How Working With VCs Can Help Your Career Take Off

As you flip through the pages of your Rolodex (or more likely, your Outlook database), some standard categories of contacts will regularly appear: past colleagues, former bosses, executive recruiters, vendors and the like. Now look again: If “venture capitalists” does not appear as one of your primary networking groups, you are missing out on what could be a major catalyst for your career.

VCs frequently ask me to introduce them to my network of CIOs, and it’s easy to understand why. CIOs have much to offer a VC in need of customer feedback on the product potential of their portfolio companies.

“Most VC firms, particularly those who invest in enterprise technology companies, have an interest in engaging with CIOs,” says Peter Solvik, former CIO of Cisco Systems and now managing director at Sigma Partners. “CIOs can be very valuable in helping a VC firm evaluate a particular investment. The hands-on experience a CIO has had allows him or her to ask different questions than a VC might.”

What a CIO has to gain from the relationship can be a bit harder to pin down. But in conversations with both CIOs and VCs about this, there is consensus that such arrangements represent a two-way street. For the CIO, they say, there are four significant benefits.

1. Learning About the Technology Landscape

While it is true that most of today’s CIOs eschew the straight technology role in favor of business leadership, technology knowledge is still a CIO’s primary differentiator. Knowing which technologies are on the horizon remains critical to your role, regardless of your reach into the business.

“Successful CIOs are always looking at how they can apply technology to advance their company,” says Asheem Chandna, partner at VC firm Greylock Partners.

“The best VCs are familiar with the technology landscape and the business value these technologies can deliver. For the CIO, a key benefit to working with VCs is the window they offer into emerging technology,” says Chandna.

2. Gaining Board of Directors Experience

For any CIO who is looking to secure a CEO position someday, experience on a board of directors is a critical item on your résumé. But that first board position can be extremely challenging to obtain. The CIO-VC connection provides one route toward landing your first role.

“Start on an advisory board,” suggests Solvik. “If the VCs and the company’s management team see that you have strategic insight into the company and can help on positioning and execution, they may extend your role to the board of directors.”

3. Getting Access to Potential Startup GM Roles

While IT startups should be the perfect environment for CIOs to move into their first general management role, startups themselves typically do not see it that way. The companies usually have a technology expert on board already: the entrepreneur (usually the CTO) who came up with the idea in the first place. Instead, they are looking for execs with experience in sales, finance and marketing. They often see CIOs as risk averse and as possessing experience running large, complex organizations, not sprightly product development teams. Here is where your VC contacts can be highly effective.

“When we hire members of senior management teams in our small growth companies, in addition to a demonstrated track record in the functional area and relevant market knowledge, we look for critical personal attributes, like integrity, intellect, passion and the ability to execute,” says Chandna.

If you approach your board activities as a long interview process for a GM role in a technology startup, you have ample opportunity to demonstrate these personal attributes and compensate for the fact that you have never led a sales organization.

Chris McDaniel is a case in point. McDaniel was CIO of Mutual Service Corporation, a securities brokerage, for more than five years. When Blue Frog Solutions, a startup technology provider to the securities market, opened a search for a COO, McDaniel was an attractive candidate. McDaniel had met with Blue Frog as a prospective customer and he knew the company from the market perspective. More important, he had already established a relationship with Pershing, Blue Frog’s primary investor.

“While I was at Mutual Service, I served on the technology board for the National Association of Securities Dealers, where Pershing had representatives. Talking with the Pershing people about hot-button issues in our industry really helped me to cultivate those relationships,” he says. It also allowed Blue Frog’s investors to see McDaniel as an industry player and as Blue Frog’s COO.

4. Test-Driving a VC Career

Oh, to lead the life of a successful venture capitalist. You wake up, work out, put on a designer suit, slip into some sort of Italian sports car, drive to your office and spend the rest of the day listening to cutting-edge business ideas from today’s most brilliant entrepreneurs. No firefighting, no project management, no users.

It is no wonder that more and more CIOs are telling me they would like their next job to be as a VC. However, if you’ve achieved success as a CIO, you might possess exactly the wrong attributes for the job.

“CIOs interested in pursuing a VC role should do a gut check,” says Solvik, since CIOs are often paid to be risk averse and spend money only on established technologies.

“It probably only makes sense if you are more of a futurist than a mainstream adopter,” he says. “If you have built your career on being conservative rather than bleeding edge, the VC role might not be the right one for you.”

Working directly with venture capitalists will give you a much closer look at whether this particular career path belongs in your future and the contacts to make it happen, if you decide that it does.

Martha Heller is managing director of the IT Leadership Practice at ZRG, an executive recruiting firm based in Boston. Reach her at mheller@zrgroup.com.