VC career path...(?)

by Sagi Rubin

A key question that occupies young Israeli VCs (associates / principles) is - What is the VC progression path, and - Can I become a partner?

A get-together I attended this week tried to address this question. It was organized by the YVCF (Israeli Young Venture Capital Forum), and hosted a panel of VC partners who shared their thoughts. I'm not sure I came out with any conclusion, but here are some thoughts -

On the one hand, there are some reasons for (youthful) optimism...

1. Smart organizations (as in many industries) aim to develop talent in house. This helps them predict the likelihood of the individual's success in the future position. It also helps them hire the best, and retain them. And it helps develop organization professionalism, expertise, and industry knowledge (which accumulates over many years).
2. Externally hired partners are Not necessarily more successful.  A study that was quoted from one of the international VC funds indicated that 90% of their externally hired partners were not successful. Also, when looking at the backgrounds of the Forbes Midas list its noticeable that not many were CEOs in prior life. (there are many reasons for this, including cultural and organization issues, the different skills required, etc.)
3. It seems that the LPs care about firm continuity. They look at the young generation to predict the future, and understand how the team will develop.

Indeed, the mood (and consensus) in the panel was very optimistic.

But could it be that this is because the panelists were addressing an audience comprised of young VCs, to whom they try to prove a career path actually exists? Or that they have already "made it" through the path to partnership (albeit in a different "era" in Israeli VC), so have a positive impression? A few comments were quite sobering:

1. There is limited room for new VC partners in the maturing Israeli VC industry. The amount of funds will not increase significantly from its current state. It currently accommodates about 50-60 partners (taking into account around $50m under management per partner). Almost all of them are young. and here to stay...
2. There are not too many examples of successful Associate to Partner tracks in Israel (although one fund I'm personally proud of does boast an impressive track record in this area ;)
3. Senior management experience is highly valued. Hiring externally can bring new deal flow, industry knowledge, and a strong brand name

As I left the event, I realized there are several questions that were not answered (and I'm actually not sure all of them can be answered):

1. What makes a great "deal maker", and is there any correlation to enable measuring the success of an Associate / Principle?
2. What activities should we (as associates, and later on as principles) focus on to make the most impact?
3. How valuable is VC experience for those considering a move back into the "real" world?

Hopefully I still have plenty of time ahead of me to think about these issues:) but I'd love to hear your thoughts and insights in the meanwhile...