From the category archives:

Venture Capital Jobs

Previously, we reviewed the March 2016 event that brought together academics and practitioners to discuss the state of the European venture capital market. We continue that review here…

Reflecting a cautious approach to Europe, Magnus Goodlad, Chief of Staff to Lord Rothschild, believes there is ‘a sort of macro risk that people committing to European ventures are being asked to take’. Limited partners (LPs) are deterred by the lack of well-developed ecosystems such as the ones in Israel and the U.S. and also believe it is more difficult to attain “unicorn” level in Europe – a private company valued at US $1 billion or more.

Saul Klein, a well-known serial entrepreneur, is more optimistic. He thinks it’s important to invest through cycles. Europe has had bad years but since 2011, there have been many successes such as Skype, Element 14 (a community for engineers), Criteo (the ad outfit), and Spotify. He thinks the best years for European VC are ahead and that success will breed success.

Klein was part of the original executive team at Skype and co-founded Lovefilm, which is a type of U.K. Netflix. He also founded The Accelerator Group (TAG) in 1999, Seedcamp in 2007, and later became a partner at Index Ventures. Klein and his father, Robin, have recently raised £45 million and launched LocalGlobe, a new seed fund.

Byron Deeter of BVP is hopeful too, although expressing caveats, “…the breadth of exits is starting to increase but the depth doesn’t feel like it’s here yet…  when you look at scale of outcomes… the new word in the valley is decacorn… the multiples with ten billion dollar outcomes. It now takes a Facebook or a Baidu in China or an Uber in the private markets to rattle industries. Then entire collections of funds and hundreds or potentially thousands of entrepreneurs make life-changing economics off some of these companies. That’s the ripple effect that really creates an ecosystem and I think that’s one of the material things that’s still been lacking in Europe. Europe doesn’t yet have the scale to really send those kinds of shock waves around the world.”

Professor Axelson brushes off most of the complaints against European VC but admits that exit opportunities in Europe are decidedly less than in America. Europe’s entrepreneurs are just as willing to take risks as their American counterparts are. And as European VCs do more deals, their success rate is converging to the U.S. rate. Deal experience has proven to be a good predictor of success.

The point was made that about half of VC deals now have an element of venture debt in them. The pioneer in this field has been Silicon Valley Bank, which in 2004, obtained a charter to operate in Europe. It is very likely that, in the future, more European deals will incorporate venture debt

Since the discussion’s audience included students, the inevitable question was asked, “How do I break into venture capital?” Byron Deeter explained how he did it. “I started as the most junior professional doing cold calling and got exposure to the industry for a couple of years … then went out and started a business because I wanted to get that experience both as an entrepreneur, but also to understand both sides of the equation… but there’s no one answer. The more visible you are to people that you want to work with, the more likely you are to have all sorts of options.”

The consensus was that if you want to work in VC, you must have the entrepreneurial spirit. You must demonstrate your ability to overcome obstacles.

Don’t wait for an open door. If you want to work in VC, break the wall down to get in. As Felda Hardymon puts it, “anybody will talk to you if you come through the wall rather than the door”.

A podcast and video of the discussion is available here.

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Part One of a Two Part Series

It’s been almost six years now since Arif Naqvi’s Abraaj Group provided £4 million to fund the first Master’s program in private equity in the world. It was a bold endeavor. In September 2010, when the MSc Finance & Private Equity program was launched at the London School of Economics and Political Science (LSE), Naqvi’s alma mater, the world was still in the grips of the Great Recession.

In a recent discussion Professor Ulf Axelson, the inaugural Chair of that MSc program, who is also Director of the LSE’s Financial Markets Group, mused on the state of the venture capital industry in Europe with four leading practitioners. The event was chaired by Felda Hardymon, a senior partner at Bessemer Venture Partners (BVP), the venerable VC firm founded in 1911 who, in his opening remarks, reminded the audience, consisting of practitioners, academics and students, of VC’s momentousness.  “In the U.S., eleven percent of all private sector jobs are in venture-backed companies. That’s an astonishing number. What’s more astonishing is that twenty-one percent of U.S. GDP comes from venture-backed companies… So the only job creating machine in our economy that has been reliable over the last forty years is venture capital dollars… a thriving innovation economy financed by venture capitalists makes a difference.”  Notably, some of BVP’s top exits include LinkedIn, Skype, Yelp, Veritas and Staples.

