Venture Capital Overview: Firms, Careers, and Recruiting (2024)

Definition of Venture Capital: Venture Capital is a form of financing offered to early stage, high growth potential companies in exchange for equity (i.e., ownership in those companies).

Venture Capital firms raise money from Limited Partners or LPs (such as pension funds, endowments, and family offices), then aim to grow their portfolio companies and eventually exit via acquisitions or initial public offerings (IPOs).

Since the risks are so high, VCs expect the majority of their investments to fail. But if they find the next Google, Facebook, or Uber, they could earn exceptional overall returns, even if 90% of their portfolio companies fail.

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.

You’re not likely to receive traditional “technical questions” in VC interviews, but you could easily get questions and case studies about topics like capitalization tables (cap tables), startup valuation, and which sectors you find most appealing as an investor.

So, our Venture Capital & Growth Equity Modeling course is a perfect match since it covers these exact topics.

Beyond that, it’s still helpful to understand the foundational skills in financial modeling, such as 3-statement models and DCF analyses, and you still need to know Excel and PowerPoint quite well in these jobs.

Based on that, we recommend the following courses to enhance your knowledge, prepare for VC interviews, and get up to speed when you start working:

• Venture Capital & Growth Equity Modeling – Explained above
• Excel & VBA – Perfect for learning the key shortcuts, commands, and formulas required in spreadsheets
• PowerPoint Pro – You’ll learn how to build slide decks, fix and update slides, and use shortcuts and macros efficiently
• BIWS Premium – This course combines the Excel and PowerPoint training and adds financial modeling as well