How to Become a Venture Capitalist (2023)

08-07-22

What is a venture capitalist?

A venture capitalist (VC) is a person that finances start-up companies or new businesses with potential for significant growth. What does VC stand for? “VC” is an abbreviation for “venture capitalist.”

More people today want to know how to become a venture capitalist. Interest in venture capitalism from newly qualified MBA’s is increasing. Unfortunately, there isn’t a mass-market of VC jobs available, so how can you stand out and get hired by a VC company?

Firstly, you may believe that you need a degree and a set of impressive credentials on your resume. An MBA may help you to get a foot in the door, but it’s not a guarantee for securing a VC job. Secondly, let’s clear the misconception that you need significant capital to become a venture capitalist.

New positions in VC firms rarely make it to job boards. So, if working in venture capitalism is something you desire, be active and make yourself visible, rather than waiting for an opportunity to come to you.

VC associates’ annual salaries and bonuses vary considerably depending on several factors, such as the size of the venture capital firm. A venture capitalist salary is £78,000 to £120,000 or more with bonuses.

The online NVCA report the following data: –

$244 billion was spent in 2020 on research and development from VC-backed public companies
960% employment growth at VC-backed companies (1990 – 2020)
75% of the largest US companies would not exist or have grown without VC input

Contents

How to become a venture capitalist with zero capital

You may not necessarily need money as an independent VC. Still, you must have the skills and confidence to source potential deals and, for instance, find entrepreneurs developing innovative and emerging technologies. In this instance, you either have an impressive source of connections or know the ideal places to meet new start-ups with growth potential.

Once you’ve identified a company of interest, the next step is to do your due diligence. Firstly, do you comprehensively understand the industry? If your knowledge isn’t in-depth, you must find experts who you can consult for a professional opinion on how the industry might develop.

Secondly, do you have the research skills to dig deep into the founders’ background? You might not find everything you need online, so your research could include contacting previous customers, employers etc. It’s also essential to assess a founder’s management style. A founder obsessed with micromanaging details (and people) may clash with the venture capitalist’s ideas for business development.

Doing these first two tasks helps you gather enough data to determine if the project “has legs” and create a persuasive presentation.

How to negotiate a venture capital deal

Many entrepreneurs are fantastic at creating a business idea but may have a “big picture” overview and resent dealing with the essentials of documenting and organising finances.

You’ll achieve more success if you develop exceptional negotiation skills. For instance, how much venture capital is the founder requesting? Is it enough or too little? Have they calculated an accurate valuation and acceptable terms of entry for a VC?

At the early stage, honest and open communication is essential, asking difficult questions and challenging inaccurate or assumptive information. Both parties need clarification on how to implement venture capital into a business.

Be 100% honest about your role and refrain from stating that you represent or have a working relationship with a VC firm. Likewise, explain your position as an independent VC consultant when you present the start-up company to the venture capital firm. Any misinformation at this stage could damage your reputation if you falsify that you’re a start-up team member.

How to finance a new start-up

At this stage, you’re ready to finance the start-up, and as you don’t have sufficient capital, the next step is to find willing investors. It may seem daunting, but money will chase a potentially profitable start-up if you have identified a compelling opportunity.

Venture capitalists (sometimes called “angels”) always look for the next opportunity to support and help develop exciting start-ups. However, you’ll succeed more if you’ve already pre-established relationships with VCs. If you want a VC to take a meeting with you, you’ll get through the first step if they already trust you as a person and understand the independent role you’re working hard to establish.

Top tips for how to become a venture capitalist

Become active in entrepreneurial communities

Start creating relationships with and connections to entrepreneurs. Develop a reputation as a people connector. Become a person who can be trusted and has exceptional knowledge of finance and start-ups. Start your own company or join a start-up to develop your skills and experience.

Create a social profile

Build a social presence online and consistently share your knowledge with your followers. It can take time, but after a point, momentum increases, and you become a “name” in the VC community. Building an extensive, relevant network can underpin your VC career. When your network understands what you do, followers will refer new start-ups to you, and some may want to help with your research process.

Identify which VC firms you want to work with

Whether looking for a job with a venture capital firm or working as an independent VC, identify the firms that interest you. Learn everything about the company, and immerse yourself in the details. During an interview, enthusiasm for the company can sometimes override experience and skills. Follow the partners on social media accounts, such as Twitter, and attend hosted events like webinars.

