From VC Internship to VC Job: What It Takes To Break Into Venture Capital

Landing a Venture Capital job is notoriously challenging. There are few open positions in VC, and many are not advertised. Aspiring VCs struggle to get in the hiring process, prepare for interviews, and nail the case study. I talked to Felix Li, recently confirmed in a full-time position at the esteemed Luxemburg-based fund Mangrove Capital Partners, about his journey from a VC internship to a VC job. In our conversation, Felix addresses various topics crucial for anyone looking to break into Venture Capital. These include understanding the nuances of the recruiting process, what it’s like to work in Venture Capital, and, importantly, how to best prepare for a career in this challenging yet rewarding industry.

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Initial Steps: The VC Internship Hiring Process

While Venture Capital jobs are known for their scarcity and competitive nature, securing an internship in VC is an effective strategy for gaining industry experience and positioning oneself for future opportunities.

An internship provides invaluable insights into the workings of Venture Capital and allows individuals to build a professional network, understand investment strategies, and develop the analytical skills necessary for success in this field.

By immersing oneself in the VC environment through an internship, aspiring Venture Capitalists can significantly enhance their prospects and pave the way for a fruitful career in Venture Capital.

I started by asking Felix about his choice to go into VC and to describe the VC internship hiring process.

What drew you to a Venture Capital career?

Felix Li: “There are two things that fascinated me. First, being at the forefront of technology has always been a passion of mine. Additionally, during my undergraduate studies, I started a small startup. It wasn’t very successful, but I really loved the dynamic, the strategy setting, and the team dynamics. My background is essentially in finance. I always wanted to work in an industry that marries technology and finance. Venture Capital, to me, is the industry that encapsulates all of that.”

As I highlight in my article How Much Do Venture Capitalists Make?, VC is an excellent career choice if you like technology and entrepreneurship. Most people going in for the promise of making money end up disappointed, as overperforming firms are rare.

Can you describe how you heard about the VC internship and the hiring process?

Felix Li: “I found the job opening through a friend, so it was essentially word-of-mouth. The application required finding two or three companies that might be interesting for the VC firm to invest in and explaining the reasons why I would consider bringing them to the partnership. I wrote a paper, sent it in, and about two to three months later, I was invited for an interview. The process included a first round that was mainly about fit, directly with a partner, who is now my boss. He inquired about my motivation, fit, and background. The second round involved him clarifying some lingering questions he had.”

Hiring VC managers drill into candidates to understand how enthusiastic they are about a Venture Capital career and how fast they can hit the road running. VCs have little time to train recruits. The questioning part of the interview process aims to validate motivation and knowledge. Read my guide on 19 questions VC interviewers ask job candidates to prepare optimally.

Let’s talk about the startup analysis assignment. How did you select them?

Felix Li: “I looked for startups that aligned with Mangrove’s investment thesis, which I think is very important. Understanding their thesis and the investment stage they are interested in is key. I also examined the industries in which they have high conviction. Then, I conducted deep dives, looking at market dynamics and size, and industry trends. Through this process, I slowly started to notice a few startups that fit into Mangrove’s thesis. I tried to reach out to founders, which was tough at first, but you try to see if you can get on a call to understand some private information, like traction data and user data. Gathering this information is valuable.”

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“Most Founders, of course, did not reply. I think one of them did; we had a very brief conversation, but it still gave me unique insights about why he’s in this industry and some knowledge that wasn’t available in any report.”

How did you structure your startup memo for the application process?

Felix Li: “One key thing to remember is to be as precise and concise as possible. If you can condense everything into one page, you should do that. No one has the time or energy to read through a five-page report. Sometimes you think the more you write, the safer you are, but actually, it’s the opposite. If you can answer a very complicated question in one sentence, it means you really understand it. I think my first draft was three pages, but I condensed it into about a page and a half.”

Understanding what VCs look for in startups they consider for investment is a critical skill for junior resources, as they are typically tasked with sifting through considerable deal flow. Read the article The 3 Investment Criteria Venture Capitalists Use to Screen Deal Flow to familiarize yourself with the main startup evaluation criteria.

What were some unexpected or tough questions during the interview?

Felix Li: “One of the questions was about the startup I had started before. The partner asked me to pitch my startup to him in one minute and convince him why he should invest in it. That was really unexpected. In cases like that, they want to see if you can articulate a vision and an idea, and put very complex problems into one or two sentences.”

Among your diverse experiences, which was most significant for your application?

Felix Li: “I think my international background helped a lot. Venture Capital is about sourcing data and understanding information before others do. Having an international background means I can monitor different markets. For example, I am currently writing a blog on VC market analysis, in collaboration with a friend in China who works as a VC. We compare different markets. This kind of international exposure helps. Also, being at HEC Paris, a school known for its extensive network, helped a lot because you get a lot of deals through your networks.”

