For young, promising venture capitalists, the path to partner has suddenly become much steeper

• Tech investors face a tougher path to promotion amid a funding slowdown for startups.
• Fewer deals mean junior VCs struggle to build track records they need to get promoted.
• Firms now prioritize sourcing over financial modeling, adapting to a more competitive landscape.

It's a tough time to be a junior venture capitalist. With deal flow slowing to a trickle, there are fewer opportunities for them to show their mettle and establish a track record.

That means their path to a promotion at a venture firm is suddenly much steeper than it was just three years ago when capital was flowing more freely, and deals were getting done left and right. The situation has gotten so grim that some investors are looking to exit the industry altogether.

"The reality is there's some point in people's careers where your deal sheet is really all that matters," said Dan Miller, a partner at True Search who specializes in placing venture talent.

During the period of explosive growth for the tech industry, according to Abigail Johnson, chief operating officer and a partner at Sapphire Ventures, young investors came up to speed quickly. They squeezed in many cycles of digging through data rooms, building an investment case, and negotiating, all on a tight turnaround. They did not lack chances to prove themselves.

It was also a time of high churn as senior check-writers seized an opportunity to strike out on their own to raise new funds. This led the firms they left to mint new partners at a faster pace, said Michael Larsen, a partner at Cambridge Associates, where he advises institutions, foundations, and endowments on which funds to back.

However, the current funding slowdown for startups means tech investors are bringing in fewer deals for associates and principals to investigate and draft memos. This grunt work is often how newcomers establish their worth. As funding stalls, they're putting fewer points on the board.

Another rub is that firms have little ability to promote or add partners with their shrinking coffers. And it's causing firms to make cuts that would have once been unthinkable.

"It's not just that it's slower to build a track record," said Clara Brenner, a cofounder and managing partner of the Urban Innovation Fund, which provides seed capital to startups shaping the future of cities. "People are deploying funds over a longer period of time. The funds they're raising are smaller."

That means even those general partners who would like to promote staff may have their hands tied.

Let's make a deal

There's no one way to get promoted in venture capital. Each firm has its own loose set of benchmarks and taxonomy.

Larsen said he asks GPs in his due diligence how they define a partner.

"We hear a lot of talk about the ability to be a prime mover as a person who can win the confidence of a founder, who can navigate toward a successfully signed term sheet," he said.

The criteria becomes more qualitative than quantitative. "Not all of these things can be measured down to the second decimal," Larsen said.

Investors are typically evaluated across four key areas: sourcing opportunities, conducting thorough due diligence, winning deals by having founders choose their firm, and providing strong support through board work.

However, it should be noted that these areas are weighted differently depending on the stage of investing.

At the early stage, sourcing is everything. The investor's goal is to get in front of the person leaving Google or OpenAI to start something new before another investor does.

Amanda "Robby" Robson said it paid off to lean into sourcing when she first started her investing career. "I was full-on just trying to be a sourcing machine," said Robson, who invests in software infrastructure companies. Her hustle and ability to see the big picture led her to get promoted to partner at Cowboy Ventures just two years after she joined as a principal.

At the later stage, it becomes much more important to go deep in diligence as the check sizes get bigger and the stakes go higher. The universe of growth companies is known and can be downloaded on PitchBook, said Jill Chase, an artificial intelligence investor at CapitalG who got promoted to partner last year. It's up to her and her team of associates and vice presidents to get in front of the right founders and make an impression with the homework they've done.

The diligence continues long after the deal closes, Chase said. She relies on junior investors to research a founder's market and create reports, adding value that goes beyond the check.

Network your way to a promotion

Fundraising for venture firms has become increasingly competitive, with dollars concentrated into fewer legacy funds. Exits have dried up, and investors are keeping more cash on hand so as not to run through their reserves and be forced to raise funds in a downcycle.

However, firms will staff up in areas where there's demand for deals, Miller said. In a historic bitcoin bull run, he said, firms added crypto enthusiasts to their ranks. The lion's share of venture capital is now flowing into artificial intelligence companies, and limited partners are seeking exposure to the new gold rush.

Firms might be faster to hire or promote young investors who land deals in the desired category. "You'll not have trouble getting their attention," Miller said. "The challenge is how do you get that check into that great deal."

His advice is to get out there. Early-career investors can blog, host dinners, or be active on social media. "You can build a great social media presence that gets you in touch with founders," Miller said.

Johnson, who oversees Sapphire's operations, said having a strong network of other investors also creates a lot of value for her firm. "In venture, everyone talks to each other," she said. Her team appreciates when an associate can share deal flow and offer intel on how their peers are responding to industry trends or economic conditions, she added.

When Brenner and cofounder Julie Lein started a fund, the two put together a plan for what it would take for a person at every level to get promoted. Each role had a hard metric, such as the number of deals closed, and a soft metric.

Her associate Jenieri Cyrus hit all the right notes. He came to the firm three years ago from Northwestern Kellogg with a background in real estate investing, and he showed an attention to detail and a team player attitude. Brenner added that nearly every time she talked to a peer investor, they said they just met Cyrus at an event.

"He's everywhere," Brenner said.

In March, Cyrus closed his third deal at Urban Innovation Fund, which has yet to be announced. The next day, the fund promoted him to senior associate and Brenner made it LinkedIn-official.

She posted, "I can't wait to see what deal you source next :)"