Earnest Sweat serves as an Investment Manager at a corporate venture capital group and is looking to pay it forward by answering all your VC whisperer questions and share best practices for entrepreneurs. Earnest has a combined ten years of experience in the real estate and technology industries. He currently focuses on the technical and business model due diligence of investment opportunities. Earnest gained portfolio management, venture deal analysis, and financial modeling expertise in stints as an investor-in-residence at Backstage Capital. He is an alum of Columbia University and the Kellogg School of Management. If you have any questions about VC or Entrepreneurship feel free to email info@welcometo7X.com and put “VC Mailbag” in the subject and Earnest will share whatever knowledge he has.
Over the last 15 months the most common question I’ve been asked through email, twitter, in person, and smoke signal has been “How did you break into VC?” Each time I’m asked this question it reminds me of two things: 1) how eager I was to find any nuggets of advice that I could utilize from individuals’ journeys into VC and 2) that I should really write my story down because each passing year, month, day, and minute it gets a little fuzzier on how I got to my current role at [Redacted] Ventures.
I’ve finally decided to write my story down so I can respond with a link when people ask me that broad question in an informational interview. Just kidding, I will still answer the question, but now I’ll have this post to fill in the gaps.
My Career Before VC (Before Aug ’13)
If the influx of superhero movies has been an indication of anything about the human psyche, it’s that people don’t really like origin stories. No one wants to hear about how Peter Parker lost his family or what Darth Vader was like as a pre-teen. People generally don’t want to use up the limited film of movies for this background — we yell “Get to the spider bite” or “Hurry up and choose the dark side.” I say this because you probably don’t care about where I was born, who I was born to, or what my high school and college experiences were like.
I’ll get right to the facts that provide the context for what shaped my job search into VC. In 2013, I finished business school and found myself headed west to San Francisco to start my “dream job” at Bridgespan, a leading nonprofit consulting firm. Prior to business school, I spent four years working in investment banking at BMO Capital Markets where I served as an equity research associate and focused on the exciting world of real estate investment trusts (or REITs). The final two years at BMO, I started to get more fascinated with the idea of starting my own venture and focused most of my free time on developing MERIT, Inc. (a long acronym, that doesn’t really matter now, for a startup non-profit which used for-profit technology to match students to their ideal mentor).
My interests over my last two years at BMO shifted from how to become a Wall Street tycoon to how can I create an organization from scratch that, wait for it, could change the world? So, I participated in Management Leadership for Tomorrow’s Pre-MBA program and set my sights on going to business school to become a more skilled and informed entrepreneur. I told myself that there was no way I would ever return to the world of REITs, but life has a funny way of making you look stupid on absolute statements such as that — more to come on that later.
The Turn Point to Go for VC (Feb ’14)
In January 2014, I had been living in San Francisco for about 6 months and working at the job I wrote about in my b-school essays (see writing it down does make things come to fruition, glad I read…I mean skimmed The Alchemist). However, my dream job quickly turned into a “meh” job where I found myself asking “Why did I take a pay cut?” and “Am I really enjoying this environment and/or work?” But I didn’t write those down in my list of future accomplishments or vision boards, so I found myself, a month later looking like Rastaman from New Jack City.
After a month of feeling lost, I remembered that I really enjoyed my internship during b-school as a venture capital associate. I thought to myself: Why couldn’t I just become a VC now? I’m living in the mecca of innovation and if there is a place where VC roles would be prevalent it is San Francisco and Silicon Valley. So, I decided to start my job search for a senior associate or principal role in VC.
Where to Start (Mar ’14)
At the time of my VC job search, I had no clue where to start. Looking back, I would suggest that any aspiring VC first search for secondary sources and resources available online. I later found out that there were many online accounts from VCs and former VCs on the resources they had used in the job search process. But for a guy that never reads the directions before installing electronics, I felt the best way to learn would be by conducting informational interviews and sending in applications.
