Meeting with Alex Sloan, Principal, Expansion Capital Partners

I attended an informational Q&A session with Alex Sloan ('98 Johnson School, Cornell University) of Expansion Capital. He is a member of the investment committee and is involved with sourcing, closing and monitoring the firm’s Clean Technology venture investments. Prior to joining Expansion, Alex co-founded and was a partner at Blackwolf Partners, an early stage Cleantech venture capital firm.

Alex talked about the VC industry, in general, and CleanTech VC industry, in particular. Moreover, he spoke about the opportunities in VC industry for fresh MBA graduates and how to enter this industry. Some of his thoughts:

-- Get smart on something
VCs spend 10% of their time interacting with board members, 40% managing hiring issues in their portfolio companies, and rest interacting with the management to manage P&L, devise strategies, monitor sales and marketing efforts. In order to be effective in this industry you should first do these things and then teach some one how to do it (which is what VCs do as advisers to their portfolio companies). So, they look for candidates who have worked inside the industry and bring these skills to the table. If you don't have much experience, join a company, preferably big companies, with training programs, where you would be paid to learn how this industry works. No one will teach you how to analyze business later on.

-- It takes more than passion to get into the VC industry
Being passionate is great, but what value would you add to the team. Develop an understanding of the particular industry and business you are interested in. Take a particular field and narrow down your interest, for example, if you interested in tech, which area of tech? Web 2.0? then research firms that work in this industry. Who did IPO? Who is buying whom? Learn about the latest and future direction of the technologies employed.

-- If you are focused on a particular geographic area, say India:
Think about what would you bring to the VCs in India when you join them. Do you have connections in the US which they can readily use? Do you know latest technologies? Do you have a good understanding of what's happening in Indian industries, i.e. do you know local businesses? If not, take steps to develop them while you are here.

-- It's important to know how to get a product out
Operating experience is essential for a successful career in VC industry. If you have first-hand experience getting the product from idea to market, you would be better able to advise your portfolio companies when they have just 4 months of cash left!

-- Should I join consulting or banking or start-ups after the school?
It all depends on what you intend to do. If your goal is to enter VC field, it's better to work at a venture-backed startup with approx. $1M revenue and ~25 employees. Work as VP marketing, VP sales, or VP technology and gain operating experience. Company valuation is not a rocket science and is just 10% of the work VCs do. Understanding of P&L is important though. Also, advising startups is different from advising big established companies, with revenues greater than 10 million, which consultants particularly advise to.