How to Break into Venture Capital | Arun Pai from Monk's Hill Ventures

Arun: [00:00:00] The honest truth is it is a very prestigious job to be completely candid. My interview process with monks Hill, I spent hours listening to podcasts and YouTube clips of each partner to know who they are as a person. Before getting into the interview, don't take no for an answer. There's always a way to try to figure things out.

Try your level best. Obviously put in the hard work and effort. You will need luck. If you want the quote unquote easiest path to get break into VC, obviously the unicorn outcome and exit is one route.

Rahul: Welcome back to Understanding VC. I'm your host Rahul. Understanding VC is a perpetual MBA on a single subject, venture capital. Today I'll be having an in depth conversation on how to break into VC with Arun Pai. Arun is a principal at Monk's Hill Ventures, a VC firm that invests in early stage tech companies, primarily pre Series A and Series A in Southeast Asia.

[00:01:00] Also, one quick note, are you looking to refresh your digital presence? Thanks. Digital Prism, the Singapore based digital transformation expert sponsoring this episode has a fantastic offer. First 10 listeners to contact them get 20 free consultation hours. Just mention Rahul sent you. Also learn more from the link in the show notes.

Now let's talk to Arun.

Arun: Hey, Aaron,

Rahul: thank you so much for joining me today. Thanks for having me. Yeah. So, so our topic of discussion today, how to break into VC. I often wonder why are so, so many people obsessed with, with, uh, you know, trying to break into VC and have build a career in venture capital.

Arun: Look, the honest truth is it is a very prestigious job, right?

Why do people from university want to get into investment banking or consulting? Obviously it's the pay, but at the same time, it is a very prestigious job that society deems as such. So from that [00:02:00] perspective, a lot of people want to get into finance. A lot of people want to get into consulting.

Investment banking is obviously the sell side in finance, which means you're doing the selling. the natural evolution of that is to go from the sell side to the buy side, be it hedge funds, private equity, venture capital. they're all like the sexy industries, or at least they definitely were. three years ago before this winter is set in, but that becomes a natural evolution, I would say.

Rahul: why do you think it's, so challenging to break into VC? Is it just that like too many people are trying to do this?

Arun: It's, it is still a very niche, industry. I mean, if you think about, investment banking asset, like analyst classes, you're talking about like 80, 100, 200 people joining the bank.

you're talking about companies that have like 50, people, as the total employee strength. If you look at your average venture capital fund, you're probably talking about two to five partners and maybe. [00:03:00] the equivalent number of investment folk and maybe the total combined investment team equivalent in the platform success or operations or some kind of backend.

So you're talking about very small outfits. And given that, to get that one seat, within the firm is naturally going to be quite challenging.

Rahul: Yeah. What are some of the things that people, uh, were not in venture don't get about venture.

Arun: Look, honestly, until two and a half years ago, I wasn't in venture, right?

So this is quite new to me. I think it might help give some context about my own journey of getting into venture capital first. So, uh, an electrical engineer by vocation, went to Georgia Tech, like any, traditional Asian student, I should say. Not stereotyping, but, that's just a fact. You either go become an engineer or you become a doctor, right?

It's one of those two fields. I chose the former. because I wasn't that big a fan of education, so the lesser number of years spent in university, the [00:04:00] better. Uh, ended up going to Georgia Tech, spent four years in electrical engineering, realized after the first semester itself that engineering is not going to be for me.

So I tried my level best to get into investment banking. Coming from a public school down south, which is Georgia Tech, it's not easy to break into those Ivy League. elite private school circles that typically get into investment banking. So that first step was literally going physically to our alumni house in university, with a pen and paper.

taking down, jotting down the names of 80 people who were Georgia Tech alumni who got into investment banking, who were working at that point of time in investment banking. The list of 80 people, I, I emailed them out, probably about 20 percent of that, bounced back because they may be at, they'd already left banking and they didn't update their email address.

The vast majority. back rejection letters [00:05:00] saying, look, to break into front office investment banking is not going to be easy from Georgia Tech. Become an engineer, go to your big tech, which probably in retrospect would have been a better option. But anyways, go into technology and then apply for B school, get into B school.

And then get into banking. So it was a very long winded process, which I didn't want to do. But at the end of the day, three people were willing to meet me, flew up to New York on my own dime, which was obviously quite expensive on a college student budget.and one person after meeting me was willing to put my resume in the right pile to ensure that HR at least interviewed me.

Nice. So from 75, 80 people, it got whittled down to one person, and I only had one interview on Wall Street, which was with Lehman. Is it skill? Is it luck? Is it timing? That was the only batch, which was 2006 summer batch, which was the only batch that allowed for double the size of their traditional intern [00:06:00] batch.

