Do you enjoy meeting interesting people with unique ideas from around the world?
Are you an entrepreneur who wants to make the move to the investor side of the table?
Are you capable of saying "no" to the most optimistic and wide eyed founders?
Are you able to sift through enough due diligence, data, and financial modeling that would make the U.S. Federal Reserve Chairman bored?
Then a career in venture capital may be your ticket to the big leagues.
You know you are more than capable. Forget experience in the financial industry, you have never missed an episode of Shark Tank. You may not have an MBA but you made investments into GameStop…before it was cool.
A job in venture capital awaits!
Let’s be honest. A career on Wall Street was for your boomer parents and working at McKinsey hasn’t been cool since Shark Tank was in its first season. Venture Capital is where it’s at these days. A job that comes with a high amount of respect (and even higher compensation). Instead of slaving away at your desk, you will be networking with some of the best and brightest entrepreneurial minds who are building the companies of tomorrow that you can back today. Imagine if Steve Jobs was pitching you on Apple or if Mark Zuckerberg told you about something called “Facebook.” Now imagine if you invested in them and reaped the rewards. It’s no wonder why everyone who is anyone wants to be in venture capital.
For those looking to work in venture capital, they should prepare themselves for the reality of the industry. Understand that jobs in venture capital are stressful, competitive, rare, and aren’t for everyone. So, before you begin your career pivot, you need to know the roles and responsibilities that await you in the world of venture capital. (For the serious, OpenVC co-authored an entire book on this topic called VENTURE, which provides resources and knowledge that go beyond this article).
Table of Contents
The VC Career Path
When it comes to Venture Capital, there is no specific path to follow. Some of the biggest venture capitalists came from non-traditional backgrounds. In fact, in the world of venture, there is no such thing as a traditional background. Take a look at the following paths that led to the world of venture capital and perhaps you can see yourself joining the list.
The Polymathic Approach
Peter Thiel studied philosophy before earning his law degree from Stanford. He worked as a law clerk, a speechwriter, a securities attorney, and a derivatives trader before launching Thiel Capital Management and co-founding PayPal.
The Exited Founder
Marc Andreessen (of Andreesen Horowitz fame) received a degree in computer science and was an entrepreneur, founding Netscape and Loudcloud before launching his firm.
Neil Shen worked in banking at notable firms such as Citibank, Lehman Brothers, and Deutsche Bank. In 1999, he left the traditional banking role to become an entrepreneur. He founded Home Inns and Ctrip.com, before founding VC firm Sequoia Capital China.
Mary Meeker was a securities analyst for Morgan Stanley for nearly two decades before joining Kleiner Perkins Caufield & Byers. She left in 2019 to start Bond, a new investment firm.
The Rising Star
Brian Singerman was a software engineer who worked for Google and was promoted to engineering manager. He started XGYC, which was his own fund that made investments in early-stage startups. He joined Founders Fund as a principal in 2008 and then became a partner in 2011.
The Management Consultant
Ravi Mhatre began his career as a management consultant for Booz Allen Hamilton. He then became a product manager before joining Bessemer Venture Partners. In 1999, he founded Lightspeed Venture Partners.
If you need it broken down in a graph, here is a not so simple sample path thanks to GetIntoVC.com
But what if you didn’t found a company and had a successful exit? What if your only experience in banking is when you played Monopoly? What if you have never been to Silicon Valley and your connection into venture capital is through your brother’s girlfriend’s sister’s cousin’s roommate?
Don’t count yourself out. There are options.It helps if you have a degree from a top tier business school. Graduates of these schools (especially their MBA programs) are given preference for low level positions within the VC firm, giving them a chance to rise through the ranks. Take a look at this chart provided by Crunchbase and TechCrunch for a simple breakdown:
Relevant work experience also plays a role. Experience in consulting, sales, product management, business development, finance, and investment banking will help make you standout. It also is a benefit if you have had these roles at a startup, especially a venture backed startup. The experience you gain from launching, scaling, and even failing, will be invaluable. After all, VCs fund startups and the understanding of the inner workings of one will be beneficial.
If you have been an advisor or an angel investor with several successful exits under your belt, that is a plus. It also helps if you have a strong professional network of founders and other investors who can provide you with quality opportunities via dealflow. VCs are always looking to add people who can strengthen the competitive advantage of their firm.
Where should you hope to land a dream VC role? If you are fortunate enough to get a job in VC, the right answer is anywhere. But for context, the top one percent of the top one percent will hope to land at one of the following.
You should also understand the industry. Each VC firm has a different focus and area of expertise. While there are some generalist firms, the majority have a specialization. If you have a background in blockchain, it doesn’t make much sense to try and get your foot in the door of a firm that focuses on biotech.
You will need additional skills to help you in whatever role you land in VC, because chances are, you won't be the one making the investment decisions. That brings us to the next two sections, the jobs within a VC firm and the useful skills you will need to be successful (it also helps to know how venture capital works, which you can learn more about in our previous article).
Venture Capital Jobs
Like most companies, a VC firm is a hierarchy with established roles. This includes general partners, principals, associates, scouts, limited partners, and venture partners. You will find each role broken down below. A special thank you to John Gannon for his 2021 VC salary survey.
General Partners (GPs)
First and foremost, are the general partners (GPs). They make strategic decisions, guide the investment decisions, develop and guide the fund’s strategy and take board seats in their portfolio companies. They are the leaders of the fund. GPs average around $300k per year in salary (and much more in carry).
Next up are principals. They are the more senior members of a firm who are responsible for sourcing new deals as well as working with founders in the firm’s portfolio. They may get a percentage of the carried interest of the deals they source. Here is a description of a principal role from CoinList Seed.
