I read recently about another venture capital investor switching firms. I don’t know the specifics behind that move. But, I do think more career moves like this will be commonplace. It’s a stark change from what VC used to be.

When I joined the business in the late-1990s, VC firms promoted partners from within. In other words, you started as a junior employee, and over time, you made partner. That’s how it was at nearly all VC firms. You were recruited, you joined, you received a ton of mentoring, and then, hopefully, you were promoted to be a part of the firm’s “General Partner.” There was a huge premium on fit and whether someone matched a firm’s unique culture. So, the theory was to “grow your own” partners.

I think those days are over.

I think firms now are more likely to hire a partner from outside of the firm, such as someone from another VC firm or a hot tech company that has gone public.

Part of that is economics: most firms are raising smaller funds, or are unclear whether they will get the next fund. This means there is less management fee with which to hire and retain staff (see “How Are VC Paid?”). In those situations, the first people to be let go are non-partners and members of the non-investing staff. It’s cost cutting. So, fewer and fewer people at VC firms will make partner. It’s a shrinking industry.

Another reason is firms may want to find someone with a great track record who can help them raise a fund. So, by hiring someone already experienced, they get that person’s track record.

A third reason is that VC firms are under tremendous pressure to produce. So, if someone “isn’t working out,” firms will be quicker to terminate someone’s employment–and, find someone who can deliver results. And, that’s true BTW for all VCs. Whether you’re a partner or not, the bar to stay at a VC firm is very high. It’s just business.

So, the VC industry is changing quickly. There will be a lot of turnover at VC firms. This unfortunately complicates life for entrepreneurs.