So if it was just the first, if it was just the traditional any other year, I would not have been considered. That was the one year, which was when Lehman was going through its world domination phase, that they were like, okay, you know what, we're going to hire an extra number of people anyways. Why don't you at least, interview with us?

That got into getting the job, spent nine years totally in banking from Lehman, transitioned over to Nomura when Lehman went bankrupt, transitioned over to Nomura, stayed there for another six and a half, seven years. And something was always missing, right? Like I knew that my idea of finance when I was a freshman student was having the, having the benefit or the luck of listening to Charlie Munger come to our school.

So my idea of finance was always investing. Ended up becoming an options trader, which is completely different from investing. took me a while to realize that, uh, took me a while to get over, the golden handcuffs that investment banking [00:07:00] provides. And I knew that I wanted to get into investing. Not exactly which form of investing, venture capital, private equity, growth stage, seed stage.

I didn't, you know, didn't have a clear idea of that, but I knew I wanted to go into investing. My journey, or my hypothesis was, if I've not been in the trenches myself, How do I even look a founder or any investor in or any founder in the eye, any entrepreneur in the eye and say, or have like a level headed conversation with the person.

So it ended up being, uh, became part of the founding team at Crystal AI, which is a fintech startup out of Singapore, uh, was there for four years. Initially when I joined or when we started up the company, it was more of on a B2C angle. Uh, for me to round out my skill set, went from a B2C startup, to a B2B credit management company.

I wasn't part of the founding team. I joined that company at a later stage, was there for two years. And that's when I thought, okay, now's the right time to get into the investing world. Uh, fortuitously, Monks Hill Ventures, which [00:08:00] is the venture capital fund that I'm part of right now, they're, motto is exactly my hypothesis, which is entrepreneurs supporting entrepreneurs.

And when I cold emailed, the head of HR of Monks Hill, because I never pitched to them. I had no connection with Monks Hill. I pitched to a whole bunch of other VCs. I knew most other venture capitalists, but not Monks Hill. weird coincidence, right? But then ended up just cold LinkedIn messaging, the head of HR.

And one thing led to another, had numerous rounds of interviews, and then, got lucky enough to get the role. I would say I would be one of the few rare people to have gotten into this industry via a cold email. But I would like to say nine, 10 years of banking, and especially six years in the [00:09:00] trenches made a huge difference, at least to, my employer.

Yeah. And, the one advice I would give is, everyone and their mother has an opinion about the way to get into, certain industries or not, right? If I had to listen to the 68 other, 69 other people of my alumni from school, I would have gone into some other firm. I would have potentially gone into B school and then gone through that route.

don't take no for an answer. There's always a way to try to figure things out. Try your level best. Obviously put in the hard work and effort. You will need luck. There's no two ways around that in my humble opinion. but put yourself in a position to get lucky and then try to like figure out your way to get into the, any industry that you want, right?

Venture capital is obviously one of potentially the more difficult ones. But, I think, That thought process could apply to all industries.

Rahul: Yeah, I was speaking to a VC only couple of days ago. She was telling me that, venture is a weird industry. [00:10:00] There is no fixed path to break into, right? But that's also maybe an opportunity.

There are, like, multiple ways people could actually approach this.

Arun: Some a lot easier than others, might I add. It would be a lot easier to start up a company, let it get to unicorn status, IPO it, and then become a partner in the fund. Yeah. but you know, maybe that's a conversation for another podcast.

Rahul: For, for most other folks, I think, the couple of things that you did, one is building relationships in terms of like reaching out to people. That is really helpful. And I think the one thing that I think happens when you work in a startup and you have that sort of, real understanding of how things work, you're able to build a relationship with founders and also in that respect, gain access, right?

So those two things I thought, really helps, if you want to position yourself as a VC.

Arun: Look, most definitely, right? If you want the quote unquote easiest path to get break into VC, obviously the [00:11:00] unicorn outcome and exit is one route. The other route is, if you know one of the founders really well, of one of the investment portfolio companies of the VC fund.

And if that founder can vouch for you, you immediately form a very strong, indirect relationship with the founding partner or general partner who's hiring. That would be the path of least resistance, I would say. Another route is if you've been a C level exec, in one of the investment portfolio companies of the fund.

And you start floating the discussion that you look, you want to switch to the other side. And that goes both ways, right? A whole bunch of people, especially in the past. one and a half, two years, where many people have gotten a little bit disillusioned with the asset class. Maybe they were only, the, the only experience they had in the VC space was in the past six, eight years when life was relatively easier than what it is right now.

they've switched [00:12:00] over from the VC side to their portfolio investment side, right? to one of their port So I think it's relatively fluid. I think as this still relatively nascent ecosystem, which is only 10, 15 years old. And I'm talking about Southeast Asia specifically. I think as that matures, we'll start seeing a lot more of this fluidity, I guess, of people moving from one side of the table to the other and vice versa.

