The Ultimate Guide to Entering Venture Capital

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Do you want to get in on the exciting, fast-paced venture capital industry? With over $260B invested in 2021, the industry has seen 78% growth year over year in total global venture investments, illuminating the vast potential of this growing field filled with opportunities that you won’t want to miss out on.

So, you’re a student or recent grad who wants a piece of the action? We’ll give you some tips.

In this article, we’ll cover:

  1. What is Venture Capital
  2. The Benefits of Working in VC
  3. Education Guidance 
  4. The Skills You’ll Need
  5. Getting A QUIP VC Certification
  6. Nailing the Interview
  7. Career Paths and Salary Expectations
  8. Final Tips for Success

What is Venture Capital?

Venture capital (commonly referred to as VC) is both a form of financing for small and growing businesses, as well as an investment vehicle for firms and high net worth individuals. A venture capital firm will pool money from limited partners which is then invested into companies looking to fund growth in exchange for ownership, commonly referred to as equity. The money raised from limited partners such as pension funds, sovereign wealth funds, wealthy families, endowments, etc. VCs mitigate the risk of investing in early-stage companies by investing in a portfolio of companies in each fund.

The aim of a VC fund is to find early-stage companies that have a large potential for growth, and therefore a high return on investment (ROI). The investors recoup their investments through one of three ways: 

  1. The merger or acquisition of a company
  2. Pre-IPO secondary sale to other investors
  3. An initial public offering (IPO)

Venture capital investments are extremely risky. Due to the high failure rate of startups, the most common venture strategy is to remain highly focused on finding big winners that disproportionately offset the loss from failures. Despite the risk, there is the potential of finding, funding, and owning a part of the next unicorn (i.e Uber, Airbnb, Google). What makes venture capital investments appealing are anecdotes such as Peter Thiel’s early investment of $500,000 into Facebook turned into over $1 billion in value he has recouped over the years. Today, the investment would be worth over $10 billion, had he not sold any shares.

Ultimately, the game of VC is managing high risk and securing high yield sustainably.

What are the Other Benefits of Venture Capital?

There are more benefits to the world of VC than money (although, that certainly can be a great benefit). One of the top benefits for VC professionals is that it can be an intellectually stimulating career that involves analytical and critical thinking. Venture capitalists typically evaluate a wide array of ideas each day, which makes for an exciting challenging workplace. Furthermore, venture capital opens the door to building a robust professional network across multiple industries.

Successful venture capitalists achieve fulfillment by enabling and fostering innovation and entrepreneurship. Many VCs are entrepreneurs themselves and come from a diverse set of backgrounds. Their widespread investments allow them to gather diverse insights, view business decisions broadly, and provide valuable feedback to founders on tactics and strategy.

Do I Meet the Education Requirements?

Another benefit within the world of venture capital is the diverse backgrounds of its participants. Currently, the two typical entry points to a VC firm are through a successful exit (as a founder) or an internship at an existing VC firm. There are many other paths as well, including starting in finance roles, leadership at venture-backed startups, equity research analysts, roles in private equity, etc. In short, there is no one direct path toward becoming a venture capitalist.

Most successful VCs have a formal education. If you are considering a field of study, a bachelor’s degree in business or finance might be a good start. A foundation with the language of finance may assist in business analysis and financial modeling.

Many venture capitalists also have an advanced degree (a little over 50%), like an MBA or a master's in finance, but it is not necessary.  As the VC industry is growing, it is also getting more professional and harder to break into, this is where adding a professional certification to your resume improves your chances of breaking into VC.

Alternative Options for Education:

Perhaps the most important education requirement comes in the form of work experience. As a result, post-grads strive to find work or internship experience in the banking or consulting fields. You can also consider completing an experiential venture capital certification course.

