Venture Capital Careers
You might have heard of a venture capitalist but do you know what it is? Or what venture capitalists do?
This guide will explain all you need to know about this high-powered career choice.
In short, venture capitalists raise finance to help new start-up businesses get themselves off the ground.
You have started a new coffee business and need investment for marketing, product and staff. A venture capitalist will invest funds in your business if they see it has the potential to give them a return on investment in the future.
Venture capitalists normally acquire monies from limited partners like endowment policies and pension funds.
They will then invest the capital in new businesses they believe have the potential for high-growth statistics, this usually means the venture capitalist will either have equity in the business or some other agreed ownership.
The VC will then exit the business after a length of time, whether successful or not, or once they have successfully achieved growth within the start-up.
What a venture capitalist does on a day-to-day basis can depend on the type of investments they make, the industries they make them in and how much input they have in each business.
For instance, if you have raised monies for a small start-up in need of more than just financial aid, as a venture capitalist, you might be required to help with advice and strategies on how to grow the business.
You have invested in a small product-based business and the owner has no prior business experience; however, you think the product has the potential to grow exponentially. You have a video call with the business daily and provide support.
A day in the life of a venture capitalist might look like this:
Raising funds. The main role of a VC is to raise funds and discover ways to bring the right amount of capital together that is needed for the businesses in question.
Searching for start-up businesses and new companies to invest in. Maybe your portfolio is lacking within a certain industry and you want to broaden your range.
Negotiating. You are more than likely to spend a lot of time negotiating deals and terms with the business so they suit both parties.
Growing your investment. Probably one of the most important steps in a venture capitalist’s day is to help the start-up grow. You both want this venture to be successful, and you want to receive ROI (return on investment) so helping the company increase business is the result you both want.
There is a chance your tasks could change from day to day depending on the businesses you have invested in and your role within the firm.
For example, there might be a lot of traveling involved for an associate venture capitalist, especially if they have invested funds in another part of the world.
You might have to meet with potential clients and other investors to dot the i’s and cross the t’s in person.
The higher you grow within a venture capital company, the more responsibility you will receive, thus increasing your workload and need for travel.
The main industries venture capitalists tend to invest in are as follows:
Technology – Many tech start-ups need the assistance of a venture capital firm if they have no other backing and have just started out. On the other end of the spectrum, venture capitalists are always looking for the next Amazon or Google to invest in.
Healthcare – Venture capitalists also tend to invest in healthcare products, apparatus or medical research companies as the potential return is generally high in healthcare.
Education – Educational products and services also seek investment from venture capital firms, this is a growing industry and one many venture capitalists are keen to get involved in.
Cleantech – This industry has proven popular with venture capitalists, especially because of the environmental aspect and significant energy improvements certain products and services from cleantech might offer.
Retail – There are many online retailers or bricks and mortar businesses that have sought the help of a venture capital firm over the years. VCs might be able to assist with inventory, technology and other business needs.
Of course, there are emerging industries all the time and venture capitalists usually have the know-how and expertise to predict when they are about to take off, especially if they have been in the VC field for a while.
As mentioned previously, a lot of their daily tasks involve trending industries and other areas they can invest in.
If you are aware of venture capital firms, then you might have heard of the following firms. These are some of the top venture capital businesses in the US.
If you are looking to get into venture capital, these are the companies you need to have on your radar when searching.
The list is based on information received from recent analysis and is in no order:
- Founders Fund
- Andreessen Horowitz
- Sequoia Capital
- Index Ventures
- Bessemer Venture Partners
- GGV Capital
Of course, there are several other high-profile firms around the country, but the above list is just a start to whet your appetite.
One firm can differ from the other, so it is best to do your homework on each company and what they specialize in before applying for a position.
You can also find out about the start-ups and other businesses they have partnered with recently and in the past.
For example, venture capital firm Benchmark invested in Popshop Live, a live streaming service where members can create their own channels.
You should be able to explore all the different firms and their partners to see which excites you the most. It is also a good idea to research the type of positions venture capital companies hold, this is something this guide will cover too.
To become a venture capitalist, the key skills you will require will need to include certain personality traits as well as academic attributes like college degrees, etc.
See below the type of skills and experience you might need to pursue this kind of career:
You are a college graduate who has interned or had work experience at an investment bank or you have experience in management and/or business development. Even working at a start-up is a good idea if you want to get experience from the other end of the playing field. Some people might go straight to a venture capital firm straight out of college.