Prof Axelson followed up on Mr. Hardymon’s preamble, observing that the spillover effects of innovative firms is truly enormous. Every dollar that an innovative firm captures in profits results in five dollars to other firms. Groundbreaking enterprises must naturally spend to sustain their operations. In addition, other firms imitate the leader by either getting into the same business or applying the knowledge to another line of business. And most amplifying of all, is the economic ecosystem that develops around innovative firms as they become bigger.

There are three levels to a successful VC industry, opined Prof Axelson. There is, firstly, a need for entrepreneurs with good ideas who dare to act on those ideas and ‘start companies and actually know how to grow those companies’. Secondly, there is a need for VCs with expertise in measuring risk; that is, VCs who can pick winners and who can, in addition, provide effective monitoring to ensure fledgling companies get the nurturing to develop. Thirdly, there must be exit opportunities, either through the capital markets or by a trade sale to a larger company.

At all three levels, the European VC industry has been indicted. The first charge is an old and imputed one. By singling out the spirit of enterprise exhibited by Northeastern Americans in the 19th century, Alexis de Tocqueville in his seminal On Democracy in America was suggesting Europe’s dearth thereof. The reproach persists today. It has been suggested that the entrepreneurial spirit is lacking in Europe, that Europeans are more risk-averse than Americans, that in Europe there is more stigma attached to failure and, therefore, less tolerance for it.

However, part of this perception may stem from the tendency of European entrepreneurs to hold on to their businesses. They are less likely to sell and start again. Therefore, the ‘serial entrepreneur’ as a class has not emerged in Europe as it has in the Silicon Valley. This community of serial, or experienced entrepreneurs, in America forms a valuable resource into which VCs can tap for expertise and contacts. Just as importantly, serial entrepreneurs become heroes, role models and mentors to others. And as expected, any community of successful people emanates an aura of elitism which attracts aspirants and causes the community to multiply.

The battery of allegations is rounded out by the claim that European VCs are staffed by banking and finance types who lack the entrepreneurial mindset and are therefore unable to assess either the risks or the entrepreneurs.

…to be continued…

A podcast and video of the discussion is available here.

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2014 is coming to an end.  With the year almost over, it seems fitting to review h ow private equity employment did through the year and what we can expect for the year ahead.

A Look Back at 2014 – Actual Employment

The following is a look at total private equity employment since 1990.  Overall, the soon-to-be-finished year was relatively good to employers and employees in the private equity field. Employment by firms classified as private equity added around 1,400 net new jobs this year, representing an increase of about 4 percent.  In hindsight, private equity industry employment is likely to have been the best year ever for total industry employment, having averaged a little over 36,000 for the entire year.

The industry is well on a recovery path after bottoming in May 2010 at around 33,000. In terms of trend, this year will mark the fourth year of upward momentum in employment growth for the industry.

The previous cycle, from October 2003 to August 2008, lasted almost 5 years.

Private Equity Employment (through2014) Sources: Econometric Studios, Moody’s, BLS

Looking Back at Year-Over-Year Growth

In terms of the year-over-year growth rate, 2014 looks even stronger.  The year 2014 started off with a bang, with year-over-year employment growth accelerating from 3 percent to 4 percent in July.  By contrast, the economy as a whole was only adding jobs at a 1.7 percent to 1.9 percent pace. The rate of growth decelerated a little bit in the (estimated) latter half of the year, going from 4 percent to 3.6 percent.  The economy as a whole is anticipated to have generated a year-over-year growth rate of about 1.9 percent.

