#16 - Guy Kawasaki’s The Venture Capital Aptitude Test (VCAT).? & “Identify job openings ahead of time” - VC Partner

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👋 Hey there! Welcome to Saturday's edition of this week's Break Into VC Newsletter. We've got a packed issue focusing on everything you need to break into venture capital.

• This Week’s VC Math Questions

• Deep Dive On Guy Kawasaki’s The Venture Capital Aptitude Test (VCAT).

• Break Into VC Hub: Get Access To Startup financial model template, 10000+ investors' email contact database & more.

• Today’s Tips From VC Professional “Identify job openings ahead of time” - VC Partner and ways to find it.

• 20+ Venture Capital Job Opportunities.

• Upcoming Global Online and In Person VC Events

• Must Read Articles on Startups, Tech & Venture Capital

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THIS WEEK’S VC MATH QUESTION

Thing About It & Select Your Answer

Consider - An AI startup, has the following cap table after its seed round:

• Founders: 70%

• Seed Investors: 20%

• Employee Stock Option Pool (ESOP): 10%

DEEP DIVE

Guy Kawasaki’s The Venture Capital Aptitude Test (VCAT)

In previous editions newsletter we discuss about How VC Firms Calculate the Average Check Size For Startups, How VC calculate the Target Ownership Stake In A Startup & How does VC fund cycle works? If you haven’t read that I highly recommend to spend some time to read.

In today’s writeup, I’ll share Guy Kawasaki’s The Venture Capital Aptitude Test (VCAT) to decide whether they are right for the venture capital business.

Guy Kawasaki was an early employee at Apple and later served as an Apple Fellow. In 1997, he co-founded the VC firm Garage Technology Ventures and served as managing director for a long period of time.

While working with VC firms, he received daily emails from aspiring VCs that typically read something like:

Kawasaki Shared -

“They see a wonderful job: going to cocktail parties and networking events, flying in private jets, and getting sucked up to by entrepreneurs while pulling down a base salary of $500,000/year plus a piece of the upside of selling a YouTube for $1.6 billion. Who wouldn’t want such a job? (Frankly, I would too.)

First, a rare moment of Guy-Kawasaki humility: I am by no means “proven” as a venture capitalist. I’ve been in this game for about ten years, but I don’t have the mega-hit that “makes” a fund. Thus, I may not be a source of good advice about getting into this business, but when has the lack of knowledge stopped a blogger?

Regardless, here’s my advice to all the Biffs, Sebastians, Brooks, and Tiffanys who want to be kingmakers:

“Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first.”

My theory is that when you’re young, you should work eighty hours a week to create a product or service that changes the world. You should not sit in board meetings listening to an entrepreneur explaining why she missed her numbers while you read email on a Blackberry and intermittently spew forth gems like, “You should partner with MySpace; I can also introduce you to a few of the losers in our portfolio.”

Furthermore, entrepreneurs should view any young person who opted for venture capital over “real world” experience with contempt. Why would you want advice from someone whose background consists of working in a college bookstore or cranking spreadsheets at an investment bank? Financial models are almost totally irrelevant because there’s no financial wizardry involved in making a good product and selling the heck out of it.

Here’s the Venture Capital Aptitude Test (VCAT) to help people decide whether they are right for the venture capital business.

Part I: Work Background

What is your background?

• Engineering (add 5 points)

• Sales (add 5 points)

• Management consulting (subtract 5 points)

• Investment banking (subtract 5 points)

• Accounting (subtract 5 points)

• MBA (subtract 5 points)

The ideal venture capitalist has an engineering or a sales background. Engineering is useful because it helps you understand the technology that you’re investing in—for example, is the entrepreneur trying to defy the laws of physics? Sales is useful because every entrepreneur has to introduce a product and sell it. For the third time in this blog, let me say, “Sales fixes everything.”

The three worst backgrounds for a venture capitalist are management consulting, investment banking, and accounting. Management consulting is bad because it leads you to believe that implementation is easy and insights are hard when the opposite is true in startups. Investment banking is bad because it leads you to believe that everything can be reduced to cells on a spreadsheet and that companies should be built for Wall Street, not customers. Moreover, investment bankers are oriented towards doing deals, not building companies. Accounting is bad because it leads you to believe that history not only repeats itself, it predicts the future.

Finally, there is the issue of the pertinence of an MBA to venture capital. The upside is that such a degree can provide additional tools and knowledge (such as calculating that 25% of $1.6 billion is $400 million) to help you make investment decisions and to assist entrepreneurs. The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested. All told, the downside of an MBA outweighs the upside.

Part II: First-Hand Experiences

You may have been in the right places, but you also need the right experiences in those places. Specifically, have you gone through these?

• Been kicked in the groin by a major, long-lasting economic downturn, so that you know how powerless you are. (add 1 point)

• Worked at a successful startup, so that you can speak first-hand about the ecstasy of entrepreneurship. (add 1 point)

• Worked at a failed startup, so that you understand three things: first, how hard it is to achieve success; second, that the world doesn’t owe you a thing; and third, what it’s like to be fired or laid off. (add 3 points)

• Worked at a public company, so that you know what the end goal looks like, warts and all. (add 1 point)

• Held a CEO position, so that you have this fantasy experience out of your system and will not try to run the startup from a board position. (add 2 points)

• Been an angel investor with your own money, so that you understand the fiduciary responsibility of investing other people’s money. (add 2 points)

Part III: Necessary Knowledge

Finally, can you answer these questions for entrepreneurs? Because this is the kind of advice that entrepreneurs need. (Don’t worry: many current venture capitalists would fail this part.)