Yeah. So exciting times.

Rahul: Yeah. So in your opinion, who should be the ones trying to become a VC ideally?

Arun: I think that's a great question. So, you know, whenever I go to any university, for any kind of talk, it's always interesting to see the youngest, the brightest, try to even skip the path of bothering to go to the sell side, forget about consulting.

If my end goal is hedge fund and VC, get into it directly. Sure. You know, again, who's to say, [00:13:00] that's not the right way to do things, but I genuinely feel specifically for venture capital, at least, right? I'm not talking to referring to hedge funds or private equity or any other of the investment asset classes, but very specifically venture capital.

It is such a industry that, that, pertains to mentoring your founder. If you do not have the required experience in the past, what gives you the right to forget even mentoring? Okay, that's, that's like at the senior investment level, but even I'd say like a junior level, what gives you the right to even talk and ask questions to the founder?

It, it's such a, I, I genuinely feel it's a bit disrespectful, right? To, a person is put in his blood, sweat, tears, trying to build something, and there you are sitting at asking, oh, what's your cac, what's your LTV to cac? It, it's, [00:14:00] something is wrong in that power dynamic. And just because your partners were the ones who did the hard work of raising the capital, and you've been given that seat.

shouldn't give you the right to question someone who's tried to build something up from scratch. So I think my personal opinion of the ideal person to be on the VC side is someone who's either very experienced in the industry, And I think that there's some value to be added to the founder with that conversation.

Someone who's been in the trenches, successful or not, I mean, you can learn from mistakes. Maybe I have a chip in the shoulder on the back of that. And you know, I'm more aggressively going out there and trying to prove to founders that I can add value, are the, the, the routes or the seniority level required before you break into the space.

I think everything should be looked at. [00:15:00] In the from the perspective of the lens of a founder and what will be the best, advice, use of time, resource allocation, whichever factor it might be to provide to that founder. And then you need to go about thinking about how you can cultivate that. Yeah.

Rahul: Yeah. I think that's a good place to go deep on like the things that you need to cultivate. If you want to do this job, right? Like, I can think of. Three, four aspects. One is like, you need to be able to attract, or find really good founders and founding teams and then, pick and get picked and then support them and then eventually have an exit.

So, if you're trying to become one, does it make sense for you to just focus on one of things and build up skills? And also the thing that you mentioned where you develop sort of expertise in, in a particular industry, or maybe a particular business model or things like that. Would that be the approach?[00:16:00]

Arun: So two different questions. I think one is from the perspective of, are you a great sourcer, networker, et cetera, to get the required deal as step one. Second is being an active board member, providing value, analyzing, identifying that to begin with. And then, The exit part, right? So there are various stages.

I think when you're more junior, there has to be some level of proficiency of doing all of them. It's one of these roles, it's similar to say even, like consulting, right? But you start off as a more generalist, but then if you want to become the rainmaker, you've got to try and start specializing at some point.

From the traditional, like, VC lifecycle management, right? Uh, perspective. There is something to be said about being a specialist at a certain point. You could be a great, initially [00:17:00] like top of the funnel, going out there, getting, doing networking, all deals are being referred to you and whatnot. You could be a great picker.

that could be your secret sauce, or it could be, you could be a fantastic board member by opening up your Rolodex of contacts and connecting them to the who's who, who's who's to drive a revenue growth, right? Any of those things, I think people will start searching you out if you are specialized in one of those aspects.

It's just a natural way as, as you scale up, as you become more of an expert, as you get more experience, you will naturally become more of an expert in one aspect. You talk to the greats. And you ask them this exact same question, and I've heard a whole bunch of podcasts about this. All of them say that, okay, I'm good at this aspect.

You know what? Deal sourcing is not my forte anymore. I'm not the young person who's hungry enough to go out there and try and find, The next, the next hidden diamond in the rough, right? Like that, that's not them. Over the years, they've cultivated such an amazing network. [00:18:00] That if a founder were to choose them, they're able to really help them out.

So, uh, or identification, you know, because they've been able to do so much pattern recognition in the past. They've connected so many dots in the past. They've now, they're now very comfortable that they know which could be that potential future Decacorn or next trillion dollar business, right? They have that ability to gaze into their crystal ball.

I typically feel that one of those. aspects becomes your, core competence as you scale up. The second part of the question, which is being a generalist versus a specialist, to be completely honest, I don't have a good answer for that. I think it really depends on who you are and what you believe your core competency is, or what your skill set is.

I think you have amazing investors who are generalists. I think you have amazing investors who are sector focused or [00:19:00] specialized in a certain business model like SaaS or marketplaces or embedded finance or whatever else it might be. But you have to layer that with the fact of which ecosystem you're in.

