What you need to know about working in venture capital
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Venture capital (VC) is currently one of the most attractive fields to work in. As technologies like artificial intelligence become more sophisticated, the demand for VC professionals will only grow. It is a fast-paced, exciting industry and ideally suited for someone who likes helping develop companies from the startup phase to commercialization. Careers in VC are less regimented compared to investment banking and private equity, and VC firms typically hire candidates with more diverse backgrounds as well.
There are a number of key positions to fill at a venture capital firm, and virtually all of them require knowledgeable, intelligent people in one role or another to fill the positions.
Because venture capital firms expect to employ top performers, they typically pay their employees generous salaries, relative to most jobs. However, the total compensation is usually lower than investment banking and private equity. Nevertheless, the more senior VC professionals can expect large compensation packages if they are repeatedly successful at finding startups that turn into productive and profitable companies.
Key Skills for Succeeding in Venture Capital
There are a number of key skills the most successful players in the venture capital business have in common. The first of these is that a potential VC professional must be extremely passionate about helping develop and build companies. The candidate must be able to understand an industry and how this startup can fulfill a missing niche in that industry. It’s also important that a potential VC professional be able to develop effective networks in order to eventually find promising companies to invest in.
Specific technical skill requirements include general financial analysis and a solid understanding of valuation.
People skills, such as management skills, communication skills, negotiating skills, and networking skills, are also critically important, as they are in most finance roles. While quantitative skills are always important, they are less important in VC, relative to investment banking, growth equity, and private equity. More time will be spent on qualitative aspects like analyzing industry trends and meeting with entrepreneurs. Basically, this role is more geared towards individuals who like to help build companies from startup to viability.
The personality of someone well suited for working in venture capital typically has the following character traits:
Desire to help build companies
Polished and presentable
Getting into Venture Capital
Venture capital typically has the most diversity of entry points and hires. For instance, since the roles aren’t as quantitative, a background in investment banking isn’t really necessary. VC firms will hire from undergraduate programs, business schools, or target industries like tech or healthcare.
A Day in the Life of a Venture Capital Professional
A day in the life of a VC professional can vary depending on specific responsibilities, the size of the firm, and whether there is a transaction in the works. A typical day will be spent reviewing news and industry trends, drafting agreements for a financing round, updating cap tables, and meeting with potential startup founders.
Interviewing in Venture Capital
While interview prep is critical to land any job in finance, VC interviews will be less technical in nature compared to investment banking or private equity. If you have previous VC deal experience, you should discuss it in a way similar to how you have it written on your resume. Start with a summary describing the main deal/overview, and then dive into two or three key issues or pieces of analysis that you played a big role in, and how they impacted the outcome of the deal.
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