There are no training programs to speak of (that would go against the ethos of the industry, which prides itself on being agile). Let’s start with the bad news: VC firms rarely hire junior talent.
To be invited to these deals, it helps to know other players in the industry, particularly if they hold you in high esteem. A strong contacts list: Very often VC firms will enter investments not as the lead investor, but as one of several supporting investors.Do you know your Java from your JavaScript? How does R stack up against Python? You don’t have to be fluent in any of these languages, but you do have to know in which situations which language works best. Tech savvy: The better your technology - and coding - knowledge, the better, enabling you to get into the technical details of potentially interesting startups.The best candidates will know their way around this finance. many startups have no track record, no real cash flows, and a new product or service, making a cost of capital practically impossible to establish). Excellent financial modeling skills: The financial modeling required at VC firms is very specific and not something that’s taught in most corporate finance textbooks (i.e.A successful track record: If you can prove to the VC firm that you were an early investor in successful ventures, it shows that you can combine several of the traits that they’re looking for and will instantly make you an interesting candidate for them.If anything, the skills required to make it in venture capital are broader than practically any other area of finance. There’s little doubt that VC roles bring a very specific set of challenges quite unlike those required in other areas of finance. Skills required for working in venture capital promoting the fund) at startup roadshows and workshops, and spend time with the owners of companies who are nearing their IPOs.Īs most investments in startups are led by one VC firm who brings in several others, their contact book is also of the utmost importance.
The partner will typically spend a lot of time talking to outside investors, talking (i.e. Most importantly, they also control how the capital at their VC is invested.Īs always, their ability to communicate is important. Partner: The partners of a VC firm are its owners, usually industry stalwarts that have gone through a number of fundraising processes, started (and exited) several of their own businesses, know the industry inside out and have the battle scars to prove it. They often take on mentorship roles for companies after investment. Much like principals at private equity firms, they are central in the VC firm’s fundraising efforts, as well as making decisions around strategy and investments. Principal: Principals are senior members of the venture capital firm’s investment team. Think, for example, of the VC associate who was willing to listen to the Airbnb pitch, while dozens of others dismissed it as something that could never work. They should possess a range of commercial and financial skills that enable them to separate the excellent opportunities from the overly ambitious (a motif that runs through the VC industry). The associate thus plays an essential role. They typically spend most of their time analyzing attractive companies, interviewing startup founders about their company and its prospects, and bringing relevant prospects to the attention of principals and partners. There is very little, if any, client facing involved with this role.Īssociate: Associates oversee the work that analysts do, as well as having extra responsibility within the company. When a bright-eyed startup founder sends a pitch deck that makes bold claims about an industry, the role of the analyst will be to fact-check, and confirm or deny the industry’s prospects. The work that the analyst does informs the work that the rest of the team does. They’ll usually be on emails, filtering through opportunities that come through the company’s website, and delicately refusing the companies that aren’t a fit with the VC firm’s strategy or ambitions. The organizational structure of most VC firms in venture capital mimics those of other parts of the investment industry.Īt the bottom, there are the analysts or associates, who do most of the so-called lower value work, further up the food chain, there’s the principal, before we hit the partners at the very top.īelow, DealRoom provides an explanation of each:Īnalyst: As with any analyst position across the investment spectrum, the VC analyst’s role involves financial modeling, helping in due diligence, and providing insights when called upon.
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