Deep research

Do a deep dive into one aspect of the start-up world and create a presentation with relevant data. This approach shows a company that you have excellent research and presentation skills.

A typical interview question that VC firms ask is about your preferred technologies, the markets and the products you like. A confident and enthusiastic answer helps you stand out among other candidates who haven’t done the deep research you have.

Create a “paper” VC portfolio

Practice identifying new start-ups, research the project and estimate the potential growth. Track the company so you can gather data for your success.

Training to become a venture capitalist

There are several online Venture Capital associations where you can become a member and take training courses: –

BVCA – Membership and Training

The BVCA is a superb resource for VCs. They provide: –

Networking events
Online training
Webinars
Conferences
A “watch on-demand” section

You can join as a general partner, limited partner, professional services, finance institute, or investee company.

NVCA – VC Information Resource and Training

The Washington-based NVCA has an online non-profit VC university. It offers multiple memberships options, scholarships, and the website is a great informational resource.

Conclusion: How to become a venture capitalist

To become a VC, the best thing to do is start today. Take the steps outlined in this guide, get an education, build your skills, and track emerging start-ups on a paper portfolio to test your start-up assessment proficiency. Start a public profile and build relationships with VCs and entrepreneurs. Determine to become the “go-to” person when a new start-up emerges on the market.

A venture capitalist salary can significantly exceed £120,000 with bonuses, and as an independent VC, there’s no ceiling on how much you can earn from profitable investments.

In addition, become a member of a VC online company, such as the BVCA and attend events as often as possible. Develop relationships with other members and build your network of contacts.

Whether you want a job with a venture capitalist firm or are ready to become an independent venture capitalist, it can be challenging. Still, anything is possible if you take the proper steps, adopt an honest approach, and commit to consistency in your interactions with VCs and entrepreneurs.

To discuss your employment options contact the CB Recruitment team.

FAQs

What is venture capital?

Venture capital (VC) is a form of financing when venture capitalists (wealthy investors or a financial institute) invest in small businesses or start-ups that they believe have the growth potential.

How to get venture capital funding?

Firstly, is your company fully prepared to present to an investor? Are all business processes operational, and can you demonstrate growth potential? Secondly, thoroughly research and understand early-stage venture capital and how to find the right VC for your business. Ideally, approach a VC with an interest in and experience with your industry. Create a professional presentation, like a pitch deck, and close the deal.

What is venture capitalism?

“Venture Capitalism” is purely a broad description of the process of “venture capital.”

What airlines does Capital One Venture partner with?

Capital One partners with multiple airlines. For instance, 1,000 Capital One miles gets you 1,000 points (or miles) with the below airline partners: –

Aeromexico Club Premier
Aeroplan®
Asia Miles
Avianca LifeMiles
British Airways Executive Club
Choice Privileges®2
Emirates Skywards
Etihad Guest
Finnair Plus
Flying Blue
Qantas Frequent Flyer
Singapore Airlines KrisFlyer
TAP Miles&Go
Turkish Airlines Miles & Smiles
Virgin Red

How to get into venture capital?

It can be challenging to get into venture capital unless you demonstrate a history of working with start-ups in finance.

Ideally, if you are just starting your career, you have investment banking experience or have worked in business development or management consulting. Postgraduate, you may have a background in finance or tech or gained experience with a top business school.

Aside from an appropriate degree, if you want to work with a VC firm, you’ll need to demonstrate real-world experience in start-ups and finance. The (almost) guaranteed way to start working in a venture capital firm is to apply for an internship.

What is a venture capital firm?

A venture capital firm is a company that explicitly funds start-ups or relatively new companies, notably in the tech industry, which is typically a high-growth industry. Venture capital firms raise capital from partners when they identify a private company they assess may present a promising opportunity for development.

About Author

Jan Barley

Jan is a SEO copywriter, brand advisor, content strategist & case study specialist writing for crypto, recruitment, and SaaS companies. Jan lives in the Cotswold's UK with two rescue dogs. Since 2020, Jan has written hundreds of SEO articles for various crypto companies including CB Recruitment & Coin Bureau.