entrepreneurs and VCshow to move innova-
CHAPTER 5
the viewpoints of a former business owner turned tion from concept to market, defining value proposi-
VC insider. Now a general partner with Boston- tionsbut the later volumes are particularly suited to
based Flybridge Capital Partners, Bussgang began his the economics of today. Focusing on bootstrap busi-
adventures in the VC world as an entrepreneur with ness approaches in a tight market, Mitra provides
OpenMarket and a co-founder of Upromise, which inspirational case studies and interviews that exemplify
managed more than $12 billion in college savings the joys of risk-taking. Yes, heartbreaks exist, too, but
GETTING HIRED
before being bought out by Sallie Mae in 2006. He Mitra provides compelling and convincing argument
switched to the VC world and learned how firms decide for the critical role investors and entrepreneurs play in
CHAPTER 6
which businesses to fund, which firms focus on which sustaining the health of the economic ecosystem. Be
industries, and what it takes to get their attention. bold, she says.
Bussgang successfully shares his experiences from both Sramana Mitra (CreateSpace, 2010)
business spheres, mixing in the histories of now well-
FOR YOUR REFERENCE
known names such as Twitter and LinkedIn, and most

important, conveying the often-overlooked point that
CHAPTER 7

AT A GLANCE
CHAPTER 1
The Masters of Private Equity and Venture Capital Journal

Venture Capital: Management Lessons This is a monthly industry journal pub-
from the Pioneers of Private Investing lished by Securities Data Publishing that can be
THE INDUSTRY
Skype, Young & Rubicam, Amgenjust some of the found in most business school libraries.
CHAPTER 2
investments that made the ten leaders profiled in this It takes a slightly more academic view of the industry.
book very, very rich. From them, readers are schooled Visit www.vcjnews.com for more information.
in the range of topics most dear to high-level investors:
investigating new markets, appraising the managers Websites
running the investments, and how to apply private- Angel Capital Association
equity principles to organizations in the growing not- www.angelcapitalassociation.org
THE COMPANIES
for-profit sector. Highly readable and a book sure to The Angel Capital Association brings together about
yield high returns. 200 angel organizations in North America for network-
CHAPTER 3
Robert Finkel and David Greising (McGraw-Hill, 2009) ing, to share best practices, and to develop the field of
angel investing. Check out its website for its collection
Pratts Guide to Private Equity and of research papers on angel investing.
Venture Capital Sources
The bible of the industry, this guide is not far from the National Association of Seed and Venture
fingertips of anyone seeking or providing VC funding. Funds
Pratts contains a series of essays by industry experts on www.nasvf.org
ON THE JOB
various VC-related topics: identifying a good business The National Association of Seed and Venture Funds
CHAPTER 4
plan, the VC role after financing, investor relations, has an excellent news section that collects articles on the
and mezzanine financing, among others. Even more industry every week. It also hosts an annual conference,
important than these pearls of wisdom are the names which is a great place to network.
and addresses of VC firms throughout the U.S. The
tome also provides the names of partners and staff and National Venture Capital Association
THE WORKPLACE
the type of financing the firm typically provides (seed, www.nvca.org

second-stage, leveraged buyout). A caveat: Because The NVCA lobbies Congress on legislation pertinent
CHAPTER 5
Pratts surveys a broad range of firms, each of which to the VC industry and hosts a variety of network-
measures its business differently, its quantitative analy- ing events around the country and the world. This site
sis of industry trends is not as meaningful as it could provides an excellent overview of the VC industry; it
be. For instance, when asked by Pratts which industries should be your first stop online. It also provides news
it invests in, a VC firm may list a dozen or more, even updates on VC-related legislation and links to firms and
when the majority of its investments are concentrated resources.
GETTING HIRED
in only one or two sectors. Pratts is available in most

business school libraries and is updated yearly.
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

AT A GLANCE
CHAPTER 1
PwC MoneyTree Report Feld Thoughts
www.pwcmoneytree.com www.feld.com/blog/
PricewaterhouseCoopers, Thomson Financial, and the Written by Brad Feld, a managing director at Foundry
THE INDUSTRY
National Venture Capital Association put together the Group, Feld Thoughts covers trends in business and
CHAPTER 2
quarterly MoneyTree Report covering VC nationwide, regularly offers book reviews on an impressive range of
the only such report endorsed by the industry. Check topics and genres.
it out for the most comprehensive and up-to-date firm
rankings and industry wide statistics. TechCrunch
www.techcrunch.com
vFinance Started in 2005 by Michael Arrington, this blog
THE COMPANIES
www.vfinance.com consistently appears on Technoratis list of
vFinance provides a listing of business plans and vari- most popular blogs and now counts a number of
CHAPTER 3
ous links and resources for VCs and entrepreneurs. websites (TechCrunch Japan, MobileCrunch, and
CrunchGear, for example) among its affiliates.
Blogs
The VC blogs open up new vistas for the job seeker. VentureBeat
Read some of the more high-profile VC blogs below www.venturebeat.com
to find out what folks within the industry are thinking Started in 2006 by Matt Marshall, the former venture
and doing. You might also consider becoming a fol- reporter for the San Jose Mercury News, this online pub-
ON THE JOB
lower of their Twitter account, which often has posts lication offers innovation for forward-thinking execu-
CHAPTER 4
linked to the website. Find a list of VCs on Twitter at: tives. By 2008, it was being called one of the best
www.tweettop.com/topic/venture-capital. blogs on the Web by no less than The New York Times.
We think the Gray Lady is on to something.
Burnhams Beat
billburnham.blogs.com Venture Blog
THE WORKPLACE
A VC investor who focuses on infrastructure software www.ventureblog.com
with Celsius Capital, Burnham writes almost exclu- A number of different contributors post at Venture
CHAPTER 5
sively about business themes directly or indirectly Blog, which was previously subtitled a random walk
related to VC. down Sand Hill Road. Check out the helpful links to
news sources and other VC blogs for more to read.
Due Diligence
due-diligence.typepad.com
This blog is written by Tim Oren, a partner at the
GETTING HIRED
Pacifica Fund.
CHAPTER 6
FOR YOUR REFERENCE
CHAPTER 7

