Will an MBA Help You in the Venture Capital Industry?

October 19, 2015

Whether you just finished college or you are making a career transition, it’s inevitable that this question will come to mind. Maybe you read the biography pages of several of your favorite venture capitalists and noticed they had MBAs, so you decided you should get one too.

Just because MBAs have the same three letters in their acronym, they are not all created the same. MBA degrees are subject to the winner-takes-all effect that permeates many aspects of life. If you have an MBA from a top-ten school like Harvard or Stanford, your degree can help you get a job in venture capital. On the other hand, if you went to Middleton College in rural Oregon because you wanted “MBA” on your business card, this could actually work against you. Seth Levine from VC firms Mobius and Foundry said, “I know of several firms that simply won’t even consider associate candidates that haven’t attended a very short list of top schools. In fact, going to a non-top 10 business school could actually hurt your chances vs. not going at all.”

The Job Search Digest Private Equity/Venture Capital Compensation Report revealed that the premium for MBAs is not all that significant. MBAs usually earn more in base salary, but they get a smaller bonus. The net result is only a minor difference in compensation.

Enrolling in any academic program is a big decision and should not be taken lightly. Going to school is expensive. As any good businessperson knows, one should also consider the opportunity cost. Instead of spending all that time to get an MBA from Nowhere University, you could use your time and money to start a business. If that is not feasible, you could work for a start-up. According to Seth Levine, working for a start-up is extremely helpful in developing the experience you need to become a successful venture capitalist.

If you already have your MBA, one thing you can do is apply for the Kauffman Fellowship, a two-year program that will put your venture capital career on the fast track. The Fellowship’s website describes it in detail, “While working full-time at an investment organization (including venture, angel, accelerators, policy, corporate, and impact), Fellows receive a structured curriculum with an individual development plan, executive coaching, facilitated mentoring, and peer learning and networking – all with a focus on giving back and on one’s responsibility as an emerging leader in the industry.”

One of the most important parts of the Kauffman Fellowship is the networking. The more contacts you gain and the more you surround yourself with the right people, the better your chances are of achieving success in a highly competitive industry. Praveen Sahay, a Kauffman Fellow, remarked, “Ask any venture capitalist how they became one and most will say, ‘I was in the right place at the right time.’” In other words, they were lucky.

You can increase your odds of meeting the right people by putting yourself in new situations in productive environments. For example, Kevin Bitterman, a general partner of Polaris, completed his PhD in the laboratory of David Sinclair, who was the co-founder of a company funded by Polaris. Many opportunities are hidden and are only disclosed to a select few. Flagship Ventures offers a summer internship which is never advertised; instead, they ask people “if they know anyone who would work.”

Crunching the numbers is only part of the business. Success in the venture capital industry is reserved for people who know how to interact with others, hold their attention, and gain their trust.

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