With the very low interest rates over the past 10+ years, many very young MBAs with a background in Finance are working in the venture capital industry, not as analysts, but either as observers or even as board members.
While they are intelligent and may find their job and university education sexy on paper, I do question their lack of experience and expertise. (Most often, I wonder how many have ever worked “hands-on” in the particular industry and an early stage company environment.)
Questions and points to review.
Have your finance MBA VCs ever written and funded their own business plan successfully ?
70%+ of companies are not able to return their initial investment to their investors.
VCs today are often less knowledgeable about the industry and the technology than the entrepreneurs trying to run the company.
The more money venture capital teams manage, the less time they have to nurture and advise entrepreneurs. Yes, there actually is a need to get experienced CEOs and senior members on board, to support the investors with running their early stage company operations particular when it comes to sales and marketing.
Venture capitalists invest in good people and good ideas.. no, not really – more importantly they invest in good industries. High growth and accelertion within a particular industry vertical are most important to investors.
Indentifiying competent management is very difficult. Many young companies are run by techies today – often with zero knowledge of basic sales and marketing principles. ( A competent finance MBA on the board will not make a big difference, and much of their work will eventually be replaced by a smart algorithm and AI model)
(A special thank you to the team and Bob Zider in Menlo, Park)