How to Become a Venture Capitalist: Career Path Guide
When the thought of becoming a venture capitalist comes to mind, many people just think of finding the next tech giant, like Twitter or Facebook, and investing a little bit of money with them, but there’s a lot more to it than that.
Although there are several paths you can take toward becoming an actual venture capitalist (such as first having been a business executive, an investment banker, a Ph.D. scientist, an entrepreneur of even having inherited wealth) they all require some combination of education, business acumen, and a genuine passion for a specific industry and finding exciting companies within it.
Let’s explore more of what it takes to get into this field, as well as details of this career, such as how much venture capitalists earn, what their duties and responsibilities are, and much more.
Formal education you'll need
There is no set path for becoming a venture capitalist; there are many ways to get into this field. Most paths however, require either an undergraduate degree in Finance or Economics, or a degree in a specialized industry in which an employer invests.
For example, if the firm you will be working with, or the department you will be working with, invests in the Life Sciences sector, a degree in a relevant scientific discipline would be quite valuable.
Please Note: Typically, employers prefer that an undergraduate degree is combined with relevant work experience; without it, you will likely need a master's degree.
Relevant work experience you'll need
As mentioned above, there are several paths people take to get into this field. Some come from being an entrepreneur, some from being a business executive, others from the world of finance or investment banking, and some from independent or inherited wealth.
Regardless of what background you have, they key is that employers will want to see that you have certain skills and competencies (mentioned below) that are gained as the result of education and experience.
In general, recruiters and employers want people who are well-spoken, have good deal experience, and show the potential to source investments themselves. They’re typically interested in people with strong operating backgrounds and anyone who has experience creating and managing products, developing partnerships, marketing to customers, and so on.
For these reasons, prior experience in strategic consulting, investment banking, equity research or business or corporate development in the employer’s field of interest (for example, life sciences) is usually required.
Skills you’ll need to get hired
Each venture capital firm focuses on different things, so they look for different qualities in recruits. In general however, employers will want you to have the following skills:
• Articulate, confident and presentable in front of a CEO
• Comfortable cold-calling and making presentations
• Knowledge of coordinating lawyers, accountants, and bankers
• Ability to analyze a company’s financial statements
• Ability to create financial models
• Research skills, such as market sourcing, market sizing, and investment thesis development
• Expert knowledge and keen interest in a specific industry
So, what is a venture capitalist?
A venture capitalist is an individual, or an employee of venture capital firm, who invests their own money, or money they manage on behalf of others, in startup companies and ventures in return for an equity share of that company.
What does a venture capitalist do?
In general, venture capitalists source and evaluate potential investment opportunities in areas of industry that interest them (such as science or technology). This involves finding suitable companies, evaluating pitches from company founders and representatives, and performing due diligence on prospective deals.
In collaboration with other team members, which may include accountants, lawyers and technical specialists, they also assist with deal execution and project management.
What are their job duties?
Although their duties can vary based largely on their status within their firm (such as “Junior Associate” or “Partner”), venture capitalists are generally responsible for the following:
• Identifying strong industries in which to invest venture capital
• Finding investments, whether actively or passively, which have a high potential for a substantial return on investment
• Overseeing marketing activities on behalf of venture capital firm
• Evaluating potential investments
• Assist in all stages of business due diligence including investment specific diligence, market analysis and financial modeling, and conducting primary and secondary research
• Performing financial analysis, evaluating company business plans and reviewing management experience summaries of companies
• Evaluating the ideas, business models and leaders of companies
• Evaluating the potential effect that a business will have on the marketplace
• Negotiating financing and equity terms
• Providing management assistance or consultation to company being funded
Is a career in venture capital right for you?
To become a venture capitalist, you’ll need to demonstrate the appropriate skills and competence needed to do the job. This is typically accomplished via your resume of education and experience. A strong work ethic will get you these attributes.
You’ll also need to be someone who’s comfortable and natural when presenting in front of executives and other stakeholders, as well as someone who’s willing to cold call to drum up business (in an entry-level venture capitalist role). Confidence, inherent motivation and a mission-driven attitude will help you out with this.
You’ll also have to have a general understanding that investing itself is still a business decision driven by the market rather than technical product details.
Last but certainly not least, you'll need to have passion for a specific industry, such as ‘healthcare’ or ‘technology’ (or, ‘healthcare technology'!). Employers look hard for this when recruiting venture capitalists; they want someone who can bring energy and passion into finding exciting companies to work with and invest in, not just someone who’s in it for a pay check.
