Maybe the most discouraging news to people thinking about becoming a VC is that there’s something perfect about the prototypical VC. He or she tends to be thin and very fit. I’d estimate that 75 percent of the VCs I’ve met in the past two decades have received an MBA from Harvard or Stanford. A big share of the rest hail from a short list of elite business schools. I’ve never seen so many blue eyes per capita than among venture capitalists, and their smiles tend to be preternaturally pearly white. As a group, they’re exceedingly smart and usually enjoyable to be around. If there’s a “best and the brightest” in this country, the VCs are certainly among them. They’re by definition the elite: the top 1 percent of the top 1 percent.
Venture is a hard world to break into but also one that rewards success. People raise a modest fund and make a few smart picks, which lets them raise more money. A junior-VC-in-training does the same, and suddenly she is no longer an associate but a senior associate with a chance of making principal, if not partner. The product managers and marketing gurus and growth hackers can make names for themselves at growth-stage tech companies that wow the rest of the world and find themselves being invited out for coffee and a conversation that ends with an invitation to join a firm.
“The encouraging news for anyone who dreams of becoming a venture capitalist is it’s a younger person’s game,” Tod Francis said. “It’s Nikhil and the younger partners who are hanging out with people starting their own companies five or six or seven days a week.”
These are both good times and bad for women seeking to get into venture. There are more opportunities for women but also a bro culture that is endemic to tech. Before there were Harvey Weinstein and the #MeToo movement, there was Susan Fowler, a programmer whose 2017 Medium post detailing the sexual harassment she had endured while working at Uber (“Reflecting on One Very, Very Strange Year at Uber”) led to an investigation and spurred the banishment of Travis Kalanick from his own company. A few months after Fowler’s post, the venture community was rocked by revelations about Justin Caldbeck, a rising star. He had led investments for Lightspeed Venture Partners (itself a celebrated newcomer to the venture scene) in TaskRabbit and Stitch Fix (valued at $1.4 billion when it IPO’d at the end of 2017). In 2014 Caldbeck cofounded Binary Capital, which was riding high until June 2017, when a tech news site called The Information quoted a half-dozen women claiming unwanted and inappropriate sexual advances by Caldbeck. He apologized publicly to the women he “made feel uncomfortable” and announced that he was taking a leave of absence. Eventually Caldbeck’s leave of absence became permanent, and Binary shut its doors.
That fall, another VC, Shervin Pishevar, became another symbol for the industry’s bad behavior. Pishevar, an entrepreneur turned angel investor who cofounded his own venture firm in 2013 called Sherpa Capital, was best known for getting into the B round of Uber and investing in both Warby Parker and Airbnb. Bloomberg ran a story quoting multiple women who accused Pishevar of sexual misconduct. Like Caldbeck, Pishevar went on a temporary leave that turned permanent, though he was anything but apologetic. He announced that he would use his newfound free time to pursue a legal case against those he accused of spreading false allegations about him, although he ended up dropping the lawsuit.
Women still face bias inside the venture world. Sequoia, one of the industry’s premier firms, didn’t hire its first female investing partner until Jess Lee arrived there at the end of 2016. “It only took 44 years,” wrote Fortune magazine’s Kia Kokalitcheva. The consensus choice for the second best venture firm on the planet, Benchmark, didn’t add its first woman partner until 2017, when it poached Sarah Tavel from Greylock, where she had also been its first woman partner two years earlier. As of this writing, Greylock has no women partners, which is true as well of Bessemer Ventures and Andreessen Horowitz, two more top venture firms. PitchBook Data, a research firm based in Seattle, found that in 2010 that only 5 percent of the partners at the country’s larger venture firms (those that had raised a fund of at least $200 million) were women. Incredibly, that figure dropped to 4 percent when PitchBook repeated the study in 2014. A more recent study showed it bumping up to 7 percent.
The pressure for change should be more opportunities for a wider pool of venture candidates. “There’s a push in Silicon Valley right now around diversity, particularly gender-based diversity, based a lot on the issues raised with Justin Caldbeck and things that came out after that,” said Maha Ibrahim of Canaan. “There aren’t a lot of us, but the female general partners are getting together and talking about these issues.” Much of their effort is focused on mentoring and supporting the women who join their ranks.