Finally, finding a mentor is another great way to round out your education for this industry. As a student, seek informational interviews to express your interest and curiosity about the work. You’ll likely gather insights on potential paths you can take. At the end of the day, your education is not as important as the network you build. Building a strong network will lead to more connections on up-and-coming businesses and can allow you to take your career to the next level. The old saying “it’s not about what you know, but who you know that matters” holds true, especially in a career in venture capital.

And remember, action begets authority. Never feel you missed your shot because you didn’t study finance or business. Many successful founders skip college altogether, so keep in mind that while an education may provide you with a solid foundation, it in no way guarantees your success. The actions you take and skills you absorb are a far better indicator.

What Skills Do I Need to Have? 

Just like education is important, so is retaining the skills of a traditional venture capitalist. Analyst and associate roles are extremely scarce, often going unposted publicly, only to be filled with internal networks. The jobs that do make it to public job boards often end up being filled with individuals who have a plethora of experience and knowledge in the field.

Due to the competitiveness of the field, you’d likely want to spend some serious time researching the industry before you make the leap. Reflect on if your personality and natural aptitudes might be a fit. Are you a people person who can read market trends, work long hours, and be highly analytical? Would you get tired from sifting through thousands of companies only to land on one or two with actual investments? What is motivating you to do the job in the first place? Can you support your internal intuition with external research? While these may seem rudimentary, it's helpful to know these self-reflective insights from the get-go.

Surround yourself with information, to become acquainted with the bare minimums:

  • Read Founder Stories, startup news, VC blogs and more (your curiosity will bode well in interviews).
  • Listen to startup/VC podcasts (perfect for your commute).
  • Follow prominent venture capitalists on Twitter and LinkedIn.
  • Check out influencers like Gary Tan, Peter Theil, Arlan from Backstage Capital, Naval Ravikant and other thought leaders explain the role on YouTube.
  • Dive into books like The Secrets of Sandhill Road, written by Scott Kupor, managing partner at one of the most well-known (and largest) venture firms, Andresen Horowitz
  • Use Hunter.io to find publicly listed emails of firm employees, or use LinkedIn Email Scrapers like these to get into contact with industry professionals and start building your network. Add value in your cold outreach, offer to pay for their time in exchange for answering a few questions, you’ll be surprised how few take you up on your offer and will be willing to help.

Breaking Into The Venture Industry Using a QUIP Certification

Now what? You’ve done some research, and think VC is for you. Maybe you’re still looking for internships and mentors, or maybe you’re well on your way and want to add everything you can to make your resume stand out. Now it’s time to get certified.

We think one of the best ways to set yourself apart from the competitive application pool is with a QUIP certification.

The certification process is designed to help you succeed at:

  • Understanding VC industry
  • Experiencing what VC’s do every day
  • Pursuing a career at a VC or starting your own VC fund
  • Raising capital from VCs
  • Setting yourself apart from everyone else

QUIP does this through an experiential education process designed to cover the how-to's of deal sourcing, assessing businesses and founders, building a personal brand, doing due diligence, term sheets, and investment evaluation. Some of the key reasons we recommend the QUIP institute:

  1. It is the world's largest association of unaffiliated VC professionals.
  2. QUIP is a non-profit, mission-driven, industry-attuned, and builds on 50+ years of proven leadership.
  3. The course offers members access to the latest financial research, a community, thought leadership, and continuing education.
  4. It provides an active hiring network and access to its Career Center talent tools [coming soon].

Woah, sounds great! It must be expensive, right? 

Nope! There are scholarships available and the cost to join a QUIP certification depends on the offering tier:

The QUIP VC Certification [Comprehensive] costs $3,000. 

With this, you get a comprehensive, 9-month program where you interact with team members and other investment professionals.

