Over the course of this past academic year I’ve encountered several people (my fellow HEC students included) that have indicated that they feel that they are qualified to be VC’s based on the fact that they’ve been entrepreneurs. To this I respond with a resounding “HUH?!?”
Now, some of the finest VC’s I’ve ever met have come from the entrepreneur-turned-venture capitalist track of career planning. However, the former does not necessarily guarantee success in the later. A great VC must be a good investor above all else. Many successful entrepreneurs simply do not have the ability to distinguish a great new idea, technology, what have you, with one that can obtain serious exit results.
I’d also like to add this little service announcement to everyone reading: There are entrepreneurs, and there are entrepreneurs. This is particularly aimed at those of my classmates who seem to have some misguided notions of what types of entrepreneurial experiences really attract recruiters in the PE/VC space. Let me use a couple of examples (names and certain elements have been changed to protect the innocent and their egos):
John: I really want to work in private equity. I’m only looking at PE groups within bulge brackets ibanks. I’ve had my own business so I think they’ll really like me.
Me: Oh, you were an entrepreneur? What type of business did you start? How was the exit? Were you VC backed?
John: *looking confused* Exit? What’s an exit? I ran a three person travel agency franchise for my dad.
Me: Oh..um…ok. Good luck with the ibanks then!
Hans: I’m doing great in my MBA classes and I started my own business so being a VC will be easy!
Me: What was your business?
Hans: I used to perform repairs on people’s bikes.
Me: It was just you?
Hans: Yeah. I was doing that for the past year.
Me: So how about the Euro Cup?
The point being (I know, I said this before but I’ll repeat it because business school students often need things to be repeated to them) that there are entrepreneurs, and there are entrepreneurs. Having an entrepreneurial spirit is a fantastic attribute and is something that Europe needs more of, but there is a considerable difference between the attractiveness of a tech entrepreneur who’s dealt with venture capitalists and gone through a successful exit as compared to someone who ran a local McDonalds franchise when it comes to getting a job as a VC.
I think the effect of being in a business school can often cause delusions of grandeur in certain people, causing them to overestimate their expected place in the world immediately post-graduation. Everyone coming out of b-school tends to have this sense of entitlement to the type and level of job they’re expecting. If the guy who ran the travel agency is serious about working in buyouts then he needs to formulate a five-year plan to achieve that goal. Maybe his best foot in the door is via advisory services? Maybe it’s through something else? Either way he’s going to have to work long and hard at it. So to all the MBA’s and M.Sc’s: You got (or are getting) your degree. Great. Have a celebratory drink, pat yourself on the back and get on with building your career!