Archive for 2007

Why do later-stage VC firms have more use for junior hires than do early-stage VC firms?

Thank you again to all of the people who contributed comments to my query about junior hires in early-stage versus later-stage firms. As a whole, the comments highlighted most of the major differences between those firms; in this post, I’ll summarize them and extend them to career questions.

Breaking down the factors by the three major stages of the VC-investment process, we see important differences across all three stages: deal flow, deal making, and post-deal support for portfolio companies.

1. Deal flow — Amir

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In my first “Upside-down VCs” post, I asked for input on “upside-down” org structures in VC. Thank you to Jeff Barson and to two anonymous commenters (one of whom provided an excerpt from the “Understand the Math” part of this post from Seth Levine) for contributing their thoughts. Their comments are excellent starting points for the next stage of this discussion.

Jeff and the quote from Seth highlight VCs’ economic disincentives to hire junior people: that GPs pay their junior hires out of their “overhead” or management fees, and thus may make more careful hiring decisions. I absolutely …

“Does it matter how my VC structures his own firm internally? Why should I care whether he’s doing all the work or whether he’s delegating it to junior staff?”

When you see the picture below, what’s your first thought?

“Org chart,” right? The above “pyramidal” organization structure – in which the senior people at the top of the organization have a larger number of junior people working for them at progressive levels downward in the organization – is so pervasive that “pyramidal” and “organization chart” have become almost synonymous. In the typical organization, rather than doing all of the work …