“Join the Old Boys Network”
I received an email with a link to a great recent article about the VC industry with a study showing which Universities VC’s have attended and, not surprisingly, more than one out of every three has attended one of the top 5 schools on the list. According to the report in Red Herring, “42 percent of VC investors went to Harvard (12%), Stanford (9%), University of Pennsylvania, Duke, or MIT.” These numbers, while still disproportionately high, are actually lower than I have seen in other reports. I believe this study looked at VC’s nationwide and I wonder how the percentages would change if one were to look at exclusively Silicon Valley VC’s, or just top tier VC’s. I would surmise that the portion from HBS and Stanford GSB would increase drastically (although I have no raw data at this point to back that up).
This study apparently looked at all roles in the VC industry including partners, analysts, principals etc. The study also has interesting information on the “road to becoming a VC.” It states, “Prior to entering the venture capital business, 22 percent were either C-level entrepreneurs or startup employees; 20 percent worked at a larger or middle-market company; 20 percent worked at a different venture capital firm, and 19 percent worked at a law firm, consulting firm or investment bank.”
A few other notable stats:
- 88% of the VC’s were white
- 86% were male
So the good news is if you attended one of those schools and are a white male, you have a good chance of getting into the VC world. The bad news is obvious. VC is too much of the “Old Boys Network.” I do think that it is changing a bit. They do show statistics that the industry is becoming more diverse, but in general, I think there is a long way to go. In defense of the industry, it is one of the most popular professions in the industry and it would probably take an incredible amount of time to really sift through every person who wants to get in. Further, some of the best VC’s are identified by their entrepreneurial success and thus are “tapped by VC’s” rather than seeking out the position so it might be a bit of a random fact that they all have come from similar schools.
How can we identify who the next great VC’s will be? Right now, the great VC’s pick and choose and through their networks figure it out, but can there be other ways as well?