Venture Capital

VC firms are often categorized based on their investing stage, industry focus and strategy.  This results in myriad opportunities for firms to carve out their own niche.

• Investing Stage: Early stage? Late stage? Closer to growth equity?
• Industry Focus: Technology? Life sciences? Cleantech? A specific sector within one of those? Something else?
• Strategy: Does the firm spend more time on portfolio company operations, finding new investments, doing industry research, or something else? Does it find new investments via outbound marketing, referrals, or a more data-driven approach?

Ranking VC firms is hardly an exact science.  Nevertheless, here are 9 of the top VC firms based on the number of prominent partners in the global top 100 in recent years (source: CB Insights).

Venture Capital Professionals allocate their time between sourcing deals and helping their portfolio companies grow.  The job can be divided into these 6 functional areas:

1. Sourcing: finding new investment opportunities
2. Deal Execution: due diligence, market analysis and negotiating deal terms
3. Portfolio Company Support: helping companies succeed and grow
4. Networking and Brand-Building: building awareness of the firm brand
5. Fundraising and LP Relations: helping the firm raise new funds and reporting to existing Limited Partners
6. Internal Operations: including administrative tasks and internal support functions

Venture Capital Career Path

Keep in mind that the structure of VC firms varies a lot, so the titles are less standardized than in the investment banking career path or the private equity career path.  That said, a “typical” hierarchy looks like this:

• Analyst – Number Cruncher and Research Monkey
• Pre-MBA Associate – Sourcing, Deal, and Portfolio Monkey
• Post-MBA or Senior Associate – Apprentice to Principals and Partners.
• Principal or VP – Partner in Training
• Partner or Junior Partner – General Partner in Training
• Senior Partner or General Partner – Decision Maker and Firm Representative

Learn more about Venture Capital Partners here. Or for a full breakdown of the VC career path, see Venture Capital Careers: The Complete Guide.

It’s very difficult to break into venture capital directly out of undergrad, and even if you have the perfect academic background, it’s not necessarily a great idea to do it.

To be useful to a VC firm, you need some full-time, real-world experience and at least the beginnings of a professional network. Professionals usually enter the industry at one of three stages:

1. Pre-MBA: You graduated from university and then worked in investment banking, management consulting, or at a startup for a few years.
2. Post-MBA: You gained a background in tech, healthcare, or finance before business school and then you went to a top business school.
3. Senior Level / Partner: You successfully founded and exited a startup, or you were a high-level executive (VP or C-level) at a large company that operates in an industry of interest to VCs.

For more information on Venture Capital Recruitment, check out How to Get into Venture Capital.

Unlike with investment banking, formal case studies and modeling tests are not that common in VC interviews; you’re more likely to get into a deep discussion of your investment ideas.

Nevertheless, careers in investment banking and private equity are often stepping stones toward a career in venture capital.   In addition, certain soft skills such as networking are an invaluable asset in the Venture Capital space.

Some of the relevant courses offered by Mergers & Inquisitions and Breaking Into Wall Street to support a VC career path include:

• Investment Banking Networking Toolkit
• Investment Banking Interview Guide