Salary, Job Description, How To Become One, and Quiz
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Venture Capitalists
Venture Capitalists invest in small companies that require capital to expand in exchange for equity in the companies that they invest in. Venture Capitalists are often the ones responsible for funding startups.
Table of contents
Startups and developing companies often struggle to become profitable during their early years due to the cost of expansion and growth. Investors help these companies focus on growth by providing the required funds.
Companies have a variety of options when it comes to finding investors, including angel investors and venture capital firms. While angel investors are individuals who invest their own money, venture capital firms obtain investment funds from other people.
Venture Capitalists are the people responsible for helping venture capital firms evaluate the potential return and risks of investing in a company. Here is a closer look at what they do.
What they do
Venture Capitalists invest in small companies that require capital to expand in exchange for equity in the companies that they invest in. Venture Capitalists are often the ones responsible for funding startups.
Analyze Investment Opportunities
Venture Capitalists spend a significant amount of time looking for the next great investment opportunity. They pay attention to the growth of new companies in various industries and analyze their potential.
Some Venture Capitalists specialize in specific industries, such as information technology, energy, or real estate. Focusing on a single industry allows Venture Capitalists to pay greater attention to industry-specific trends and developments.
Negotiate Contracts with Business Owners
Experienced Venture Capitalists are often directly involved in contract negotiations when investing in a company. Venture capital firms typically provide funding in exchange for a stake in the company.
Firms often obtain between 25% and 55% equity ownership in the companies that they add to their portfolios.
Depending on the percentage of equity ownership, a venture capital firm may have control over the company’s structure, policies, and objectives. They can help steer the direction of the company to increase the likelihood of positive investments.
Closely Monitor the Financial Industry
Venture Capitalists need to closely monitor the financial industry and the performance of their investments. The typical Venture Capitalist may check the news, stock market, and social media feeds throughout the day to remain up to date.
Attend Meetings with Other Venture Capitalists
Most Venture Capitalists work for investment firms with multiple partners. The firm’s team of Venture Capitalists may meet at least once per day to discuss objectives and investments.
Daily meetings help Venture Capitalists receive input on investment opportunities. They may then present an opportunity to the firm and begin the process of negotiating an investment.
Meet with the Executives of Portfolio Companies
Venture capital firms develop investment portfolios that include major investments in multiple companies. The companies that the firm invests in are referred to as “portfolio companies.” The Venture Capitalist responsible for selecting a portfolio company often meets with the company’s executives.
Venture Capitalists need to ensure that their investment funds are being used wisely, which involves meeting with executives to review their progress. Along with equity ownership in the company, venture capital firms often gain some type of control or oversight.
For example, Venture Capitalists may have the ability to approve or deny company objectives or bring in outside consultants to help restructure the company. The amount of control over the company depends on the contract and the amount of equity owned by the firm.
What is the job like
I work with one of the leading Silicon Valley/SF accounting firms, Kruze Accounting. We serve over 450 venture capital backed startups, providing accounting, finance and tax consulting. My title is VP of FP&A (Financial Planning and Analysis). I lead the team at Kruze that helps VC backed businesses prepare their financial projections for venture capital … Read More
As a VC, my job was to source startups that our firm’s partners wanted to invest in. This entailed networking with entrepreneurs and attending demo days and talks at co-working spaces to see what interesting early-stage startups were working on. Once I found a startup that matched our investment thesis, my job was to be … Read More
Pros
You Get to Help Businesses Thrive
Venture Capitalists pick companies to invest in, which provides those companies with the necessary funds to continue their operations. By choosing a company to add to the portfolio of a venture capital firm, you may help a business grow and employ more people.
You May Make a Significant Amount of Money
Most Venture Capitalists enter this field to make money, as few other jobs offer the potential for millions of dollars in bonuses.
You Can Focus on the Industries You Care About
Some Venture Capitalists only invest in companies in industries that they specialize in. For example, if you have a passion for computers and technology, you may focus on finding the next successful IT startup.
You May Use Your Knowledge to Build Your Personal Portfolio
Venture Capitalists learn more about what to look for when choosing investments, which also helps them build their personal investment portfolios.
Cons
High Risk of Failure
About 75% of all startups fail, making it difficult for Venture Capitalists to find the next big investment.
Difficult Job Expectations
Venture capital firms expect Venture Capitalists to find good investments and achieve specific returns. The job expectations can make working as a Venture Capitalist stressful.
Where they work
Venture Capitalists work for venture capital firms, as investors working for other types of companies go by other names, such as Investment Analyst. However, Venture Capitalists who gain enough wealth may start their own venture capital funds.
Venture Capitalists may also seek comparable roles at other companies, such as investment banks. Some Venture Capitalists use their experience and education to become executives in various industries, including the financial industry.
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How to become one
Step 1: Study Math in High School
Venture Capitalists need to be good with numbers, as their job involves analyzing financial figures to evaluate investment opportunities. High school students should take the highest levels of math available.
Step 2: Obtain a Bachelor’s Degree
A Bachelor’s Degree is the minimum educational requirement for Venture Capitalists. Some venture capital firms hire graduates immediately after they finish college, even with no work experience. Common majors include Business Management, Finance, and Statistics.
Step 3: Obtain a Master’s Degree
About 50% of Venture Capitalists have a Master’s of Business Administration (MBA). They also tend to attend top schools, such as Harvard University and Stanford University. Along with obtaining an MBA, Venture Capitalists often complete coursework related to specific industries, such as Computer Science courses for a better understanding of the IT industry. Taking Biology courses may be helpful for those specializing in the healthcare industry.
Step 4: Look for Entry-Level Jobs
While some venture capital firms hire Venture Capitalists right out of college, many VCs start in other industries. Common starting jobs for Venture Capitalists include Investment Banker and Financial Advisor.
Step 5: Grow Your Personal Investments
Venture capital firms often look for individuals with large personal investment portfolios. Building a large portfolio shows that a candidate understands the stock market and how to find profitable investments.
Step 6: Look for Venture Capitalist Job Offerings
After gaining work experience and building a large investment portfolio, start reaching out to venture capital firms to find a job. Venture capital firms may not put out job ads, requiring aspiring Venture Capitalists to submit resumes to multiple firms and follow-up on the submissions.
Should you become one
Best personality type for this career
People with this personality likes to start and work on projects. They also like leading people and making many decisions.
You can read more about these career personality types here.
Venture Capitalists are typically extroverts, as they need to establish relationships with executives and business owners to find investment opportunities. Venture Capitalists are also methodical, which allows them to analyze the potential returns on investment. Successful Venture Capitalists tend to be ambitious, as it is a difficult field to succeed in and requires a high level of commitment. Venture Capitalists are also often risk-takers, as multimillion-dollar investments involve significant financial risk.
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