• How do I introduce a product with no budget? (add 2 points)

• How do I determine whether there’s really a market demand for my product? (add 1 point)

• What do I do if customers hate our first product? (add 1 point)

• How do I get Walt Mossberg to return my call? (add 2 points)

• How do I get to the folks who run Demo? (add 1 point)

• How do I get a plug in TechCrunch? (add 1 point)

• How do I get the folks at Fox Interactive to return my call? (add 1 point)

• How do I dominate a segment when there are five other companies doing essentially the same thing? (add 2 points)

• How much time, energy, and money should I spend on patent protection? (add 1 point)

• We bet on the wrong architecture for our product; what do I do now? (add 2 points)

• What kind of people should I hire: young, old, unproven, proven, cheap, expensive, local, remote? (add 1 point)

• How do I get them to leave their current jobs without throwing a lot of money at them? (add 2 points)

• How do I tell my best friend that he can’t be chief technical officer just because he was a cofounder? (add 2 points)

• How do I get to the buyer at BestBuy to return my call? (add 1 point)

• How do I handle a customer who wants to send back his purchase for a full refund? (add 1 point)

• How do I fire people? (add 2 points)

• How do I lay people off? (add 2 points)

Results

Here's how to assess your readiness to become a venture capitalist:

• 40 or more points: Contact major investors and tell them you're raising a new fund.

• 35 to 39 points: Reach out to top VC firms and let them know you're available.

• 25 to 34 points: Send your resume to many venture capitalists and hope for the best.

• 24 points or less: Keep working to improve your score and continue flying on budget airlines.

Here’s the bottom line: You should become a venture capitalist after you’ve had the shiitake kicked out of you. This will yield at least two positive results: First, you’ll stand out from the full-of-shiitake artists who entered the business when they were young. Second, you’ll really be able to help your portfolio companies—which is what venture capital should be all about.

Instead of focusing on point systems, I suggest understanding what skills and experience you need to become a VC. Don't rush. Learn and keep challenging yourself. My consistent advice is to work in a startup before considering venture capital.

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TODAY’S TIPS FROM VC PROFESSIONAL

“Identify job openings ahead of time” - VC Partner

An advice from VC Partner - “ Identify job openings ahead of time”. It’s seems simple but most powerful. Most Aspiring VC missed to get their dream job due to missing job opportunity at right time. So, how to find VC Job opportunities ahead of time. Here are few ways -

VC Partner shared -

“It is no secret that there are only a few junior VC jobs out there. I estimate ~100 non-partner VC roles across the main funds in Western Europe, but since most of these investors seem to enjoy their job, the turnover is low and as a result new openings are particularly rare.

What that means for aspiring investors is that one needs to be following the job openings proactively over a period of time and react as soon as something opens up versus just looking around for openings when trying to make a move.

It also means that most vacancies for Associate roles don’t make it to a public posting or job board as they tend to get filled quickly with an already strong candidate pipeline many funds have via their network and via specialized recruiters.

But just emailing every fund asking whether they are currently looking for someone is probably also a bad idea; the best time to reach out to VCs is when they are likely looking for someone new, typically when someone junior on the investment team is on the way out to a new company.

VCs also sometimes increase their team when they have just raised a new, larger than before fund, but more often then not it’s too late when you can read about it on TechCrunch or our newsletter Venture Daily Digest.

Overall, it is probably worth mentioning that cold emails to the talent manager of the VC or members of the investment team have a lower hitrate, even when the fund is likely to be looking for someone new. Just like when entrepreneurs want to reach out to VCs for fundraising, the most effective way of getting attention is via an introduction through someone they already know (LinkedIn works well to find mutual connections.”

We have simple solution for you , we have build our slack community - VC Crafter, where we are daily sharing updates on new fund launch, VC job opportunities - internships / full time role, curated content, daily discussion on other topics.

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VC JOB OPPORTUNITIES

20+ VC Job Opportunities - Internship to Full Time Job Roles

• Manager - Okta Venture | USA - Apply Here

• Senior Venture Analyst - Franklin Venture | USA  - Apply Here

• Operations Associate - Techstar| USA - Apply Here

• Research Analyst - Interplace | Remote - Apply Here

• Venture Capital Associate - Flyover capital | USA - Apply Here

• Visiting Analyst - Kopa Venture | UK - Apply Here

• Internship Program - Illumen Capital | USA - Apply Here

• Investor - Tribeca Venture  Partner | USA - Apply Here

• Principal - Clocktower technology | USA - Apply Here

• Principal - Woven Capital | Japan - Apply Here

• Senior Manager - Visa Venture | USA - Apply Here

• Business Development Associate - GrowthCulture Ventures | India - Apply Here

• Principal, Investor Relations - Red cell partner | USA - Apply Here

• Visiting Marketing Analyst - Leonax Capital Partner | Germany - Apply Here

• Marketing & Communication Internship - Velocity Venture | UK - Apply Here

• Finance and Accounting Associate - Energize Capital | USA - Apply Here

• Analyst - Roadrunner Venture Studio | USA - Apply Here

• Venture Capital Intern - Maki VC | Finland - Apply Here

• Deal Sourcing Analyst - CENSIE Capital Partners | India - Apply Here

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DON’T FORGET

How Can a Software Developer Break Into VC? - Read the Journey.

Check out SWE2VC article’s to get updates on how can someone from SWE break into VC.

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VC CRAFTER’S PICKS

Weekend’s Must Read Articles On VC, Startups & AI

• A comparison of Big Tech, Startup, and VC Interviews.

• Paul Graham's Views on Competitor Analysis and a Framework for Performing It.

• How to Create A Value Proposition: A Four-Step Framework

• Deconstructing VCs’ Decision Making Frameworks

• What Investors Look for in Your Startup's Financial Model During Fundraising? - With Excel Sheet Template.

• A Total Addressable Market (TAM) Masterclass by lightspeed

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