You have a background in industries such as tech, finance or other key areas for a couple of years and have been to business school.
You have launched your own start-up business and it has been successful. You might have already had a high-powered job and been named partner at another venture capitalist firm.
The key personality traits a venture capitalist will need can range from patience to confidence. Here are some examples of traits that are important to a VC:
Ambition – It is a fact, venture capitalists need ambition to move higher in their careers. VCs might have a goal before they even start their journey. You will also need the ambition to invest in a particular field and maybe even help discover the next Uber or Facebook.
Flexibility – Most of the time you might have to work independently, without a team around you. You will need the flexibility and adaptability to work alone, travel when needed and work on last-minute deals you might not have scheduled.
Confidence – With all the networking and client meetings you will have to undertake at a VC firm, a certain amount of confidence will be necessary. You must be confident in your abilities and create a whole black book of contacts. Confidence is also required for obtaining new clients and taking chances.
Passion – As with ambition, a large amount of passion must shine through when becoming a VC, this is to show the importance of what you do and the results you endeavor to obtain. Passion is key.
Patience – You must have a large amount of patience when investing in start-up businesses. Some investments can take a while to get off the ground, while others flourish immediately, but you might have to wait a while to see a return on investment.
On a more professional level, you must be analytical and have a financial mind to analyze data and predict whether a company has what it takes to grow before you invest.
This will also help you to calculate your ROI and whether the risk is worth it.
As mentioned above, a college degree helps get your VC career started, especially if it is in the following fields:
Some venture capital firms will focus on candidates that have experience in a specialist field.
For example, the firm could focus solely on investing in finance start-ups so would prefer a candidate who has an MBA or bachelor’s degree in this area.
Some of the biggest names in business and tech might not have a college degree – think Michael Dell and Bill Gates – however, to say your journey to venture capital will be hard without a degree is an understatement.
But do not let that put you off, after all, Mark Zuckerberg went back to college years later after founding Facebook.
However, if you have already founded or owned a successful start-up business, then this will leave you in good stead of becoming a VC, as you will already know the ins and outs of the business world and will have created a good network of contacts.
You can also start from the bottom.
If for some reason you did not get a college degree, then work experience is necessary. Working your way up is how a lot of key business people have built up their reputation and got ahead in the world of venture capital.
You could do the following:
Intern at a start-up so you get a feel for what that side of the industry is like.
Get work experience at a venture capital firm, showing passion, ambition and all the personality traits you need to flourish in this industry.
Study the field first-hand. Learn the skills you need to be a successful venture capitalist. Maybe get a mentor who you can shadow.
Work hard. As previously noted, it might be harder if you do not have a degree, so you must be prepared to work for it if you want to pursue your passion.
It might be worth seeking the advice of a venture capitalist so they can explain their first-hand experiences.
Also, some firms’ recruitment processes might differ; for instance, some smaller firms might want to invest in younger, raw talent so they can nurture them to grow within the company.
First, to work as a VC you must love start-ups and the business world as this is what the job is all about – investing in new business and talent.
You also need to be a risk-taker as venture capital is all about taking a punt and involves lots of risks.
You might only be in the office a certain number of hours per week, but this does not mean you will not be working. Venture capitalists are on the ball all the time and will need to be able to work on their own and make their own decisions, if you want to be a VC you must be flexible with your time and be prepared to not see a co-worker in a while unless you are working on a deal together.
The culture within a VC firm can differ from business to business, but it can be quite pressurizing, thrilling and fast-paced. The best way to discover the culture is with work experience.
You might start your VC career as an entry-level associate which means you will have a lot of meetings with potential investees, you will have to be on the ball and see which start-up has the most potential.
Growing within a firm will depend on the success of your investments and foresight.
Senior positions and partnerships can come in time and will depend on the firm you are with, which is why it is important to see if these positions are available at a firm before you apply.
Your salary will also differ from firm to firm and depend on what level you are at. However, according to salary.com, the average salary for a venture capitalist can range from 230,417.
The salary of a venture capitalist might be higher than what you would make as a business analyst or investment banker, you also have the potential to make a large salary if an investment you have worked on grows significantly – it can also depend on the length of time you have been within a firm and their bonus policies.
Becoming a venture capitalist takes a lot of ambition, patience and work – it is a thriving industry which many people would like to ‘venture’ into, so do your homework, work hard, have passion, and your VC career will be on the cards.