“The unfortunate fact is that most women working in venture capital are associates, and often they’re the only female in that firm,” Ibrahim said. “A lot of them are saying, ‘I don’t know if I fit; I don’t see myself as being supported here.’ ” Some aren’t waiting for acceptance. Jesse Draper, a great-granddaughter of the founder of the first West Coast venture capital firm, William Henry Draper Jr., started her own $10.4 million seed fund, Halogen Ventures, that invests exclusively in female founders. Aileen Lee, who holds a science degree from MIT and an MBA from Harvard, worked for the Gap and then Kleiner Perkins before starting Cowboy Ventures, a seed fund, in 2012. Cowboy can already claim twelve exits in less than six years, including Dollar Shave Club, and today ranks as one of the Valley’s premier funds.
Race is a different story. In all my years of visiting venture firms and attending venture-heavy events in the Bay Area (and, to a lesser extent, in New York), I’ve seen maybe one or two African American VCs and about the same number who are Latino. That’s starting to change at the associates level, and maybe the newest generation of VCs will offer more than lip service about the need for change.
The state of the industry offers more positives for those wanting to enter the venture world. The venture ecosystem is thriving these days. Fund-raising in 2016 was at a healthy $42 billion—the highest figure in ten years. As of 2016, according to the National Venture Capital Association, there were 898 venture firms across the United States. That represents a drop-off of several hundred from the peak days of the late 1990s and the start of the 2000s, but that’s probably a positive sign. Venture funds are once again posting double-digit returns. Those in the top quartile are again delivering annualized returns of 25 percent or more. Fewer companies are going public than in the past, but more are being snapped up in mergers and acquisitions.
The rise of the super angel and the blooming of so many seed funds probably represent the two most encouraging trends for wannabe VCs. In the old days, angel investing meant no jobs above that of a personal assistant. No longer. Clicking on the “Meet the Team” tab at websites some of the better-known firms demonstrates that the apprentice route is alive and well, at least at the seed level. Youth seems prized more than experience at firms seeking to fund promising companies that are still being run out of a dorm room; each is populated by people in their twenties and early thirties with profiles that emanate a high-energy, bubbly optimism.
One of the best of this new crop of seed firms is one of the earliest, First Round, founded in 2004 by serial entrepreneur Josh Kopelman. I counted seven partners working for First Round, along with another twenty-nine employees, including a chief financial officer, an office manager, a pitch doctor, several engineers, and Rei Wang, who took over as director of its Dorm Room Fund six years after she graduated from Emory University with a BA in international relations.
That’s another route into venture: a role other than that of an investing partner. Greylock has a four-person public relations team headed by the firm’s “marketing partner,” Elisa Schreiber, who went to work at Greylock three years after earning her MBA at the University of Southern California’s business school in 2011. Eight people at the firm work in recruiting. One is Dan Portillo, who turned forty years old in 2017. His father was an undocumented immigrant from El Salvador; his mother, born in Cuba. Portillo was the first in his family to go to college but left the University of California, Los Angeles (UCLA), before graduating to start working as a recruiter for a series of venture-backed start-ups. He would become a “talent partner” at Greylock (he is one of two) in 2013, two years after he started at the firm.
“I look to give any advantage I can to my partners in a competitive situation,” Portillo explained. “If they’re excited about a potential investment, I’ll drop everything to talk talent strategy, to help that start-up recruit.” He isn’t making investment decisions, which, of course, is central to what a VC does, but there’s still the excitement of working with a lot of smart people doing interesting things.
“For those trying to get in, the industry is ripe with opportunity right now,” said Ben Veghte, a vice president at the National Venture Capital Association. That’s especially true, he added, at the larger firms such as Greylock that are raising billion-dollar funds. “These big firms have employee head counts of a hundred or more. At the same time, we’re seeing the emergence of a lot of new players that we would call ‘emerging managers,’ who are growing and hiring as they raise funds in the range of fifty million to one hundred million. As far as employment opportunities for young graduates and people out there who want to sink their teeth into venture, I think this is a great time to get into the industry.”