A great example is you could be specialized in the construction space to give one relatively niche vertical. And there'll be like 10 unicorns in the US in that space potentially. And by all means, right? Like you could be the construction tech specialist in the US. You try to do the same thing in ASEAN, you probably won't have a long career in VC.

So, and that, that process itself is a natural evolution. And we're seeing that within VCs over here, right? If we go back and I'm here, I hear stories from my founding partners of what the state of the VC ecosystem was back in 2014 when they founded Monk's Hill. There were only probably like 8, 10 funds out there.

All of them were seeded by [00:20:00] Tomasek basically. Pretty much everyone was generalist. mostly in the seed stage, given the size of funds that they had. Fast forward to today, you have country focused funds, especially for Indonesia, which is a large enough market. You have, sector focused funds, local and regional and global.

You have generalist regional funds like a Monks Hill. You have global funds who have offices set up over here. You have cobbling together. South Asia and ASEAN. So you have, you have all sorts of like a hodgepodge of different types of VC funds, given the evolution of the market. Are some more successful than the others?

Sure. Obviously. I mean, we all know that the top quartile of VCs have an unfair advantage, quote unquote, in this space, which is very different from the public market space, right? Where there's [00:21:00] neutrality in information dissemination by law as compared to the private market space, where your past track record.

literally influences the future because the best founder will want to see, am I working with the best investor? And that naturally leads to the best of the best pairing up with each other. And then you keep that flywheel moves, quicker and quicker as experience goes as the tenor of the VC fund grows.

Quite different. But I think if you look at all, you look at the entirety of the ecosystem, within each type of VC fund, you will have funds that are performing better versus the other. But I think it might be a little bit more difficult to necessarily compare one style of investing, special investing versus regional investing versus global investing.

All of them come with their, you know, own pros and cons. Like a global, FinTech fund can give the value prop to the founder of, oh, I can connect [00:22:00] you to XYZ founder that we invested in eight years ago in Latin America, because the startup ecosystem there is more developed than ASEAN. Which if you're a FinTech founder sitting in Vietnam and you know a similar business model is panned out well in say Brazil or Mexico, that's an amazing.

value add by the VC fund. You could have a regional fund where if you're sitting in Vietnam and you want to expand to the Philippines, Indonesia, Singapore, the regional fund can help out. You could be a sector focused fund and really have a lot more in depth insight, unique insights about that specific space.

Each of them brings their own value add. I think if you're a founder, if you had to invert the question around, what will it be best for the founder? And I would say, figuring out the right combination. of this kind of skill set to form your cap table is what's in your best interest.

Rahul: So to, again, going back to somebody who's want to break into VC, right. we talked about the job functions and [00:23:00] then it's essentially how you can get good at any of this and position yourself to get into a VC, right. So, I think one thing that Even I do is that, you know, you start work early, even before you actually become a VCS and like, you can do it multiple ways, right?

Including, maybe investing in, in a portfolio of startups and building a track record, or you help, founders with a specific aspect, maybe with fundraising or hiring or something else that you have expertise in. is that a good

Arun: approach? Absolutely. Look, if you have those kind of financial resources to invest into startups to begin with, great.

Right. And you can start building your track record, all the good things that you mentioned. For some people that might be the route. that becomes a relatively easier discussion to be had with other people. your hiring partner saying, what's your track record? Oh, I've invested in these eight startups.

What do you know? Two of these have been invested by you at a later stage. So obviously we are [00:24:00] seeing eye to eye on quite a few investments. I would love to be part of your fund on a full time basis. One aspect, helping out founders, and helping them scale up and, become bigger is definitely another approach because that enhances your relationship with the founder.

Coming back to our previous discussion point, one of the best ways to get in is if the founder of a portfolio company refers you to a partner, why would that person do that? Because they're putting their neck on the line by telling that to the partner too, right? And it's not just going to be because it's a family relation or something else.

You would like to think that that kind of social capital. by a founder is not going to be used to give a random person who is not qualified for the role, a potential interview. Even it's going to be because the founder sees something in, the candidate or in the future candidate, that, Because of so and so [00:25:00] reason, I am willing to put my neck on the line to some extent to get the partner to at least meet this person.

Rahul: Yeah, this is, this is the kind, I think this is the best thing that you can do, right? Like building a reputation among founders that, you know, you are somebody of great value in a very specific way could be. And, that means that. The founder is going to choose you, which is very attractive for any VC firms to possibly hire you because it gives them, it gets them get picked, right?

Their capital gets picked. so how do you develop this? Is it just by being nice to founders and helping them or?

Arun: I don't think it's about being nice. I think it's literally having, okay, be nice as in be cordial and professional and, have that ability to connect with people, not just at the superficial level, but at a slightly deeper level, right?

