Venture Capital as a Career
Description of the Job
Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that they believe have long-term growth potential. Venture capital generally comes from institutional investors (aka rich people), investment banks, and/or any other financial institution.
The business model for Venture Capital is inherently very risky because startups have a high rate of failure, meaning that the VCs lose money on most of the startups they invest in. However, the successful startups generate massive returns (often 10 times or more) off the initial investment, which make up for all the failed companies they invest in.
Fast Facts
- Number of hours per weekGenerally 50-60, but can be more during peaks
- Average starting pay$81k Nationally, $100k in the Bay Area
- Amount of travel requiredLittle to no travel, generally have local clients
Roles & Responsibilities
- Sourcing: Research new startups to potentially invest in and reach out to them
- Deal Execution: Conduct due diligence on potential startup investments, analyze their market and financial projects, and negotiate deal terms
- Portfolio Company Support: Help portfolio companies with a range of potential needs including recruiting, sales, marketing, engineering, fundraising, administrative tasks, and financial issues
- Networking and Brand-Building: Attend events and conferences in hopes of finding new startups to invest in, publish content online, and speak with other professionals in the industry, including lawyers or bankers who work with startups
- Fundraising and Limited Partners (LPs) Relations: Help the firm raise capital, report to existing LPs (owners of the firm), and source new investors for future investments
- Internal Operations and Other Tasks: Perform a broad range of administrative tasks, which may include hiring for jobs in investor relations, improve internal reporting and deal tracking, and miscellaneous tasks that pop up relating to accounting, legal, or IT.
Skills Needed
- Long-term thinking: The ability to look at the whole picture and future results rather than just short term profits. VCs will often find themselves thinking of where they are able to see companies 5 years from now, and sometimes a decade away
- Networking skills: Meeting new startups and individuals whose company you might invest in is a huge part of the job
- Analytical skills: The ability to perform in depth and accurate financial diligence regarding potential or present companies.
- Macro Analysis: VCs must understand historic technology waves as well as predict emerging waves.
Steps to Enter The Field
- Bachelor’s degree is important to enter this field. Further education may be required, especially when the VC fund invests in a particular field.
- It’s very rare to enter the VC industry straight out of college. People generally spend a few years in investment banking or in the greater finance industry before entering as an Associate (lowest level).
- If looking to enter this industry right after college, internships in the VC or investment banking industry are ideal.
- As one gains more experience and develops their own portfolio and reputation in startups investing, they can eventually become a partner (highest level with ownership in the company) or even raise their own VC fund.
Landscape of the Field & Companies in the Field
- There are 3 “tiers” to Venture Capital firms. Tier 1 contains the top 15-20 venture firms, who consistently raise large funds of $300-500M+ and have backed multiple, well-recognized startups in the past. Tier 2 firms are the next 20-25 funds, with some moderate past success but not multiple huge exits yet. Tier 3 contains every other VC Firm.
- Some of the Tier 1 VC firms include: Khosla Ventures, Sequoia Capital, Accel Partners, Kleiner Perkins, New Enterprise Associates, Bessemer Ventures , Intel Capital, Global Founders Capital, Tiger Global Management
External Resources to Learn More & Develop Skills
- Merging & Acquisitions has some great resources for people interested in breaking into the VC industry. Some of their helpful links within their website include:
- VC careers
- Breaking into VC
- VC Industry Overview
- VC Training Courses for all levels: Includes VC Training Courses at the beginner, intermediate, and advanced levels (9 total)
Related Careers
- Private Equity, Investment Banking, Investment Analyst, Hedge funds, Growth equity
Informational Interviews
Hannah Li
Company Name: The Westly Group
Title: Investor
Years of Experience: 3
Biography
Hannah Li is an Investor at The Westley Group, which is a Cleantech Venture Capital firm. She graduated from UC Berkeley in 2018 with a Computer Science degree, and started her career as an Analyst for BlackRock in the US Private Capital division.
Overview
Steps took to enter field
Challenges & Favorite Parts
Advice
Andy Hudlow
Company Name: Redbrick Associates
Title: Venture Capital Staff Accountant
Years of Experience: 2
Biography
Andy Hudlow is a Venture Capital Staff Accountant at Redbrick Associates. He graduated from Santa Clara University in 2019 with a major in Finance and minor in Economics.