RPRS - Career Spotlight

The Changing Face of Venture Capital

John Burns MBA’05 has ideas about what’s next in VC, how to help bridge the industry’s gender gap, and advice for aspiring venture capitalists.

No matter their business idea or industry, one common challenge all entrepreneurs share is securing funding. As chief investment officer at Breakaway Innovation Group, John Burns MBA’05 is on the receiving end of funding pitches from entrepreneurs of all kinds.

The VC industry has changed significantly since 2000, shrinking from 1,000 active firms in the U.S. to about 500 today. At the same time, angels, incubators, family offices, and others have filled the hole, offering alternative sources of private capital.

“At the end of the day, entrepreneurs care about getting capital to grow from partners who can actually help,” Burns says. “It’s becoming less about the type of firm the money comes from.”

Another trend is in women entrepreneurs’ access to capital. Research from the Diana Project’s recent report Bridging the Gender Gap in Venture Capital (pdf) shows that the share of VC funding directed toward female entrepreneurs has tripled since the height of the dot-com bubble, jumping from just 5% of total VC dollars in 1999 to more than 15% today. Still, by not investing more in women entrepreneurs, the VC community is missing an opportunity for profit.

“From the report, 36% of businesses in the U.S. are majority-owned by women, but I’d venture to guess fewer than 5% of the entrepreneurs who pitch me at Breakaway Group are women,” says Burns. “To me, this points to either an access issue or an education issue, or a combination of both for women entrepreneurs.” Breakaway Group wants to be part of the solution and is partnering with Babson to hold an event for female entrepreneurs and the VC community later this year.

A connection with Babson has been important to Burns ever since earning his MBA in 2005 through the one-year program. At that point, he was transitioning from traditional private equity to working with venture-oriented, early-stage companies. Because he wasn’t making a true career change and he didn’t want to take two years off for school, the one-year MBA ended up being a perfect fit.

Now, he says, “Not a week goes by where I do not connect with someone, somewhere, who has a connection to Babson. Our alumni network and its exposure to the global business landscape has been one of the greatest things about being a Babson alum.”

For aspiring venture capitalists, Burns has a few words of wisdom: “Think hard about why you want to become a venture capitalist. I think the press has glorified the role and set some unrealistic expectations. The job isn’t all cocktail parties and IPOs. Build a skill set that includes real experience in company building and operating experience. Ultimately, your success in venture capital will be dictated by your ability to truly help entrepreneurs build great businesses over time, so real experience matters.”