Is an MBA worth it for breaking into VC?
Photo by Oliver Roos on Unsplash
No, not really.
This is one of the most frequent, unsolicited questions that I receive, which comes as no surprise. I used to be a consultant. Then I went to business school. And now I’m a VC. It’s a completely valid question and something that I probably asked a few dozen times when I was applying to schools.
It’s understandable to be a bit shocked by my negative response to an otherwise hopeful question. I don’t mean to be hypocritical (I just graduated), but I think it’s important to be transparent and set the stage for the topic. So my typical response is “No,” and then I’ll qualify with two quick questions:
Are you rich?
Why do you want an MBA?
The first one seems blunt (and it is), but it’s important. An MBA is an enormous investment in your future, and many don’t properly size the financial impact it will have on their lives. As an example, I borrowed $90,000 to attend business school. To repay that debt I’ll be paying $1,000 a month, every month, for ten years. That is a life-altering responsibility that even bankruptcy won’t alleviate. My debt affects almost every major decision my wife and I have to make, so you can begin to understand why I take this question extremely seriously. If, however, you’re well off, then this is a non-factor, then by all means you should go for it. But for most of us, this is a big decision that has long-term impacts, so do your homework before signing anything.
My second question requires a more thoughtful answer, but ultimately this is the deciding factor. People attend business school for many reasons, and most of which are valid. If you want to build an amazing network of successful and intelligent people, you will. If you want to get access to inspiring speakers and professors, you will. If you want to gain a generalist business education with a touch of specialization, you will. But if your primary driver in pursuing this path is to “open doors to venture funds,” then you really need to readjust your expectations. Two things are going against you:
While it’s true that many VCs did start their path via B-school, this is an example of survivorship bias. This handful of success stories is a fraction of all the students who fought for their shot. In my class of 410 students, five classmates got summer internships at funds, which was unheard of, according to Career Services. Of those five, only one got a full-time offer, and he didn’t end up taking it. There just aren’t enough roles to go around. It’s true I attended school in London, where the venture ecosystem is much smaller than the Bay Area. There are certainly more junior roles out west to be sure, but there’s also a higher number of candidates gunning for said roles.
The correlation between an MBA and a venture job is going down as business schools are no longer the preferred sourcing pool for funds. Tech innovation is happening at a rapidly increasing rate, and investors need to make decisions faster. As a result, most Partners need to surround themselves with juniors that have the technical chops to quickly sniff out bullshit (PhDs in data science, product managers, etc.). This is less true at the growth stage, where the abundance of data lends itself to a financial mind, but the trend is still there. Also, technical folks tend to be considered more credible by founders because many assume all MBAs are assholes. Not saying it’s right; just saying it’s something to overcome.
Only you can answer “why an MBA?”, but when you do, be honest with yourself. If your primary motivation for pursuing this degree is to gain access to the venture asset class, I argue that there are less expensive ways to do it. Consider this an ROI analysis. Could you get the attention of venture investors for less than $90K in tuition + living expenses + opportunity costs? With reasonable certainty, I can say you can. Venture is built for hyper-driven people that feel exhilarated at the prospect of finding a deal, winning that deal and then supporting the team as best they can. Instead start a meetup. Or a podcast. Or go to every pitch event in your city and share deals with funds. Or work at a startup. Or start a startup. Or work your ass off in your boring corporate job and start making angel investments. Or rob a bank and start your own fund.
Ask yourself “Why do I want to be in venture?” or “What do I want to get out of a role?” No two funds are the same so take the time to think identify a firm AND partner you could to work with. Start a process of building a relationship to see what makes them tick and capitalize on whatever that is. The best way to land a gig in VC isn’t knocking on doors to see who’s interested. Instead, you want to be outside the door, ready to pounce as the knob turns.
To clarify my position on all of this, I in no way regret my decision to get my MBA. It was a transformational experience and propelled my career on a new trajectory. I was able to leverage my degree for a role in venture. But I got insanely lucky. If John and Christian and the team at White Star didn’t take a chance on me, it’s likely I wouldn’t be where I am today. Fortunately they did, and as I’ve told them multiple times, I will forever be in their debt.
To be a great investor, you need to support the founders that you back. You should understand disruption theory and management principles and conflict mitigation and tax accounting and cost accounting and corporate finance and global economics and organization behavior and M&A strategy and WACC and a bunch of other stuff I’ve left out.
In my humble opinion, getting an MBA will teach you how to be a better investor, but it won’t help you get there.
Big thanks to Chrys Chrysanthou for the help with this post. For anyone considering a career in venture I’d recommend John Gannon’s blog, it’s one of the best treasure troves out there.