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I am starting an MSc in Computer Science in the autumn and I am concerned that I don't have any research experience. My interest is in Theoretical Computer Science and I am finding it hard to find any internships, as there is very little funding for undergraduates available at my university and no advertised positions in this area. I have seen an industrial position that matched my interests, but it was only advertised for Msc/PhD students.

I asked around last year and was unsuccessful but it was suggested that I self study a topic, so I don't know if I should do this again, or try to pursue an actual internship.

I think the reason I was unsuccessful was that I was too general and not specific enough about my interests. However, as an undergrad I am finding it hard to identify something that is achievable at my level and to narrow down to one area.

Therefore, would it be better to find a paper and a topic and directly approach an academic, or would I be better off using the summer to study more broadly and find a specific topic to pursue? Is there anything else I should do to increase my chances of getting an internship?

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I am starting an MSc in Computer Science in the autumn and I am concerned that I don't have any research experience.

Not having research experience when starting an MSc is not a problem! One of the goals of MSc is to acquire research experience.

However, as an undergrad I am finding it hard to identify something that is achievable at my level and to narrow down to one area

It is perfectly normal that at this stage you do not already have well defined interests.

A potentially more successful approach would be to ask your current teachers. Even if they do not have any funding in their lab, they may be able to suggest some of their colleagues and to recommend you.

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I believe strongly in personal growth as a means of getting where you want. I am trying to get an internship as an undergrad, so I checked which skills interest both me and the companies I am trying to work with the most, and now I am developing them on my own.
My suggestion is that you start some extensive reading on the subject, start with a book or two, read some papers and try to apply that knowledge (of course, I'm in computer engineering so it's easy for me to say). I started by writing tutorials to showcase my knowledge, and I have also published a game and a small development tool for example, participated in a contest and participating again, and am still developing.
The point is, it would probably give you good odds of getting the position if you show that you are already in touch with the topic, have some working knowledge and interest in really learning about it well (for me that's optimization, abstraction and low level programming that show that I'm really into it), and that you're already capable of delivering some work, and thus can give them better quality work in less time than other candidates.
Also, having a large portfolio/showcase with plenty of good work in it, shows that other than knowing what you're doing, you like doing it and are working a lot, thus you will deliver work rather than just occupy space and, possibly, resources.

In short: do what you can to show that a) you're already into it (less training, producing sooner), b) you're good at it (no low quality work), c) you will deliver work (not just trying to pass your time / put a check on the task). This is my approach to the whole issue.

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