The Life of a Venture Capitalist

Some compare a job in venture capitalism to a roll of the dice.

Although a career in venture capitalism may sound like a tedious job, many are drawn to it for the excitement it provides. Essentially working as an investor, a venture capitalist helps an inventor or start-up company with the funds needed to get the product or business going. If the financed item or company is successful, the venture capitalist will get the original sum back as well as interest or a percentage of any profits.

Background

While one can become a venture capitalist without a college diploma, it is much easier to break into the profession with a business degree or MBA. Additionally, working for a start-up company or in banking can help give the background necessary to succeed in the field. A good business sense, ability to network and sufficient risk-taking initiative are all important skills for the venture capitalist.

Employment

Although some venture capitalists work independently, using their own money to fund projects, most work for the relatively small community of partnership firms. These firms, which generally have a small staff and a lot of money to invest, each have specific industries they focus on, although they are frequently interested in areas of technology such as telecommunication and alternative energy sources. Employment with these firms is difficult to come by and usually requires an exceptional resume and a lot of networking.

Titles

Within each firm, as with any company, there are different roles a venture capitalist may play. The first job in the industry is typically as an analyst, doing research on possible investment opportunities before presenting them to higher-level staff. As a VP or associate, the employee would look over business plans and visit potential investment companies. The general partners are in charge of the firms, raising the money to keep going, usually while putting in some of their own, and making ultimate decisions about which projects to invest in. A junior partner is an employee who will likely eventually become a general partner and is responsible for similar duties with lesser importance and personal investment.

Salary

When employed at a venture capital firm, pay is related to how well investments are doing, but there are sizable management fees all workers must be paid regardless. As of 2010, an analyst was paid $100,000 to $120,000 plus bonus, VP/associate roles earning $177,000 to $267,000, with the VP salary at the upper end, a junior partner, earning $206,000 to $270,000 plus a percentage of the company's profits, and a general partner earning up to $500,000 plus a percentage of the company's profits.

Advantages

Venture capitalism is considered an exciting career, and is especially rewarding when an investment pays off, and the start-up becomes a successful company. Observing the way businesses and industries are being run and changing is also exciting to many venture capitalists as well as the thrill of taking calculated risks. Finances are another draw to the profession, with many in the industry making a lot of money in a relatively brief time period.

Disadvantages

Money can be a strong pull to the world of venture capitalism, but it can be a drawback. If the start-ups that the firm has invested in don't succeed, employees will face personal losses and frequently worry about layoffs in harsh economic climates. Additionally, the relationship between venture capitalists and start-ups is frequently strained, with the former often accused of meddlesome moves in an attempt to turn the company profitable as quickly as possible. As a result, some small companies looking for longevity eschew funding from venture capital firms and interesting opportunities are lost.

References

• Princeton Review: Venture Capitalist/Investor
• Seth Levine's VC Adventure: How to Get a Job in Venture Capital (Revisited)
• Wet Feet: Venture Capital
• AntiVentureCapital: The Smart Startup--Venture Capital