The program curriculum includes: 

  • Venture fund formation
  • Portfolio construction
  • LP fundraising
  • Personal brand building
  • Scouting deals and deal sourcing
  • Due diligence
  • Networking tricks
  • Access to 12 hours of Q&A with industry professionals in a group setting
  • Earn VC QUIP Charter (by completing the program & passing the exams)

The QUIP VC Certification [at Your Own Pace] costs $1,000

This program is designed for existing VC Professionals seeking QUIP certification

The program curriculum includes:

  • Venture fund formation
  • Portfolio construction
  • LP fundraising
  • Personal brand building
  • Scouting deals and deal sourcing
  • Due diligence
  • Networking tricks
  • Earn VC QUIP Charter (by completing the program & passing the exams)

The last option is to register for a QUIP VC Certification Exam for $500. This option is available only for existing industry professionals with relevant experience. Please review charter requirements before registering for the exam.

Of course, all of this is significantly less than most grad programs or traditional education enrollments. But in order to ensure equal opportunity for all applicants, the company also offers scholarship options, which we recommend to those who may not have the financial bandwidth to invest in the programs. 

Nailing the Interview 

Boom! You’ve done your research, taken your QUIP Certification coursework, and now want to brush up on interview skills. 

Keep in mind, QUIP prepares you for interviewing but here’s a little refresher in case you haven’t taken the course yet.

Oftentimes, interviewers are looking to understand your thought process more than anything. They will understand you may not have had the day-to-day experience of a VC professional. In fact, it’s usually more about your ability to approach problems, as they can teach you many of the needed tasks in training.

Get familiar with how you would approach vetting potential investments. To do this, read industry news to get a sense of what other VCs are thinking when they make investments. Read about industry trends, and learn how to read a company’s financial statements. Even if you didn’t study finance, you can brush up on skills with tools like Udemy. It’s also best practice to spend time watching mock VC interviews. Other areas of research we recommend as interview prep include:

  1. How to evaluate startups
  2. The basics of equity and dilution 
  3. The difference between PE and VC
  4. Reading a P&L 
  5. Common terms on a term sheet 
  6. The investment history of the firm you’re interested in (think: industry, size, stage, etc.) 
  7. Why you’re interested in that firm in particular (not all are successful) 
  8. Other fundraising methods (like crowdfunding)

Career Paths and Salary Expectations

Salaries as a venture capitalist widely depend on your experience and role within the firm.

A typical hierarchy and venture capital organization chart may look something like this:

  • Analyst
  • Associate
  • Pre-MBA Associate
  • Post-MBA (or Senior Associate)
  • Principal or VP
  • Partner / Junior Partner
  • General Partner or Senior Partner

Okay... but how do you get yourself to the bottom of the VC ladder?

Here’s a helpful map of potential routes you could try to break into the space: 

(Images Source)
(Images Source)

What can you expect to make once you get there? And is it all worth it?

In a venture firm, salaries are typically paid out from the fund’s management fees. As expected, salary largely depends on where you fall within the above hierarchy. Case in point: if you are a partner, you typically get a piece of the returns on successful exits called carry, which is short for carried interest. The carry is typically divided amongst general partners. (You may have heard of the 2/20, which is a 2% management fee and a 20% carry). Keep in mind, this is all very nuanced and there is no standard protocol. 

Okay, okay, but what about venture capital salaries

  • $76,000 - Average Analyst Salary (keep in mind there is a large range depending on the size of the firm for analysts and can be expected to range anywhere from $53,000 - $126,000) 
  • $111,000 - Average Associate Salary
  • $140,000 - Average Senior Associate Salary
  • $182,000 - Average Principal or VP Salary
  • $244,000 - Average Base* Salary for Partners

*Keep in mind the above numbers don’t include bonuses or carries and are merely an average (source). 

Final Tips for Success

In sum, there’s no sure-fire way to becoming a venture capitalist. But, you can better position yourself in the following ways we’ve covered:

  1. Study business or finance
  2. Intern or get work experience at a VC firm
  3. Start your own company 
  4. Build your network 
  5. Follow industry thought-leaders and news
  6. Get certified to prove you are Qualified (with QUIP) 

We are a group of VC professionals, and this is our honest road map to entering the field. We hope this article was helpful. Please share it with anyone else you know who might find it helpful, and best of luck on your journey!