Venture Capital

The purpose of the venture capital industry is to create wealth. It is not, despite belief to the contrary: to create jobs. The jobs are created by the wealth the industry produces. A venture capitalist job is to create and add value to the wealth invested into the companies by absorbing and directing the positive creative energy of entrepreneurs towards successful execution. This post intends to describe what a venture capitalist experiences and the requirements for the job.

As a venture capitalist i can honestly say that conventional opinion is the ruin of our souls. Generally, venture capitalist i have met are quite exceptional as they have experienced life, experienced running companies, are functioning on boards and have access to the best minds, best information and are often the people you want to work with as they are some of the smartest and most interesting.

Venture capitalists often work for themselves or for firms or companies in which they are a partner or part owner. The job is well paying and you should eventually get “carry” or equity in the firm as it prospers, but it is a really slow path to wealth as you could end up working many hours and get nowhere, while the pressure mounts to deliver exits for your portfolio.

Venture capitalists typically come from a background in business, finance, management or any other business-related field. Most have served as business executives or financial officers in large companies. A bachelor's degrees, and often advanced degrees, in business or finance-related subjects are often required by venture capital firms that hire employees. However, there are some venture capitalists that have no background in finance but have had significant success in the industry.

Gaining employment as an analyst or executive with a venture capital firm is difficult as few positions are advertised and those that do appear are usually heavily oversubscribed. Building contacts in the industry is the key to finding out about jobs and getting an interview. It helps to have a recommendation from someone already respected by the venture capitalist, such as a lawyer, banker, portfolio company, or board director. Another option is to have deep industry experience, a process which inevitably takes a few years.

A venture capital job conditions you to be a generalist and does not prepare you for other skill based profession because you grow spoiled constantly making decisions without much compromise as you hold significant sway in the boardroom of your investee companies, staying clear of the day-to-day affairs. The business of a venture capitalist is in building and growing companies so being a self-starter, having a driven ambition and an entrepreneurial outlook is imperative to deliver results.

The perks of the job is that it is at the heart of some of the most interesting industries and all the projects you're involved in would be an expansive experience in management. You have access to some of the best business and analytical minds, exciting innovators, you often get to travel and meet interesting people as networking and keeping an ear to the ground is a vital aspect of this work. Your time is spent attending meetings with entrepreneurs who want to make their pitch. You must have excellent business sense and a good feel for the marketplace, which requires a lot of daily research, discussions and work. VC firms are “due diligence machines” doing the hard work of making sure a company is what it says it is.

Once you have invested in a company, the work becomes more complicated and you need your wits about you in delivering to the “great expectations” you have committed to your fund investors. Hence, aspects that a venture capitalist really has to have a handle on is ability in operational activities, ability to execute strategy, an extensive network, aggression- as you need to stand up for your investment, tact, you need to be smart, willing to work hard and be prepared to take on risk. In my opinion, the most important aspect of being a venture capitalist is your ability to make advantageous timely decisions.

Along the process of building in value into the invested company, you may have to experience a wide range of emotionally charged situations at work and perhaps work pressure could translate into your personal life. Day after day, you would have to decline entrepreneurs who do not cut it and that could play on your mind. You would need to make decisions at board level that would not be popular and have to bear the grunt of dissatisfaction if your decision does not support your investee CEO. Disgruntled entrepreneurs would talk poorly of you and they could be vengeful, no matter how nice and helpful you try to be. No one likes rejection.

Over the years, you could become overly critical and your disposition could affect your personal life. If the invested portfolio does not pan out to plan, you may have to justify the delays in not meeting the targets or give bad news to your fund investors and that would be a painful situation. There is a lot of emotional reflection in the mind of a venture capitalist, with constant re-evaluation of the investment position, and you can never have a sound mind until you exit your investment.

Stress becomes a part of life and you would need to be someone who has mental toughness, be someone who is inspired, have self-motivation, endurance to rise above any situation and a great deal of self confidence to remain in this industry and deliver year after year. Very few people can do it well.

Likewise, as an entrepreneur you need to source for the gold plated venture capitalist who has the qualities you need to build your business and have an open mind. Unless you find a venture capitalist who wants to work hands and take an active role in building successful companies, you would have just an investor, not a builder.