Like truly build a relationship. At the same time, it can't be just fluff. Right? It's not just about being smooth [00:26:00] talking. You need to be able to provide substantive value from some other aspect. And that is a very, very, individual approach of thinking about what your personal skill set is. If you've been doing B2B sales for enterprises for five or 10 years, and you start going up and advising a whole bunch of startup founders, and all of them go up and tell their respective funds, you know what, I scaled from a million ARR to 10 million ARR because of this person advising me, why would this, why would the fund not look to at least employ this B2B salesperson in some capacity, be it investing or in their portfolio value, the portfolio creation, uh, slash platform team.

So you need to figure that aspect out. So what you bring to the table. can get you into the door, but it can also pigeonhole you into a role within a VC. Let me give you an example. I was an engineer. When [00:27:00] I was applying to investment banking, I was envisioning at that point of time that I want to be a salesperson.

The role that I got initially put on was fixed income structuring. Because the HR person was making the decision, saw my profile, engineer, has to be quantitatively oriented. Let me dump this person into a quantitatively oriented job, which was structured. And then from there to go to the next step, which was trading again, it was, okay, let's go into exotic options trading, which is again, extremely quantitative in nature.

So obviously add value, be Think about strategically what value you are providing to the founder, because that might set you up for a certain type of role within a VC. I think people talk about, Oh, you're going to get into VC. You're going to get into VC. Great. But are you sure that you want to be in the investment team?

Are you sure you're going to be in the platform team within the platform team? Is there a co op dev? Is [00:28:00] there HR? Is there marketing? Is there B2B sales? Is there AI, tech, legal, you name it. So it's really, you need to know very specifically what kind of a role you want within the VC. And then take steps backwards to figure out, am I providing that right value, which becomes the right story point for the founder to convince the partner and so on and so forth.

Rahul: Yeah, I think we've spoken about this before. Once you get into, let's say, a platform team, it's very hard to break into the investment team, right? Why, why, why do VC firms operate like that?

Arun: It is because I think it's what you bring to the table, right?

Let's take this example of a person who's done 10 year B2B sales. Yeah. Right. If the person has done this fantastic at sales, fantastic at networking or relationship building, great And then put yourself in the shoes of the partner, I bring XYZ person to a meeting with the founder. What is the value prop?

What is the [00:29:00] value at? It's naturally going to be doing B2B sales, right? Now, if you layer that on with, Oh, because for whatever, fortunate circumstance, I earned a whole bunch of money doing B2B sales for an Amazon, Microsoft, etc. I've gone out there and met 300 people. founders, and I've invested in five of these.

Of them, three have raised subsequent rounds, two are in the tens of millions of dollars evaluation, all in the past four years. Becomes a very different discussion, and the hiring partner will look at you in a very different manner. And that's where, I think a person, if they want to get into the investing side of a VC, that's the kind of, 360 degree.

overall kind of skill set they would have to build out. Yeah. Or start something up, like be more, you know, from the, from a founder perspective or done [00:30:00] phenomenally well in consulting. again, I would like to think that there's some element of being in the trenches before getting into VC, but you know, that's just my personal opinion.

Rahul: Yeah.

Arun: I think I should just use

Rahul: myself as an example. So, It, it often for VC firms, they would look at me and say, okay, marketing or community is the kind of thing this guy can do and not investing. So

Arun: we talked about this a little bit, right? Like, and I think before you even started this whole podcast series, we were discussing and I think you were ideating, Oh, should I come up with this?

Yeah. I'm like, you can, it'll be fantastic. You'll get to meet a whole bunch of different partners and senior people in the investments team. But again, the question is, are people going to look at you in a certain lens? And how do you try and create that 360 degree persona around it? That

Rahul: really means, you have to either build a track record or you have to be the guy that gives them access to the best quality founders.

Then that becomes a possibility.

Arun: It could be just from the sourcing angle. [00:31:00] It could be. You create cultivating and creating your own different skill sets, right? So you pretty much, let's say you have community slash marketing lockdown. You cultivate a different skill set such that two or three different founders, when a VC fund does ref checks on you, two or three different founders go up and tell the hiring partner.

Oh, this is what Rahul really helped me on. And then the partner sitting there, I mean, like, oh wow, okay, this was different. This is different. This is different. Oh, okay. This is a full holistic, perspective of looking at this candidate. This seems quite interesting. That could be, uh, a way to differentiate yourself also, I feel.

Rahul: You mentioned, um, that you were not sure what investing that you wanted to get into. so why VC for you personally?

Arun: I think it's also a matter of what was the final opportunity that was there on the table, right? Naturally, when you come from investment banking, the route is more private equity, a lot more about financial modeling, a [00:32:00] lot more about crunching the numbers.

I think the stage that the company is at by the time private equity comes in is potentially more financial engineering, uh, some extent cost optimization, setting yourself up for success for going IPO. That's on the private equity and the tail end of the, investing value chain. In the front end, it's your precede seed guys, right?