>> The WetFeet Story
WetFeet was founded in 1994 by Stanford MBAs Gary Alpert and Steve Pollock. While exploring their
next career moves, they needed products like the WetFeet Insider Guides to guide them through their
research and interviews. But these resources didnt exist yetso they started writing! Since then,
millions of job seekers have used the WetFeet Insider Guides and WetFeet.com to research their next
career move.
In 2007 WetFeet became part of Universum Communications, the global leader in employer branding.
Thanks to the integration of WetFeet into the Universum group, WetFeet products are now used by
job seekers all over the world. In addition to our Insider Guides and WetFeet.com, we produce WetFeet
magazine, which features career advice tailored to undergraduate students.
>> The WetFeet Name

The inspiration for our name comes from a popular business school case study about L.L. Bean, the
successful mail-order company. Leon Leonwood Bean got his start because he literally got his feet wet:
Every time he went hunting in the Maine woods, his shoes leaked. One day he set out to make a better
hunting shoe, doing such a good job that his friends lined up to buy pairs of the boots. And so L.L. Bean
was born.
The lesson we took from the Bean case? Well, it shows that getting your feet wet is the first step toward
achieving success. And thats what WetFeet is here for: To help you get your feet wet and take the right
steps toward ever-greater career goals, whatever they may be.

>> Is it the risk, the potential for dizzying
financial rewards, or the chance to play a
role in funding the American dream that attracts people to a
career in venture capital? Whatever lures them in, VCs enjoy a
high degree of job satisfaction, and insiders tell us they have
the privilege of working with bright, driven people. But if you
aspire to sit on the board of the next Google or eBay, you have
your work cut out for you: venture capital is a notoriously
difficult field to break into. Not to worryWetFeets career
experts have done the research to get you started.
TURN TO THIS WETFEET

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WHAT VCS DO DAY-TO-DAY, INCLUDING REAL THE INNER WORKINGS OF THE
PEOPLE PROFILES VENTURE CAPITAL INDUSTRY
VC CULTURE AND THE TYPICAL COMPENSATION THE OPPORTUNITIESTHOUGH

TO EXPECT FEWTHAT EXIST FOR UNDERGRADS,
MBAS, AND MID-CAREER PROFESSIONALS
WHAT VENTURE CAPITALISTS LOVEAND
HATEABOUT THEIR CAREERS HOW TO SIZE UP A VC FIRMS ACTIVITY
ACCORDING TO NUMBER OF DEALS
THE RECRUITING PROCESS AND HOW TO PREP
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WetFeet has earned a strong reputation among college

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credible, no-holds-barred Insider Guides. WetFeets investi-
gative writers get behind the annual reports and corporate
PR to tell the real story of what its like to work at specific
companies and in different industries. www.WetFeet.com

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insider guide

CAREERS IN VENTURE CAPITAL

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>> The WetFeet Guarantee

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Careers in Venture Capital

All illustrations by mckibillo

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CHAPTER 1 23 1 Venture Capital

6 Overview 18 Profiles of Top

Careers in Venture Capital

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61 The Inside Scoop

At A Glance Major Minuses

The opportunities are only slightly better for MBAs.

Major Pluses choosy.

Work with some of the smartest people in business.

Make potentially dizzying amounts of money dur-

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How Venture Capital Works.......... 6

Venture Capital Today................ 10

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Overview and behavior in business, and excel in some capacity,

money and advice that helped make them Silicon

conducted by Global Insight. This is an impressive

who choose to try. in high-risk, high-potential-yield startup companies.

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WET F EET IN S IDER GUIDE 7

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closed the financing. a big way.

As the company raised an additional and substan-

tion from an outside group of companies, relations with

held the balance of power on the board, a common

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that those theories Smart Companies 2010, investments in

WET F EET IN S IDER GUIDE 9

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period in 2009, and in another positive development,

capital also tumbled. In 2008, just six startups raised

the National Venture Capital Association (NVCA), to

talists and entrepreneurs would choose to soon forget. Medical Devices

by the second quarter of 2010, which was more than

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INSIDEr SCOOP Mid- to Late-Stage

WET F EET IN S IDER GUIDE 11

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of strategically investing in companies whose business

relates in some way to the corporations own. Microsoft,

Investments by Stage of Development, 200809

Stage 2008 ($M) 2008 Deals 2009 ($M) 2009 Deals

Startup/seed 1,648 499 1,656 331

Early stage 5,263 1,072 4,650 907

Expansion stage 10,347 1,222 5,524 823

Later stage 10,754 1,201 5,952 807

Sources: MoneyTree Report (PricewaterhouseCoopers/NVCA/Thomson Financial)

VC Investment by Stage, First Quarter 2010

Early stagev 1,006 21.3

Later stage 1,544 32.7

Expansion stage 1,754 37.1

Sources: MoneyTree Report (PwC/NVCA/Thomson Financial), WetFeet research