My first strategy was to reach out to every person I knew from my hometown, educational background, and LinkedIn networks (I’m not the only one who knows sometimes your LinkedIn network may be a little different than those other networks). I reached out to anyone who would speak to me about venture capital and early-stage technology investing. I found that my conversations in these initial informational interviews were not that helpful because I honestly wasn’t prepared. So instead of getting real insights and customized direction from people who worked in the field, my conversations were limited to broad topics such as “How did you break into VC?” “Day to day activities,” and “General advice to an aspiring VC.” I’m always a proponent of best positioning people to succeed in any role. However, for my own job search, I hadn’t taken the necessary time to think about what I was looking for in a VC role (stage, vertical), which would have given people something tangible to comment on or help me achieve. I just came to the conversation with the position of “I want to be in VC!”
My second strategy was to apply for each and every VC role I could find. The problem I found, however, is that venture capital roles are not widely advertised. Candidates for most pre- and post-MBA VC roles are found through the VC firm’s network. Therefore, any roles that happened to be posted on LinkedIn, Indeed, or any other job listing welcomed me and thousands of other candidates eager to join the investor ranks. Nevertheless, somehow within my first three months of the job search, where I knew little to nothing about how the VC job process worked, I secured two in-person interviews.
Feedback Loop (Aug ’14)
Those early informational and job interviews were helpful — not in employment, but in something much more important (at least that is what I tell myself now) constructive feedback. The consensus was that I was not ready for a role in venture capital. Contacts that I had made through the informational interviews felt that I lacked work experience in technology, and more specifically high-tech startups, that would be a key indicator of value as a junior VC. I left many of those conversations with recommendations on what my next role(s) could be to eventually earn a role as a senior VC.
From the interviews, I learned quickly that the VC process was not like the investment banking and consulting interviews that I conducted in my previous careers. Venture capital interviews are unstructured, in many ways like the actual role, and are more of a free-flowing conversation. In my early interviews, I realized I had waited for a clear question or case study, while the VC interviewing me waited for me to share my point of view on a particular market to see if I grasped the role and had the network and/or industry expertise to succeed at the role on day 1. As much as the role of junior VC is an apprenticeship, firms are generally very lean in personnel and resources so they search for post-MBA candidates that can really contribute to the success of the fund. They are looking for an individual who has some experience or expertise that can fill a gap in the current team (e.g., the firm is interested in investing in blockchain and therefore searching for a candidate that has worked in the blockchain industry). However, I was under the perception that venture capital firms were searching for smart generalists (like consulting firms and investment banks) that they could to train to be VCs. I realized now that this was incorrect, in my experience, VC firms are not going to cut another slice in their “overhead pie” for someone who needs to be trained. Many times, VC firms are not deciding between candidates, but rather whether they will hire anyone at all.
I also found that the interview process for VC is generally not as structured as the investment banking process, which has dates set for first and final rounds. The VC interview process is more ad-hoc, given that the key contact usually has a full-time job on top of organizing the interview process. On several occasions, I found myself waiting by my cell phone and constantly checking my email, like I was waiting to be asked on a second date as a teenager. My advice is to show consistent interest without becoming the desperate date candidate and to acknowledge if you have been ghosted — and move on (yes, I was ghosted a few times by firms).
A Money Grab (Nov ’14)
I realized early in my search that I couldn’t solely focus on my fleeting goal of becoming a venture capitalist, so after hearing from many VCs and growth-stage startups that I wasn’t the right fit, I started applying for roles in finance that had appreciated my skill set before. Eight months after I started my job search, I found myself with an offer from a very large bank in the USA. However, this role was a little different than my Wall Street experience in the past because it was internally focused for an organization that mirrors the size of the federal government.
Needless to say, I wasn’t too excited about working for the global risk department as a project manager. I can’t tell you how I got the offer, but I will tell you it gave me experience in negotiating my contract. I had a keen feeling that this would not be a great fit so I made sure that I got a higher compensation for it. Unlike my other work experience, I walked in on my first day and knew it was the wrong fit. My manager was based in New York, while I was in San Francisco, and the overall group was extremely introverted. On my first day, I thought I could at least read articles on the internet, but I quickly found everything was blocked.
