Boston’s venture capitalists search area universities for the next emerging technology or start-up company, hiring young scientists they find there.
David Danielson isn’t set to graduate with his PhD from MIT until next month, but he’s already made plans for his next career move: to work as an associate at Cambridge-based venture-capital company General Catalyst Partners.
Passionate about clean energy, Danielson founded the MIT Energy Club in 2004 and helped organize the annual MIT Energy Conference. He made connections with students and clubs at the MIT Sloan School of Management and with industry and venture-capital people. “I was looking for a community that didn’t exist, so I created it and learned the basic idea of founding something,” says Danielson.
That kind of initiative and networking helped Danielson secure his new job and are key ingredients for a career in venture capital, where new ideas are found and funded through networks of researchers, financiers, and businesspeople. The Boston area is home to several venture-capital firms, which frequently look to hire young science PhDs. Science graduates are counted on to scout and evaluate new technology companies emerging from university labs. But getting such a position often requires the right contacts or experience with a start-up company or a laboratory known for spinning them off.
Day to day, venture capitalists engage in four major tasks:
– Creating or looking for investment opportunities;
– Developing investment opportunities to the point where an investment is made;
– Helping a portfolio company recruit staff, raise funds, and develop general business strategies;
– Raising funds for the venture-capital company to invest.
Newer employees typically engage in all but the last activity.
While venture capitalists go to scientific conferences and visit researchers to keep up on cutting-edge science and technology, they aren’t as focused as a scientist in the lab. “I won’t get as deep as I would have in an academic career, but I’ll get broader in a lot of fields,” says Danielson.
Venture capitalists typically start at salaries that range from $100,000 to $120,000. That figure can rise dramatically as a venture capitalist moves up the ladder from an analyst position to an associate and then a principal, partner, and, finally, managing partner. On top of that, venture capitalists can receive bonuses, a piece of the profits, founding stock in investment or portfolio companies, or other incentives.
Networking is key
While it helps to have a PhD in science or an MBA, experience at a start-up company or in a laboratory that spawns a lot of start-ups is a plus.
“The best way to get into the mix [of venture capital] is a recommendation by Bob Langer, George Whitesides, or someone who’s been involved in start-ups,” says Terry McGuire, cofounder and managing general partner of Waltham-based Polaris Venture Partners, citing the names of leading MIT and Harvard researchers known for spinning out venture-funded technology companies.
For example, Kevin Bitterman, a general partner at Polaris, is a Harvard Medical School graduate who did his PhD in the lab of biologist David Sinclair, who cofounded a Polaris-funded company, Sirtris Pharmaceuticals. Amir Nashat is a general partner at the same firm; he completed his PhD at MIT in Langer’s lab.
Those not working in such well-connected labs can still build their own networks and experience. Venture capitalists recommend participating in business plan competitions for start-ups such as the MIT $100K and the Harvard Biotech Club or joining university-based venture-capital or other clubs related to start-ups.
Young scientists can also get an internship or consult on a part-time basis for a venture-capital firm that needs a specialist to help evaluate the potential of a new technology. Danielson was a consultant to General Catalyst before he was hired.
Lux Capital Management in New York has two internships a year and hires an average of one intern per year as a venture capitalist, says Lux cofounder and managing partner Robert Paull.
Other firms, including Flagship Ventures in Cambridge, hire interns more quietly. “We have one summer intern every year, but we don’t publicly advertise it. We ask people if they know anyone who would work,” says David Berry, a principal at Flagship with an MD from Harvard Medical School and a PhD from MIT, where he worked in Langer’s lab. An introductory phone call from a CEO of a company or a professor known to Flagship opens doors, he adds.
Hone your golf swing
Working well with others is a trait that venture capitalists look for when interviewing. “We look at finding people with a history of leadership, especially relating to team dynamics and supporting other people to help make them successful. We’re not looking for lone wolves,” says McGuire of Polaris.
That is one of the main challenges for young scientists who aim to switch to the world of venture capital. “It’s a very different environment,” says Berry. “They aren’t focused on publishing papers or grants. Venture capitalists are more execution focused: how you form companies and how well they’ve done.”
Networking is a critical skill, not only in getting onto the venture-capital track but in being a venture capitalist and learning about new opportunities. “I have one piece of advice,” says Berry. “If you ever want to make partner in a venture firm, you need a good set of irons. There’s a lot of networking on the golf course.”
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