The Venture Capital Career Path

May 13, 2015

The typical career path at a venture capital firm is as follows: associate, senior associate, principal, and general partner.

Career steps

There is no single formula to get a venture capital job. An MBA can help, but a lot of people have MBAs. Some don’t have MBAs and still get hired. Rishabh Kaul is an associate at Aavishkaar. When he posted a job ad for an associate position, he received over 400 applications in 3 days, including applicants who had MBAs and 10 years of post-MBA experience.

In a sea of applicants, how will you stand apart? What do successful venture capitalists look like?

One study analyzed the biographies of 151 venture capital partners in U.S. funds. Here is what they found:

  • The average partner is 46 years old.
  • 53% had an MBA.
  • In the United States, 60% of the MBAs were graduates of Harvard or Stanford.
  • 15% had a Phd, JD, or MD.
  • They had prior work experience in consulting or finance.

For venture capital jobs, having real world experience where you worked with a team, overcame challenges, and thrived will help you stand apart from the competition.

The ultimate goal of many job seekers in the venture capital industry is to become a general partner. In this role, you are running the show; you make the final decisions on deals and determine the direction of the firm. As with most desirable things in life, the competition is fierce, and the opportunities are few. Your specialized experience must match the focus of the firm.

If you are new to the industry, it may make more sense to focus on other positions – even entry-level jobs. Venture capital positions typically require heavy analytical work, especially forecasting. If you are not confident in this area, it would be advisable to do some serious remedial work on your own time. Forecasting is a core function of venture capital. Your job is to analyze the prospects of businesses and provide recommendations or rejections to senior associates. They are counting on you to do the initial review, so don’t disappoint them.

Another role is becoming a venture partner. General partners are compensated for every deal, but venture partners are only paid for the deals they identify. Becoming a venture partner can be a stepping stone to partner. Some venture partners are semi-retired former partners who still want to do deals.

Venture partners may or may not receive cash compensation. Typically, however, they do receive carried interest. One problem is a firm cannot provide carried interest it does not have. If you source a successful deal, but the firm’s other investments lose money, then it could be a wash, and you end up with nothing. It’s important to realize that your compensation is still contingent upon the success of the overall firm and not just on your particular deal.

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