A Complete Guide To Venture Capital Careers (With FAQs)

Updated 16 March 2023

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If you are looking for a career in finance and investing where you can make influential decisions and help companies grow, consider a career in venture capital. This career is both challenging and rewarding, because you may eventually get high returns on your investments. Understanding the details about this career can help you decide if this is the right career for you. In this article, we discuss what a venture capital career involves, share some steps to start your career as a venture capitalist and answer some frequently asked questions about venture capital.

What Does A Venture Capital Career Entail?

A venture capital career involves positions in which individuals raise funds to invest in startup businesses. These professionals negotiate deals for startup companies and investors and help companies grow. This job involves evaluating business ideas, keeping track of the latest developments in the business world and analysing a startup's business potential to decide the right venture for capital investment.

Here is the usual hierarchy of jobs in a venture capital firm:

Analyst: makes calculations and conducts research
Pre-MBA associate: handles sourcing, deals and portfolio management
Post-MBA or senior associate: acts as an apprentice to principals and partners
Principal: partner in training
Junior partner: general partner in training
Senior partner: decision-maker and firm representative

How To Become A Venture Capitalist?

You can start a career in venture capital by following these steps:

1. Assess and develop your skills

As a venture capitalist, certain skills and qualities are indispensable. Assess whether you have these skills and figure out your strengths and weaknesses. This can help you decide which parts of this job you can do easily and which areas require improvement. The following skills are necessary for every venture capitalist's career:

Mathematical and analytical skills
Business and economic understanding
Investment accuracy
Negotiation
Deal-making
Teaching
Networking
Management
Relationship building
Foresight
Determination

2. Select your entry point

The level at which you enter the industry often determines what educational qualifications, skills and experience you may require. There are three main entry points for a job at a VC firm:

Pre-MBA: You can get a job at a VC firm without an MBA, straight after university or after gaining some work experience in investment banking, management consulting, business development, sales or product management at a startup for a few years.
Post-MBA: You can start working at a VC firm after getting an MBA degree. This usually involves going to a business school after gaining a background in a specific industry like tech, healthcare or finance.
Senior executive or partner: You can also join a VC firm after successfully founding and exiting a startup or working as a high-level executive at a large company.

3. Earn a degree

Depending on the entry-point you have chosen, earn a degree that suits your job requirement. If you want to enter a VC firm before doing an MBA, a bachelor's degree may suffice. Your bachelor's degree may be in a related field, such as business studies, mathematics, accounting, sales or finance. You can even get a master's degree or a PhD in any of these fields, although it is optional.

Alternatively, you can get a degree in a technical field and work in a startup within that industry, such as engineering or life science. This can give you industry expertise, which is valuable to VC firms. After that, you can do an MBA, which lets you access post-MBA positions in venture capital.

4. Get an internship or a relevant job

Getting into a venture capital career straight after university is generally rare. You usually require some work experience to prove your eligibility. If you do not have an MBA yet, consider getting an internship or working for a few years in one of the following industries:

Investment banking
Consulting
Business development
Sales
Product management

Having work experience in a finance or business-related position can give you relevant experience to list on a resume and increase your chances of entering a VC firm. Working in a large company can be respectable and add credibility to your work experience. If you devote a few years to working at a startup company, you can learn more about how they operate and how their venture capital investors work.

5. Start your own company

You can easily start your career at the principal or junior partner position if you have experience in starting a company and successfully running it for a few months. For example, this could be a small company that you had started in college and eventually left or sold after a few years. The experience of founding and running a company can be crucial here. Having this kind of experience on your resume can make you valuable to VC firms.

Frequently Asked Questions About Venture Capital

Here are a few frequently asked questions that can further enhance your understanding of venture capital and give you clarity regarding career choice:

What is the difference between venture capital and private equity?

Venture capital is a form of private equity. They differ in terms of the companies they pursue. Private equities favour stable investments and incline towards established companies of any size. It denotes management buy-outs and buy-ins. Private equity is a larger concept involving venture capital, leveraged buyouts, mezzanine financing and private placements. Venture capital seeks to finance companies in the concept (seed), startup and early stages of development. VC investors take this risk because of the potential for very high returns.

What is the difference between a venture capitalist and an angel investor?

While both invest in startups, the essential difference between venture capitalists and angel investors lies in their professionalism and the guidance they can provide. Venture capitalists are professional investors who invest in a broad portfolio of new companies. They help new businesses by providing them with practical guidance and leveraging their professional networks. Angel investors are wealthy individuals who like to invest in new ventures as a side-project. They may not provide the same expert guidance that companies get from venture capital firms.

What are the pros and cons of this career?

One of the major benefits of working in a venture capital firm is that you get respect in the business community. You can meet entrepreneurs and build strong, wide and qualitative professional networks. As a venture capitalist, you can expect flexibility in your work schedule and a high salary. This career also helps you understand startups from diverse industries and get financial rewards in the long term.

Venture capital is a small industry. As there are only a few VC firms in any business ecosystem, switching over from one VC firm to another can be difficult. You may also encounter fierce competition to invest in the best startups, the immense pressure of delivering returns on investments and keeping track of various portfolio activities. Travelling to meet companies and investors is also indispensable for this job, which can be a drawback of this career if you dislike frequent travelling.

Is a venture capital investment risky?

Venture capital investments can be quite risky due to the nature of these transactions. These investments often involve uncensored loans given to startup companies and businesses that cannot get traditional loans. New companies may fail, even if they initially have potential. Investors can lose most or all of their money or only get back the sum they had invested. Only a few ventures produce substantial returns, but those few successful investments are often enough to compensate for all the other failed investments.

Is a career in venture capital the right choice for you?

If you are someone with great business acumen and an interest in investing in the next great idea to help a new business thrive, this can be the right career for you. Some of the key aspects of a venture capitalist's job are multitasking, teamwork, communication, academic strength, working long hours, travelling and flexibility with various industries.

What skills do you need in a venture capital career?

Successful venture capitalists often have a diverse range of skills, including determination, business and economic understanding and investment accuracy. Determination helps a venture capitalist thoroughly analyse business proposals, seek more investment opportunities and show potential employers their passion for a career in the field. Venture capitalists can also benefit from having good teaching skills, as they often require teaching coworkers and startup companies about investing and business.