Definition of a Venture Capitalist
While a career in venture capitalism can be both risky and stressful, many are also drawn to it for the excitement and rewards. Essentially working as an investor, a venture capitalist finds startup companies with good ideas, providing the necessary funds to help them become successful. Although not all investments pay off, when a small business does thrive, the venture capitalist will receive the original money back in addition to interest and/or a percentage of all the future earnings.
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History of the Profession
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Venture capitalism as we know it is generally agreed to have been born in 1946 with the establishment of the American Research and Development Corporation, which provided the startup money for a company and made a large profit when it succeeded. In 1958, Congress passed the Small Business Investment Act, permitting licensing of Small Business Investment Companies, or SBICs, allowing for funding of riskier investments in new technologies.
Background Required
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Although a college diploma isn't mandatory in becoming a venture capitalist, most who work in the field have a degree in business or MBA. Networking with company representatives and meeting people in the industry is helpful in finding a job, and doing some freelance work for a company can help to secure a permanent position, according to PrincetonReview.com. Finally, having some experience working in a technology field is a benefit.
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Employment
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The venture capitalist industry is relatively small and composed of a few hundred firms with approximately two to 40 workers each, says WetFeet.com. While some venture capital firms have focuses elsewhere, most stick with the technology industry, such as biotechnology or alternative energy sources.
Positions
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There is a general structure for employees at a venture capital firm, although this frequently differs with each company. As a rule, the general partner is the most senior in an office, acquiring the money for the firm and making the ultimate decisions about where to invest. The junior partner performs similar, if lesser, duties and will usually become a general partner at some point in the future. The VP or associate will review business plans given to the company by more junior staff and hold meetings with possible investment companies. Finally, the analyst, sometimes still a student and usually the most junior position in a firm, surveys potential business plans to fund or does research on emerging industries.
Responsibilities
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Typical job requirements for a venture capitalist include keeping abreast of the specific industry in which the firm specializes, looking for new and interesting startup companies to contact. A significant amount of time is spent in meetings, listening to the presentations of prospective investments and assessing their business plans. The successful venture capitalist will have good networking and communication skills and be able to carefully weigh the pros and cons of working with an entrepreneur. She will also have research skills to understand which industries and companies are in market demand.
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References
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