Choosing Between Venture Capital and Startups

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A common question I get asked (typically by people who work in finance) is “Should I go work in VC or at a start-up?” Let’s look at the pros and cons. 

Dan Winter (Investment Director, Full Circle Venture Capital)

Similarities:

• Both require you to be strong at networking
• Both require a lot of self-development
• Both require taking initiative to learn new ways of doing things
• You will likely learn faster and more in both roles than you have elsewhere
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Venture Role (assuming investment role):

• Venture allows you to expand your knowledge horizontally and vertically, however you’re more likely to find that your skillset is very broad and high-level instead of focused and deep
• You will research and learn about many industries, technology types, business models and growth strategies
• You will have the opportunity to work with many exceptional founders and management executives at all levels and across all stages of growth
• Deal doing moves fast, harvesting value takes a lot of time.
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Startup Role (will vary depending on role taken):

• Depending on the stage of the company and the specific role taken on, it may allow you to focus in on deepening your skillset in a fast paced, innovative, and high-growth environment
• Could also offer you the opportunity to experience working across many functions if you join early enough when the company is short on resources
• You may be invited to participate in the company option pool which can return exceptionally well in a short period of time
• Start-ups in the early stage have a lot of highs and lows, failures, and successes.
• The longer you are with a start-up, the more likely you'll be required to become very specialised in your role/function
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Chris Quirk (Investment Manager, rampersand)

• In VC, you get to see a lot of startups quickly but you can only go so deep on each
• A startup gives your experience much more depth
• Working in a startup will give you a lot of skills for reviewing startups.
  

Tom Bass (Cofounder of Flirtey / Growth PM Atlassian)

Pro of going into VC - if you get carry you are more likely to see a good return for the years you put in vs joining a single startup. 

If you have the specialist skillsets that a VCs talent funnel prefers, do VC instead. Learn how the capital markets work, build a massive network of the best founders and get to peak inside many top startups and learn from their wins & mistakes. THEN go found your own company with ALL of those advantages that a typical founder lacks. 

You should also have a bit of money stashed up if your firm did well. That helps a lot.

Will Dennis (APAC Commercial Finance Director, Afterpay)

Take the time to reflect on what you want out of the experience. For example, someone who believes passionately in the purpose of a particular start-up may better enjoy spending 100% of their working hours intimately involved in achieving that mission. On the other hand, someone who likes networking with hundreds of founders and being in the flow of opportunities and ideas may better enjoy working at a VC.

Kanav Bharma (Business Operations, Dovetail)

The best way to know what feels right is to try - this is where seeking internships, or bootstrapping yourself into learning the skills that would be useful in a VC or start-up context can help build that understanding. On a zoomed out level, the VC space is great for people who are keen to have an impact across a group of portfolio companies, community and the startup ecosystem as a whole. Startup roles are great for people who are keen to embed themselves into an environment, and passionately work towards scaling the startup’s ambition. 

For anyone considering later stage VC (Series B onwards), a move from a corporate background may feel more natural. A lot of the focus at this stage is validating the market potential of companies which have passed product-market fit and are now looking to emerge into category leadership or disrupt dinosaur industries. 

For earlier staged focused VCs, the focus is more heavily indexed on the Founder journey and finding startups in spaces that are focused on solving pain points of customers which are either underserved, under-appreciated or misunderstood. This requires an incredible level of empathy, ability to connect to Founders and their vision, and ideally experience working with a team through the early milestones of a startup including finding product-market fit and revenue. Whilst by no means a prerequisite, I do think having experience in a startup prior to jumping into earlier staged focused VCs could be beneficial.  

What have we missed? Please hit 'Contribute to the Guide' to give your perspective and help others into their first role.