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In order to understand how to position yourself for a career in venture capital, you should first understand what types of backgrounds are most common in venture (there are always exceptions).Broadly speaking there are four types of investors on any VC firm’s team: pure investors, operators turned investors, domain experts and jacks of all trades. At their core, each type of VC differs in how much experience they have across three key dimensions: investing experience, operating experience and domain expertise. Investing experience includes investment banking, corporate development and principal investing roles (e.g., venture capital, growth equity, LBO). Operating experience includes starting a company, working at a startup, working at a large corporation and being a consultant. Domain expertise is best characterised by activities that create the products in an industry. In the IT sector, domain expertise is coding; in pharma it’s being a chemist.
The first three VC types are more or less deep in one of the three types of experience, while the last has some experience in each of the three types of experience. Do note, however, that often jacks-of-all-trades are relatively light in domain expertise. For example, a tech investment banker turned web startup founder may not be able to code, but has both investing and operating experience in technology, giving him some domain expertise.
Having this framework can help you understand the role you might fit into and enable you to start charting a path to prepare for that type of role.
This is part of my series on how to get a job in venture capital.
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