Or your accelerators even, which are just look at a founder. Okay. I think this person is good or great. Fantastic. If you look at my personal background, it was very quantitatively oriented for the first nine years. The next six years was being in the trenches, talking to founders, talking to other founders, building out the business.

I would like to say VC specific and within VC series A investing is kind of like a good [00:33:00] combination of those two. And so it was happenstance that, that kind of made sense retroactively, retrospectively. And that was the opportunity that was also there. and I connected the best with, the partnership and other people in the team.

And hence it was a good fit from that perspective.

Rahul: Yeah. And you mentioned that, you know, there were several rounds of interviews. So what is the process like,

Arun: what is the process like typically in a decently sized fund? Again, the process is gonna be different for different funds, but just broadly categorizing it.

If it's a very small fund,and by that I mean like one or two partners. It's just about those two guys. They probably won't even have a team, they won't even have an HR team, to do recruitment, uh, to run the recruitment process. If you are going at a larger fund, the first, either, again, you have a back channel entry via knowing a partner, that's the path of least resistance.

the path of most resistance, which is what I took, is a cold [00:34:00] to. Uh, cold LinkedIn message, to be very clear, to HR, but you better back yourself up with some pretty strong points for the HR person to even consider you, right? So I would say the process is, for larger funds, HR will do your first cut, typically, headhunter slash in house recruiter, whoever that might be.

From that point, you'll typically be. refer to the hiring partner. The hiring partner will give a yay or nay, and try to do quite a few eliminations of that first stage itself. If the hiring partner gives the go ahead, then you start the process of interviewing with, other senior investment folk, other people in the partnership.

The partnership itself is kind of a weird concept, right? It's very different from, at least from what I was used to. In banking, it's very, very hierarchical. Right, where, it might be a flat structure, but it's still, you know who your [00:35:00] boss is. That's the end all be all. You better work your ass off to ensure that you are doing a good job for that boss, right?

Because you're one small little cog in this massive wheel. When you come to a partnership, the legal structure is literally All five are partners within the fund or three or whatever the large number might be. You might be reporting into one, but you have dotted lines to everyone and make no mistake about it.

Right? So you better well sure, ensure that your relationship with everyone in the partnership is sound. And this is before even getting in. And also once you do get it. It's something that's really important to know where people who might not be familiar from the banking consulting space, from the startup space, you're typically a founder or C level exec where again, you know, you're the one who's calling the shots.

The VC setup is a little bit different or the partnership setup, I should say is a little bit different. So you need the buy [00:36:00] in. of all of the partners. Typically, if one partner says no, it's going to be a no go. That's how it works. So you better ensure that you have clicked, done your homework on each and every one.

to be completely candid, my interview process with Monk's Hill, I spent hours listening to podcasts and YouTube clips of each partner to know who they are as a person before getting into the interview. It's just the banking gene that was still in me, right? Where you know that this is the kind of effort and hard work that you need to put in before, you will be allowed inside, these relatively small closed ecosystems.

Rahul: Do they ask this, this specific question, like, why do you want to become a VC? If yes, like how can you answer that really well?

Arun: Absolutely. That's one of the most important questions that you need to figure out. [00:37:00] And the interesting thing is, especially if you've had some experience, you can't bullshit that much, right?

Because okay, you want to become a VC. Why have you been doing this for the past five, six years? To be completely honest, I think for Monks Hill, if I had tried to go directly from banking into Monks Hill, I would never have got the job. Only when they saw that I left an extremely high paying job in banking, decided to get into the trenches.

Do put in that work, put in that effort off being in the startup ecosystem for a certain period of number of years, and they did a massive deep time as to exactly what I did in each startup. There were probably 15 background checks. That I know of, because some people I know really well, and they were telling me, oh, just FYI, [00:38:00] yesterday I had a background ref check about you with Monks Hill.

That's something that's very, very common in the industry, right? Only after all of that, could I even begin to answer that question and prove to them why I really want to get into VC. Because there are a lot of people out there that just seem to think that this is an extremely cool job, cushy job, whatever else it might be.

This is the sexy flavor of the past like 10 15 years. I want to get in because it's such a hot industry. So you're going to try and sift out the people who really, really want it?versus vis a vis the people who are just, okay, this seems the sexy flavor of the month. Let's try to get it. And to answer that question, then it's not just your ability to, speak smoothly.

It's a lot to do with the core steps with the real what's actually happened in your life in the past that's led you to this point of,coming for an interview. And I think that's [00:39:00] really important. And that's what you need to, fine tune and be able to, again, convince the partner that this is why you truly want to get into VC.

Rahul: I think in your case, uh, Monk's sort of philosophy is that, they have, people in investment team who was actually build businesses. So you, you've done, that, maybe that this, how

Arun: you, Align with the fund 100 percent when Peng and Coey, the two founding partners of monks Hill started out the fund, they were very, very clear that anyone and everyone in the investments team, at least at the senior level, had to have that background.

