#BreakIntoVC: How to Break Into Venture Capital And Think Like an Investor Whether You're a Student, Entrepreneur or Working Professional (Venture Capital Guidebook Book 1)

First, the stage is really important. If we’re looking early stage, finance is not necessarily a relevant background. Having more technical experience at an early stage is definitely more advantageous although less necessary because what you’re likely doing is staying up to date on what’s new and relevant in a given space.

The income statement is also referred to as the profit and loss (P&L) statement. The whole point of this statement is to understand the profitability of a company in a given period (usually a year or a quarter of a year).

How to Pitch a Company In order to pitch a company, you need to be aware of their level of funding, key hires, material events and partners, what you admire about the company and your suggestions for management.

A study by Bessemer Venture Partners notes that an acceptable annual customer churn rate is anything below 7 percent, which comes out to about a .58 percent monthly churn.15

As in our tree startup example, venture debt is a fairly common tool that allows a company to meet sales demand without giving away equity. Companies may also consider venture debt after they have raised a round and need a little more cash to accelerate growth.

Customer lifetime value (CLV) represents the projected revenue that a customer will bring for a company during their lifetime as a customer. Since customer acquisition and marketing can be expensive, metrics like CLV help determine just how much a company can spend to acquire a customer beforehand.

Therefore, pre-money valuation is the value of a company before that latest round of capital has been invested. This is typically the value of the idea, opportunity, the management team and perhaps any patents or intellectual property that comes with the founders.

The balance sheet helps an analyst or banker determine whether or not a company is worthy of additional credit or loans. As discussed in the venture debt chapter, a VC may look into an early stage company’s balance sheet to determine how much debt they have.

I also knew I wanted to get exposure to a lot of different industries so instead of doing a startup and diving into one specific vertical, I wanted a more generalist feel. That’s ultimately what led me to VC: the fact that I’d really be able to touch a bunch of different industries and really see innovation throughout all the different ecosystems.