Last time, we looked at mid-range, senior-level positions in private equity, the dealmakers who are involved in identifying and completing transactions for the firm. Today, we’ll look at similar jobs within the venture capital industry.
The U.S. venture capital industry provides the capital to launch some of the most innovative and successful companies in America. Funds raised by VC firms tend to be much smaller than the multi-billion dollar funds raised by the big private equity and LBO firms. These investments take place in the early stages of a company’s life cycle (known as the “seed round”), or in later stages as a company focuses less on launch mode and more on market expansion.
But venture capital is more than pouring cash into a start-up. Venture capital partners often become actively engaged with a company, sometimes taking a seat on the board and interacting frequently with the management team. They lend their business expertise and guidance. This of course limits the number of start-ups that a fund can invest in.
The pile of 100 business plans that cross the desk of a venture capitalist gets whittled down to roughly 10 or so that get a serious look. The venture capital professional who would look at and evaluate deals that have been vetted by more junior members of the firm (such as research analysts and associates), might have the job title of “principal.” A principal is one route on the path to becoming a partner in the firm.
The VC principal would evaluate the management team at the potential investment company, the concept, the marketplace, the fit to the fund’s objectives, the value-added potential for the investment, and how much capital is needed.
Finding a Job as a VC Principal
The venture capital industry is relatively small, with only a few hundred firms consisting of between two to 50 people. Networking is crucial in this industry. While the “Old Boy’s” network is still in active and many principals having degrees from Ivy League or other top business schools, your industry experience in a particular niche may give you an edge.
In fact, one legendary venture capitalist, Guy Kawaski, an early backer of Apple and other high tech startups, goes so far as to suggest traditional background experience such as management consulting, investment banking and accounting may work against you in moving up in the ranks of venture capital.
Instead, those with engineering or sales backgrounds may be preferred. Engineering, because it helps a venture capitalist understand the complex technologies they are often investing in. Sales, because it’s a key driver for the success of the new start-up.
Many principals in venture capital firms also come from science backgrounds. Ph.D’s working with prominent research laboratories can often parlay their experience into a venture capital position. They are also often the ones bringing exciting new ideas for start-ups to the venture capital industry.
References:
The National Venture Capital Association www.nvca.org
Comments on this entry are closed.