Fred Wilson is a very well known VC and blogger. A few weeks ago he started a blog series called MBA Mondays, during which he explains a topic he learned in business school- and does so in a simple way that allows anyone to quickly catch-on. It’s a great series (I actually use it to supplement the MBA Finance class I’m currently taking!) and he’s covered some important subjects. Links to his first three Monday posts below:
- Net Present Value (NPV): A way of evaluating future money (say, future money you earn) according to the value that future money has now. So if someone said “sell me the next 10 years of your salary,” what would that money be worth now? It’s linked to the second topic.
- Time Value of Money: Fred admits he should have blogged about this before NPV, but better late then never. As he puts it, time value of money is the idea that “money today is generally worth more than money tomorrow.” Determining that time value of money allows the determination of the NPV.
- Compounding Interest: a form of interest that (simply put), adds the interest being earned to the principal, so that it compounds as it earns. He explains all this much better….
It’s a very cool series- check it out every Monday and enjoy!
So this piece of advice is one specifically from the venture capitalists I spoke with and it’s pretty straightforward:
DON’T GO WORK FOR A VENTURE CAPITAL FIRM RIGHT OUT OF SCHOOL.
Sounds kinda harsh – but remember, this isn’t my advice, it’s advice from VCs. Every single GP or MD I spoke with said this- some kindly, others more bluntly, but the same points. The first reason isn’t a philosophical one, but several of the others are:
- There are no entry-level jobs in VC right now. I participated in a three-day “VC Bootcamp” that Darden put on over winter break, where a group of Darden students met with Virginia and D.C. venture capitalists, entrepreneurs, and angels (huge thanks to Cooley Godward for office space and John May and Tim Meyers for setting this up with the EVC Darden Club and the Batten Institute- amazing experience). A lot of VCs talked about trouble with investment exits right now, and how the pipeline they have that is doing well are sucking up their cash, leaving them without money to make a lot of new investments. That’s compounded by the fact that they don’t want to cut loose companies that are doing well, but IPOs aren’t an option and M&A isn’t blowing up either. So they’re not hiring- they’re keeping expenses. Continue reading