So why was this period of 15 months working at the bank so critical in my job search? Because it allowed me to earn income and compartmentalize my workday so that I could focus a few hours a day on my day job and leverage my afternoon hours to search for VC roles, meet with potential employers, and conduct general industry research. I was able to get a lot of work done outside of my job while maintaining the standard of work that my team expected.
Through this role, I was also able to invest in a career coach. I received one early in my search as part of my transition from Bridgespan, but I admittedly wasn’t really open to it mentally. This time, I had a “north star” of a career objective and financial resources to pay for a quality career coach. I worked with my career coach for about six months and she really helped me learn how to frame my career aspirations, acknowledge how my previous skill building could contribute to those aspirations, and identify the skills and roles that could bridge the gaps between the two.
How to Hack My Experience (Nov ’15)
During the design research phase of my career development and through reading any and every article about VC, I was able to finally discover what VC firms and entrepreneurs were looking for in new VC hires. They are looking for individuals that have a strong network of other investors and talented founders as well as some type of superpower, which could be an operational expertise or industry expertise. This is when I realized my previous experience wasn’t antique trash, but was valuable and I could leverage it in the next chapter of my career. So, I became determined to use my experience to obtain the following:
- Gain experience helping early-stage founders
- Solidify and display my “superpower” or expertise to the general VC community
- Get experience assessing startups and tech markets
- Grow my network of investors and founders and reputation as a contributor to each community
First Big Breaks (Jan ’16)
After I determined what experience I needed, I began to apply to part-time or contract opportunities in congruence with my continued search for full-time VC roles. My first real opportunity was as a startup consultant for the New-Orleans based Camelback Ventures. I had met the founder through a friend a year prior and he reached out to me when they were looking for candidates for the role. I was really interested in the role because it would give me hands-on experience with early-stage founders who were looking to leverage technology to solve inefficiencies in the world of education.
I was brought on to assist the four founders, given my experience as both an edtech founder and a nonprofit consultant. I learned so much working with them on product market fit, sales pipeline strategy, the fundraising process, and hiring strategies. Camelback Ventures gave me that opportunity to expand my startup experience outside of MERIT Inc. Once I had experience working with Camelback Ventures, I was able to pitch to other accelerators that operated in areas outside of education, such as real estate and fintech, for paid and unpaid opportunities working with early-stage founders.
Working with early-stage founders, especially first-time founders, gave me a glimpse into all the problems that entrepreneurs face in the early days of their venture. Instead of holding those common learnings to myself, I decided to share this content with the general masses of entrepreneurs. I had read many times from VCs the importance of blogging to establish a brand as an investor. But, I initially assumed the activity was a lost cause given that there was so much noise on the internet. But, my perspective was changed after reading from an established VC that an aspiring VC should not view their blog as a popularity contest (i.e., your views and readership numbers don’t matter), but should see it as an extension of his or her resume. Later in my job search process, I received compliments from those that interviewed me on my blog, many had read some of my content to see if I had a point of view.
Initially, I started micro-blogging by finding articles in my verticals of interest and retweeting them with a short comment. As I gained some traction, I began writing on Medium almost every week on concepts such as fundraising advice for first-time founders and areas I would make early-stage tech investments. I’ll admit I wasn’t able to see immediate impact on my job search from my blog posts and many times it felt like I was screaming into an empty room, but it was slowly solidifying me as an “expert” in the world of fintech, edtech, and real estate tech. I decided on those verticals because I had finance experience in investment banking, real estate experience as a REIT equity research associate, and education experience from Bridgespan and as a failed entrepreneur. Blogging also opened doors that I never would have dreamed of, such as the city of Amsterdam recognizing me as global tech blogger and flying me, all expenses paid, to cover their tech ecosystem.
Sharing my content through Medium and Twitter eventually caught the eye of Arlan, the managing partner of Backstage Capital. Backstage Capital is an amazing team of VCs that are focused on investing in talented startups that are led by founders from underrepresented demographics. She reached out to me in early 2016 through twitter and asked if I would be interested in chatting about Backstage. We had a short conversation where we discussed her vision and my career goals and she offered me a temporary role, which ended up lasting for over a year, as Backstage Capital’s first Investor in Residence.
