Transitioning from industry to private equity or venture capital is tough, but not impossible.  The good news:  Institutional investor appetite for alternatives has fueled tremendous growth in the private equity market.  As a result, private equity and venture capital firms are staffing up on investment talent at all levels.

For those considering making a move into private equity or venture capital, here are a few observations on making a successful transition, based on my work recruiting investment professionals for private equity and venture clients over the years:

Master the Basics
Before speaking to a private equity or venture firm, have a basic knowledge of how private equity funds are structured versus traditional operating companies.  Having an understanding of terms such as general partnership (GP), limited partners (LPs), management company, management fees, carry, FOIA and clawbacks to name a few, demonstrates that you’ve done your homework.  Relatedly, be sure to know the difference between venture capital, growth equity and leveraged buyout firms and the ensuing investment, deal sourcing, and human capital strategies for each.
 
Articulate a Clear Rationale for Your Transition
Why do you think you would make a good venture capitalist or private equity investor? In thinking through this question, focus on how you could add value at each of the three key elements of the private equity value chain:

1. Sourcing investment opportunities
2. Making investments 
3. Working with portfolio companies to help make them worth more than at stage 2 of the process

Perhaps your network of clean technology executives allows you to hear about interesting investment ideas before most others. Perhaps your experience structuring complex M&A deals as an investment banker would help the LBO firm you’re speaking to execute certain types of investments more effectively.  Perhaps your successful operating or entrepreneurial experiences allows you to quickly identify and capitalize on value creation opportunities at portfolio companies.  Whatever it is that you may bring to the table, be sure to make it relevant to your private equity or venture audience and translate it to how it will help make the firm money.

Network, Network, Network
Although it sounds hackneyed, most people making a transition to private equity land their roles through persistent networking.  Also, take a multi-pronged approach to networking and pursue not only private equity professionals themselves, but also well-regarded private equity service providers such as lawyers, placement agents and executive recruiters. Once you get in the door at a firm, offer gifts:  You are much more likely to differentiate yourself if you bring thoughtful investment ideas or introductions to people in your network who would be useful for the firm to know.

Consider Your Timing
Many venture and private equity firms tend to hire people in anticipation of or immediately after raising a new fund from their limited partners.  Keep your finger on the pulse of the fundraising market to identify who is coming to market and might be considering adding investment professionals.  That being said, a typical private equity recruiting process can take anywhere from three months to one year. The reason?  Most of my clients compare hiring a senior person into a small, close-knit partnership to getting married:  It is a long-term decision and the right fit is key because you will be spending a lot of time with your new partners.