As Principal, CoinList Seed at CoinList you’ll help develop and scale our highly accoladed CoinList Seed Program. You’ll build and develop the CoinList Seed team. You’ll source, select, and invest in the highest promise new crypto projects in the ecosystem. You’ll support our portfolio of founders and entrepreneurs and help them scale their projects. Most importantly you’ll seed the next generation of innovation in web3 and crypto.
Principals average $182k per year in salary.
Associates are the employees who conduct due diligence into possible investments for the firm. Their primary role is research and they often bring in deal flow to the firm. Here is a description of the role from ICI Equity Partners.
The Associate will support the delivery team in preparing and handling project documentation. This individual is responsible for assisting with administrative tasks related to the delivery team, contributing to efficient operations. Additionally, the individual works directly with business stakeholders, general counsel, and external suppliers to prepare documentation for approval. The Associate gets involved in fact-finding tasks and helps manage issues by being organized, detail-oriented, professional, responsible, and committed.
It should be noted that associates have no power to make investment decisions. Associates average $135k per year in salary.
At the lowest tier of the fund are the analysts. These are entry-level employees who work with associates on research and due diligence. For example, here is a job description from E.Ventures.
The Analyst will be responsible for supporting the e.ventures investment team on both quantitative and qualitative projects. The Analyst will perform financial analysis and modeling, and interpret company and financial data to help the investment team make investment decisions. In addition, the Analyst will assist with company and market research, preparation of investment memos and other written materials, due diligence, and other tasks that arise in the course of business.
Like associates, analysts have no power to make investment decisions. Analysts average between $56k-$126k per year depending on the type of firm.
But wait, you have seen people who call themselves scouts? What does that mean? A scout is just what it sounds like. They are people who look for promising new startups and then pass them on to their contacts at the firm. Scouts are not full fledged members of the firm, aren’t paid a salary, and are only compensated on a success basis.
But who funds the firm? That would be the limited partners (LPs) who provide the necessary capital for the firm to make their investments and generate those high returns. As limited partners, they have no sway over the policy of the firm.
What about a venture partner? What do they do?
Venture partners are allies of the fund and serve a supportive role. They are not involved in the firm’s daily activities and are usually not part of the fund. They provide their own networks and experience and can assist with operations, deal flow, and fundraising. They may be paid a commission via carried interest.
A VC may also employ a CFO to manage the standard financial activities of the firm while keeping an eye on the exit for all the companies in their portfolio.
But what do all these people do every day?
Senior members of the VC firm (principals and partners) spend their time on supporting the companies in their portfolio while junior members (associates and analysts) spend their time on sourcing new deals and due diligence.
Here is a great breakdown from the Harvard Business Review
Now that you understand the roles and what they actually do each day, let’s discuss some useful skills to have.
The VC Skillset
Venture Capital requires a variety of skills, especially to have a successful career. It is far more complicated than looking at a deck, hearing a pitch, and committing on the spot.
Here is a list of useful skills for a role in VC. Keep in mind that this is a constantly evolving list:
- An ability to raise money (preferably for your own startup).
- Ability to coach and offer guidance to founders to help them succeed.
- Ability to conduct due diligence on investment opportunities.
- Ability to create extensive financial models for startups who often have no track record, limited cash flow, and limited information to establish an accurate cost of capital.
- Ability to understand if a startup has a path to not only profitability, but a profitable exit for the investors involved
- Access to investment opportunities via quality deal flow (Shark Tank doesn’t count).
- Access to Limited Partners (LPs) who have invested with VCs before (your uncle who gave you a savings bond for your 13th birthday doesn’t qualify).
- Access to veteran entrepreneurs and startup all-stars (beyond a LinkedIn connection).
An established reputation in the startup ecosystem of your preferred domain (more than being a member of a Slack channel in the space).
- Involvement in the startup ecosystem via blogging or speaking at events and on panels.
- Understanding the industry of your preferred domain.
- A track record of successful investments (Kickstarter doesn’t qualify).
Understand that every firm is different. There is no one size that fits all and if you want to work in VC, you will need to wear multiple hats and be constantly learning, networking, and evolving.
How To Realistically Get a Venture Capital Job
Venture Capital is an extremely competitive industry that relies on not only what you know, but who you know, and how you know them. Positions are often filled via the personal networks of those working in the firm but there are some openings that are offered to the general public. There is also no formal hiring process and universities have yet to offer a degree in venture capital (but after reading this article, I am sure at least one will). This is why our book, Venture, is paramount for those truly looking to enter the world of VC. It covers everything from the interview process to assessing the actual offer.
One of the simplest ways to enter the world of venture capital is by becoming a scout. As we discussed earlier, scouts are not formal employees of the firm and are only compensated when they bring in a startup that the firm invests in. Although this role has no formal structure or benefits, it is a method to prove to the firm that you have the ability to assess quality deal flow and deliver on startups that the firm can deem as winners.
If you want to see what’s available out there in the world of VC, here are a few job boards to help you in your quest (and trust me, it will feel like that from time to time).
It is clearly evident that VC roles are demanding, scarce, and not for everyone. If you truly want to work in venture capital, then understand the requirements and be prepared for the long haul. While the journey may be tedious, difficult, and frustrating, it could lead to huge rewards, both professional and personal. I will let serial entrepreneur, angel investor, and co-author of VENTURE, Maximilian Fleitmann, end this article with his own personal advice.
Getting a job in venture is freaking hard. Because so many people want to become VCs and the good firms are getting thousand of applications for their open roles. So you as an applicant have to stand out from the masses. Make sure to be different in everything you do - this can start with your CV, outreach and can go as far as building a personal brand before even applying. VCs love to see applicants that are passionate about the ecosystem and really show that through everything they do.