This opportunity gave me clear insight on what the role of a venture capitalist entailed. I had the opportunity to do market deep-dives on companies we were conducting due diligence and I had the opportunity to source deals on behalf of Backstage Capital. While I was able to contribute to the diligence process of Backstage, I could never contribute enough to the organization prepared me for a full-time role in the industry. I was able to build analytical skills that were unique to venture capital as well as build a strong deal flow from a network of talented minority founders, something that is uncharacteristic of most traditional VC firms.
Once I was able to articulate my experience in advising early-stage founders, my expertise in legacy industries, and proprietary deal flow, I realized I still needed to grow my network of current VC investors. I came across John Gannon’s Going VC program. I had become an avid reader of John’s website, which tracked VC role openings and had a repository of VC blog posts and articles on how an aspiring VC could break into the industry.
I was a member of Going VC’s inaugural class and got more out of it than I anticipated. I originally wanted to grow my network of VCs so that I could get advice and techniques on how to increase my chances of being hired by a VC. During each fire-side chat, the VCs spoke of their areas of interest, how they found themselves in VC, and what they look for in candidates. This last point was helpful. From those discussions, I was able to get advice and feedback on my investment thesis documents that I used in my final round interviews to display my knowledge of the role and how I anticipated contributing on day one. They helped me design my materials and package my experience for VCs considering hiring me. Like most personal investments, the GoingVC doesn’t guarantee your success in gaining a role in VC, but if you leverage the network it should increase your chances. After each session, I reached out to the speaker and asked to connect over the phone or coffee. The follow-up conversations gave me the opportunity to share my focus and to give the VCs an idea of what types of roles I was looking for. Many of the GoingVC speakers are still in my network and have helped me decide on job offers and provided me with deal flow.
By working for Camelback Ventures and Backstage Capital, while also blogging my perspective and participating in GoingVC, I was able to fill gaps in my experience. I would not be in my current role if it were not for those three organizations.
Draft Day (Nov ’16)
In mid to late 2016, I was traveling a lot due to the contract work I was doing in various parts of the country with accelerators, while still interviewing with venture capital firms. I had done a better job of using “warm leads” from b-school and professional contacts to secure interviews with VC firms. Even though I was more prepared in my VC interviews this time around, given my teaser decks (which had a portion of my thesis) and in person materials (which had investment recommendations), I wasn’t convinced I was any closer to gaining employment in the VC field. Then, one day I flew back from a consulting engagement early to conduct two final round interviews and one first round interview. I was feeling great on my flight back to the Bay Area until I landed and immediately saw an email from the secretary of one of my final round interviews. I had a bad feeling about the interview given that we had set this interview about two weeks prior and I hadn’t heard back for the last 48 hours. The email informed me that the VC, unfortunately, wouldn’t be able to meet and had already filled the position. I was a little down, but reminded that nothing is ever set in stone and it motivated me to do my best for my first-round interview and other final round interview the next day.
I met with [Redacted] Ventures’ entire investment team and presented them with my thesis on the future of commercial real estate tech. I must of have done something right because I heard back a week later (Dec ’16) that I got the offer. From that point on, I circled back with contacts that I made over the past 2 years with questions I should ask the company and what things I should consider before going to a corporate VC. The relationships that I cultivated through my initial job search and the GoingVC program were extremely helpful in making me a shrewd applicant and potential employee of [Redacted Ventures].
After two additional conversations with the Managing Partner of [Redacted Ventures], where we discussed the investment process, the vision of the team, and their vision for my growing role, I felt like it would be the right next step in my career. It felt surreal to accept a role I had been chasing for so long. However, I acknowledge that I wouldn’t have been able to break into this role if it weren’t for me taking the time to gain work experience in the VC profession and the contributions of my personal and professional relationships.
Looking back at this novel I wrote, maybe “breaking into VC” isn’t a true characterization of my journey from non-profit consultant to corporate venture capitalist. Maybe, my experience was more like an Ocean’s movie. I didn’t recklessly break into the industry, but instead, I took my time, organized a team capable of helping me secure the “one big job,” and diligently waited for the right time and place to conduct my heist and end up with my sought-after role.
Or I just got lucky.