The year-over-year growth rates for the current business cycle are generally good.  The industry appears to have avoided any potential “bubble” employment compared to previous peaks. In October 2006, private equity employment was expanding by over 5 percent. Interestingly, the previous two big private equity employment cycles were enormous by current standards.

In September 2000, private equity employment was expanding at a 10 percent year-over-year growth rate. In March 1994, private equity industry employment was speeding by at an 11 percent year-over-year growth rate.

In all, year-over-year private equity employment growth is somewhat subdued for private equity business cycles, although the industry is still adding jobs at twice the pace as the economy as a whole.

YY Private Equity Employment (through2014) Sources: Econometric Studios, Moody’s, BLS


Looking Forward to 2015

With the actual experience and year-over-year growth rates established, what can we expect in the coming year?

Well, if economic indicators are correct, 2015 is set to be a banner year. The first graph has the statistical ranges for the private equity employment forecast. Overall, statistics says a projected range of around plus 3,000 to minus 2,000 net new private equity jobs, with the mid-range of around 1,000.

What the statistical forecast doesn’t capture is the economic indicators. If economic indicators are correct, private equity employment may expand by 5 percent or 6 percent in 2015, meaning a total of 2,000 net new jobs.


Overall, in looking forward to 2015, the private equity industry appears poised for further expansion.  A baseline forecast is for the industry to see net new job creation of at least 2,000 new jobs in the coming year, bringing total industry employment to almost 39,000.  Employment in the industry at 39,000 would far surpass any previous year.

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Bleak Results in the Second Quarter for Life Sciences Investment

September 17, 2012

New investment activity in the life sciences venture capital segment continued to decline through the second quarter of 2012, PEHub’s Jonathan Marino reported in an August article. This continues a widespread trend seen in many other private equity investment sectors. With a plunge of 40 percent year-over-year investment levels based on a report from PricewaterhouseCoopers […]

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The 2 and 20 Private Equity Compensation Model

July 1, 2012

VC and private equity compensation is typically paid out using a 2 percent annual management fee on capital committed to the fund and 20 percent of the profits each time a portfolio company is sold. It is known as the 2 and 20 model. According to National Venture Capital Association, 2-and-20 has indeed stood the […]

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Sage Advice When Looking for a Venture Capital Job

March 20, 2012

It’s springtime, which also means it’s the time of year when hope springs eternal for many second-year B-school students searching for the keys to the world of venture capital. In the face of tumultuous times in venture capital, it remains a coveted career destination for graduates and aspirants of all ages posing the question, “How […]

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A Door Opener for Venture Capital Jobs

February 6, 2012

His advice was aimed at candidates looking for jobs at start-up companies. But it applies just the same if you are looking for a venture capital job. In a recent post for VentureBeat, Alex Taub writes that there’s a hidden goldmine for those looking for non-technical jobs such as business development, marketing and operations at […]

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Hot Spots for Venture Capital Jobs in 2012

January 23, 2012

Earlier this week, members of the Venture Capital Lunch Club met for their annual luncheon at a law firm in downtown New York City to make their predictions for what could be the hot areas for venture capital jobs and investment this year. Number one on the list is “Big Data”, which involves ramping up […]

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Venture Capital Jobs The Year in Review

January 9, 2012

What were the big stories for venture capital jobs in 2011? For some, 2011 was a year of recovery, with returns picking up as a result of a few successful IPOs. Some notable tech IPOs included LinkedIn, Groupon, Zynga, ZipCar, RenRen (China’s Facebook), Yandex (Russian search engine), to name a few. The activity boosted the […]

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Venture Capital Jobs to Grow in Russia?

December 26, 2011

The headlines out of Russia focus on the protests against corruption and the seemingly endless reign of Vladimir Putin as de-facto leader. However, the news has overshadowed Russia’s entry into the World Trade Organization, an event that has taken 18 years to come to fruition. In terms of stability and acceptance of Russia as a […]

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