What is the work environment like?
Hours of Work
Venture capitalists generally work normal, weekday business hours, although overtime is required from time to time, such as when a deal is in its final stages. They might also have to travel overnight and on weekends to attend meetings, conferences and networking events.
Work-Life Balance
Typically, a strong work-life balance is enjoyed in this profession, although the working hours can be lonely at times. They work alone most of the time, and while they meet a lot of people, they don’t get nearly as much camaraderie with co-workers as there is in related fields, such as investment banking.
How Time is Spent
Venture capitalists spend much of their time in meetings with entrepreneurs and portfolio companies, as well as networking at conferences and other events. They also spend some time on research and due diligence for active deals, but most of the time is typically spent meeting people and networking.
How much do venture capitalists earn?
As with any occupation, the amount that venture capitalists earn can vary based on a number of important factors, such as:
• The size of the firm they work for
• The size of their client base
• The region in which they work
• Their level of education and experience
• The amount of responsibility inherent in their position
• Their status (i.e. junior associate, partner, etc.)
• Their pay structure (i.e. if they're paid salary, commissions, bonuses and/or 'carry' - when they invest personally alongside their firm)
Venture Capitalists Salary Alberta: According to the 2015 Alberta Wage and Salary Survey, Albertans working as part of the “Financial and Investment Analysts” occupational group (within which "Venture Capitalists" are categorized) earn an overall average salary of $95,286 per year.
Salary in the United States: According to the United States Bureau of Labor Statistics, Americans workings as part of the “Financial Analysts” occupational group (within which "Venture Capitalists" are categorized) earn a median salary of $81,760 per year.
Please Note: These figures are only intended as a guide.
Venture capitalist jobs
Our job board below has a listing of "Venture Capitalist" postings in your area of Canada, the United States, the United Kingdom or Australia.
What career advancement opportunities will there be?
Career advancement will generally hinge on your ability to demonstrate competence, initiative, passion, dedication and of course your ability to find good investments and generate solid returns. Basically, you will have to earn the firm’s trust in order to advance.
Career progression can vary, but typically involves being given more responsibility, and greater independence to make decisions, as well as increased pay.
Eventually, you can become a Senior Associate, Principal or Partner, or use your experience to start your own firm, become an independent investor, or start a consultancy.
Please Note: If working for a large firm, becoming a partner usually requires an MBA and several years of successful work with the firm. And if you're looking to start your own firm, you will need a proven track record of success and a lot of connections.
What careers are similar to this one?
Listed below are careers that may be in the same field, or they may involve many of the same skills, competencies and/or responsibilities as “Venture Capitalist”:
• Business Development Officer
What scholarships are there for aspiring venture capitalists?
The “Majors in Our Database Relevant for this Career” section below lists fields of study that are relevant to becoming a venture capitalist. You can search for relevant scholarships by finding those majors on our "Scholarships” page.
Success Tip: Apply for any and all scholarships that you even barely qualify for; there are millions of dollars worth of scholarship money that goes unused every year due to a lack of applicants in Canada and the United States!
References/Sources for this career guide
The following resources were used to gather information for this career guide:
• Starting a Business: “What Education Is Needed to Become a Venture Capitalist?” Linda Ray (n.d.). Houston Chronicle Website. Retrieved August 29, 2017.
• Midwest VC Musings: “4 Keys to Becoming a Pre-MBA Venture Capital Associate.” Eric Duboe (November 14, 2016). Medium Corporation. Retrieved August 29, 2017.
• Careers & Recruitment: “So you want to be a venture capitalist?” Jason Brown (2008). Nature.com. Retrieved August 29’17, 2017.
• Venture Capital - Recruiting: “How to Break Into Venture Capital.” Brian DeChesare (May, 2016). Mergers & Inquisitions. Retrieved August 29’17, 2017.
• Occupations: “Investment Analyst.” (March 30, 2017). Alberta Learning Information Service. Retrieved August 28’17, 2017.
• Occupational Outlook Handbook: “Financial Analysts.” (May, 2016). United States Bureau of Labor Statistics. Retrieved August 28’17, 2017.
Majors in our database relevant for this career
We have career guides for over 60 university majors in our database. Below we've outlined those that are most relevant to becoming a venture capitalist. Click on the links to see what else you can do with these majors!