From VC Internship to VC Job: How To Stand Out As A VC Intern

Next, I turned to the tasks Felix was asked to perform as an intern. I also wanted to know how he succeeded in landing a full-time analyst position after the VC internship—a rare outcome!

What were the main tasks you were assigned during your VC internship?

Felix Li: “The main task was deal flow. I was responsible for sourcing a lot of deals. Once a startup was referred to us, I was the first one to analyze it. If I thought the opportunity was interesting for us, I’d discuss it with a partner. I also did a lot of work supporting our portfolio companies, especially with their business plans and market research. In Venture Capital, you have to learn and understand an industry in a very short amount of time and have an educated opinion about it. So, deal sourcing, market research, and some portfolio company support were the three main tasks.”

What did you find challenging about deal sourcing?

Felix Li: “Deal sourcing was the hardest because you are still new to the industry and haven’t developed your network yet. It takes time to develop and nurture a network so that people start sharing good deals with you. It takes a lot of time, but it’s also how you bring value to the firm. There’s a lot of pressure to perform as soon as possible.”

Top-tier VCs are great at building referral networks”, i.e., a web of relationships they leverage to gain access to investment opportunities, share deals, and gather insights about potential investments. This network typically includes other Venture Capitalists, Founders, Angel Investors, accelerators, industry experts, and professionals from related fields. These connections are invaluable for sourcing deals, conducting due diligence, and facilitating the exchange of knowledge and resources critical to the success of investments.

What is one thing you loved about your VC internship?

Felix Li: “It’s talking with founders. These are men and women who have devoted so much of their lives to one subject area. They are really experts in that area. You can learn so much from them in a very short time. I also admire how they think about businesses and all kinds of different variables. It’s the best way to learn about business in general.”

Was there anything about the job that was unexpected to you?

Felix Li: “I probably thought it was less intense than it is. Most people think VC is very chill, where you just sit there, read stuff, and think. But it’s a lot of hard work. It’s a day-in and day-out learning, absorbing, and hard work. Sometimes, after a day of absorbing so much information, it feels dizzy when you stand up.”

What do you think you did well that convinced Mangrove’s partners to take you on?

Felix Li: “Probably my willingness to dive deeper than others to really understand something as best as I can. One of the partners said it’s very easy to kill a deal but very hard to build a conviction to invest in one. Especially at an early stage, some ideas are crazy, or the pitch decks might not be well designed. It’s easy to say, ‘I don’t like it,’ and kill it. But it takes a lot of extra effort to see if there’s potential beyond that, to give them a bit more reasonable doubt, to see if we’re missing anything. I guess this is a key point.”

One common misconception about elite VCs is that they have a superior ability to find risks that nobody else sees. My experience and analysis suggest otherwise. Top-tier VCs find mitigants, i.e., reasons to find comfort in a potential risk. In my article dedicated to VC Investment Committees, I illustrated this point with real-life Investment Committee memos from Sequoia and Bessemer Ventures.

Felix’s Tips To Break Into Venture Capital

In this last portion of our interview, I asked Felix what he learned throughout his time in VC that others can leverage to break into the industry.

What advice would you give to people preparing for a career in VC?

Felix Li: “Show that you understand the ecosystem and already have a network and connection. And this is actually easier than most people think. Because there are so many VC events where you can meet VC professionals and a lot of founders. If you network with founders, you can already build deal flow and have a good understanding of different business models.”

How should candidates prepare for the case study part of the interview?

Felix Li: “For case studies, it’s important to have a guideline that you work through. A lot of applicants send a summary of the market or industry, without a framework. It’s important to understand the top metrics to look for in different business models. For example, for a B2C SaaS platform, questions on retention or cohort data are among the first you should think about. Knowing which metrics are most relevant for evaluating certain topics is very important because when you talk to founders, you don’t have hours; you have maybe 30 minutes. So, you need to know what you are looking for.”

Understanding unit economics in various industries is, indeed, a critical skill VCs have to learn early on. This article on unit economics in VC will help you build knowledge on this topic.

Would you advise VC applicants to start a blog about tech or VC?

Felix Li: “100 percent. I was a bit late on this. Right now, when we hire, one of the questions we ask is if the applicant has any blogs or publications we can look at online. You can immediately see someone’s thinking and mindset from their writing, how they look at a company. It’s sometimes more telling than a CV because a CV doesn’t tell you how someone thinks.”

What would you say to someone who thinks getting into VC is easy?

Felix Li: “If you are willing to put in the extra effort, like cold emailing people, building your network, showing up at events, and building connections, it’s probably possible. Because there’s not a very standard way to get into VC, luck does matter. But putting yourself in those kinds of events, starting your own blog, actually increases your chances quite a bit. Some boot camps boost your chances. It’s just hard work. Unfortunately, there’s no smart way or easy answer. It’s just hard work.”