So much. So there are a number of people who joined as, summer fellows or analysts or associates were literally requested to please leave the firm, go into a startup, start [00:40:00] something up, and then come back. It's literally like the way consulting or banking kick out, its people, at least it used to a lot more, kick out the analysts to go for a B school and then come back.

It's the exact same thing over here. And it's not just like one or two, right? I'm talking about like many people who have entered Monks Hill, have been asked to leave not because of performance issues at all. They were great people, great relationships that are being maintained still to this date. You need to get that trenches experience.

Otherwise you can never become a partner.

Rahul: But 15 reference checks, that's a bit too much.

Arun: Um, that I know of, to be clear, by the way. I think it's if you don't know the person yourself and you don't have that direct relationship, then you want to try and minimize the risk of letting a person slip [00:41:00] through the cracks, because.

there is some amount of reputational damage that can be done. There is some amount of, at least at a senior level, there is some amount of, interaction with your limited partners who are your investors, itself. So there are a lot of other things that go into, the position or the role when you are joining at a senior level.

Probably not going to be the case when you're looking to hire an analyst or associate, but otherwise, it is something that's quite important. to the fund and from a cultural perspective. So for all of those, the more people that you meet, the more different touch points you have, the more different, data that you can gather and you can try to form a more holistic view of this person.

It's similar to an investing process, right? Yeah. Uh, Due diligence. Due diligence. You, you go out there and even before you get to the due diligence stage, it's literally you try to meet, you try to [00:42:00] meet the founder at as earlier a stage as possible to keep tracking them, to see how they evolve, to see the good, the bad, the ugly, which everyone has to some extent.

But if you made a mistake, how have you learned from that mistake? We do that to our founders all the time. Why should it be any different, to hire someone, within the firm too?

Rahul: Yeah. Yeah. Now that you're already a VC, um, is it, do you like it? What is good? What is bad?

Arun: to be completely honest, I think this is the first job I've ever had that truly excites me to go to work every day.

And the reason for that is the intellectual curiosity. that is sparked every time that you meet a new founder. That's an amazing thing. It's just truly amazing, right? You just don't get that in any other role, [00:43:00] right? And so from that perspective, I think I've found, finally found my calling in the VC space.

Yeah. Which after multiple different jobs in the past, it's in a pretty amazing position to be. That's the, the good part of the job. The difficult part about the job, when I was on the operating side, right, and I was pitching to a whole bunch of VCs. I always wondered, why are a lot of these people so stupid?

Why are they not being able to understand this brilliant startup that I'm building and just invest money? Now having come on to the other side, I have learned to appreciate how difficult it is to truly gain conviction to make an investment. And to be very clear, that's not the spray and pray approach.

Right? Where if [00:44:00] you have like 50 or 100 or like an index fund, just go and spray and pray and hope that something pans out. Maybe that works. Maybe that doesn't work. Again, a topic of discussion for a different podcast. But for what we do, which is very high conviction investing, the way Warren Buffett thinks about investing is literally his advice to everyone is take a scorecard, write down 10 company names in it, and know that you will never be able to change those names for the next 10 years.

so much. That's how you should do investing, not this high frequency type of trading. That is, in a way, VC, right? When you invest into a company, you're stuck with this company, with the founder, and the founder is stuck with you for an average amount of time that is longer than, an average, marriage, time frame in the U.

S. Right? So it is a long time period. You better know what you're getting yourself into. And for that, you need to have high conviction. How do you have high [00:45:00] conviction if you only met the founder? Once or twice, or even three or four times over, say, two, three months, you need to be able to build that

Rahul: by doing multiple reps.

And also minimum data, right? Like it's not like quantitative. Honestly,

Arun: I've pitched to many VCs from different startups, you will put your best foot forward, right? It's like your dating phase. Only when you get married, do you really realize what you've gotten yourself into to some extent. But you try to ensure the dating phase.

again, due diligence, multiple aspects of talking to different people to see how these people were in different settings. Try and have your, personal interactions with the founder across different settings in their office, in your office. across drinks, uh, over food, et cetera, et cetera, to try to truly get a sense of who that person is and whether you can click.

Because there are so many ducts that need to be lined up in a row, especially if you're a lead investor, because then you're the one who's [00:46:00] championing the deal. You're the one who's going to be sitting on the board. You're the one who's going to be working closely with the founder to try to get, the startup and the team to, the end successful zone.

Running a startup is probably the most difficult job in the world, right? Being a VC funded startup is even more difficult because you immediately have this huge time pressure and this huge scaling up pressure. You're not running your SME down the street knowing that even if you make a profit, which is very difficult, don't take me wrong, profit clocking in year in year out.

a nice family run business. This is something that's extremely difficult. That's not meant for many business models. It's not meant for many founders. It's tough. So you, for you to be able to figure out that true hidden gem, is challenging. And I think that's the part that I did not appreciate enough.

when I was on the other side pitching to VCs. [00:47:00] Now, having been on this side of the table, having experienced that for the past two and a half years, uh, I've definitely been humbled. I

Rahul: think it's just the reps, right? Uh, that's all you can do. But that's the thing, like, imagine if the one guy that you meet turns out to be like a Lenon Musk, then your job is done.

Arun: Look, many careers have started out with that one true success story. Because again, like we were discussing, right, the private market is so interesting. The second you get that one success story, as that person keeps scaling up, right, say for example, you invested into a company at a series A stage 20, 30 million valuation.

Forget unicorn, right? That's the end state. As it gets to say like a couple of hundred million dollar valuation, a whole host of other aspiring entrepreneurs are looking up to that person and say, Oh, tell me your secret sauce. What happened? What did you do? And if you are that valuable board member to have played some role.

Then you have an unfair advantage. Then you have an unfair [00:48:00] advantage. Yeah. And that begets more interesting founders to meet you. And you just keep going, which is why you start seeing, especially in the US, which is a much more developed market. You start seeing these truly amazing, VC investors who have just layered one success on top of the other and just kept building that, structure for themselves with an extremely strong foundation, which typically leads to a lot of hard work and effort to find, that hidden gem, but also a fair amount of luck.

Luck. Yeah.

Rahul: So one last question. So I've heard a lot of people, even in Southeast Asia, who've been a VC for at least a decade, uh, burnt out. Because it's, it, it pulls you in different direction, right? You need to meet a new founders. You have your LP relationships to maintain and plus job mean the board board relationships.

And also, this is a kind [00:49:00] of job where you get worse off as you spend more time becauselike you were saying earlier that, you know, people tend to specialize because people don't have the energy to source as you age or you spend more time. Is that true? I would disagree with that.

Arun: Okay. I think you don't become worse. You start specializing in one thing that doesn't necessarily, but if that specialization outweighs Thank you. your effort to go to every single accelerator program that's happening in your city, things could still work out because as long as you've built that solid foundation and you keep growing it over time, you will naturally get that network as an example.

So I think this is actually one of the few jobs that you get better over time. So I would take the complete opposite take to that. You look at, okay, the ideal North Stars are [00:50:00] like your Warren Buffett Charlie Munger, right, like 95 and sadly Charlie Munger just passed away, right before turning 100. As long as you have that keenness to want to learn every day and to become smarter on a day by day basis, And you still want to do that.

You still have that drive to do that. I think everything else can kind of fall into place, but you have the unfair advantage of having that solid network in the past. You have that unfair advantage of having committed so many mistakes as any investor does. You can pattern recognize, you can understand that you can connect the dots in the past to see what might work in the future.

The thing that you do need to grow and keep fine tuning is to not let your biases then take over. Just because something, just because a social media network did not become a close to a trillion dollar business 25 years ago. And because you invested into one company that in that field, doesn't mean that if you were [00:51:00] lucky enough, when Mark Zuckerberg knocked on your door and you said, Oh, social media networks, they're tried that, it failed, it's never going to work.

So you're going to be very cognizant, you're going to always be willing to learn, you're going to be, you're going to know what your biases are, because all that baggage also accumulates over time. I would say from a balancing out the pros and cons, I would say a person who's a lot more experienced will always, edge out a person

Rahul: who's potentially new.

But then there's also another angle, right? okay. The learning aspect and the experience, all that helps, but then you also become a different generation, right? So then connecting with the younger generation, sometimes, you know, things like Snapchat and the newer things, I don't even. I can't even understand why that works.

So, will that be a challenge as you

Arun: grow older? yes, maybe. I mean, if you're lucky enough to have a family and kids, I think, I don't remember which startup it was, but this really famous VC in [00:52:00] the US, heard about one of these fast growing, fast growing, D2C platforms, thanks to his daughter, spending time on it and was like, Dad, you got to take a look at this.

This is amazing. And he was like, what is this? I don't even know what this is. And then, then you got to go down the rabbit hole and put in that effort and energy to truly learn something new. So, is it, is it fortuitous that, you know, A, you have a daughter, B, she, the daughter's on that app? Absolutely. But along with that comes the amount of extra effort that you need to do to be willing to learn something new, which if you think about steady state as a person ages, you tend to go into your little cocoon, your little corner, and you're very happy in that space.

If that's the mentality. Or that's the intent that you get into, the investing space. You will be humbled quite quickly. You won't even have an opportunity to stay that long. You will be kicked out well before that.

Rahul: This was great. Thank you so much for taking the time to do this, Aaron. My pleasure. Thanks as always for having me.