VC Starter Kit (2024)

FAQs

How to answer the why VC question? ›

Q: Why venture capital? A: Because you are passionate about working with startups, helping them grow, and finding promising new companies – and you prefer that to starting your own company or executing deals.

If you haven't already made some good investments — it's going to be tough to start your own fund. Go work at a fund first and make some good investments there. Assuming you have at least a partial track record, then, there are two-and-a-half basic paths on how to start a venture capital firm.

The truth is, like most careers, there are multiple paths into VC despite how daunting it might appear. But it's still hard. If you only have a few minutes, here are some takeaways to consider when thinking about how to break into VC: Go niche to stand out.

The most important things to remember are that you should be able to clearly articulate why you want to join the VC industry overall and the firm in particular, and have knowledge of the markets and industries in which the firm works.

If you have the requisite background, preparing yourself for common questions will help you shine in your venture capital job interview. Many of the questions you can expect during a VC job interview are general in nature, but others are unique to the venture capital industry.

And yet, despite all that cash flowing into VC-backed companies, twenty-five to thirty percent of them will fail. One in five fail by the end of their first year; only thirty percent will survive more than ten years.

Venture capital is a high-risk, high-reward type of investment, and there is no guarantee of success. While VC firms aim to identify the best opportunities and minimize risk, investing in startups and early-stage companies is inherently risky, and there is always the potential for loss of capital.

Setting up a fund may vary depending on the stage the fund wants to invest in, the sector or industry, and the performance objectives for its portfolio companies. Full-time GPs typically require between $20 MM and $40 MM per head in fund size to cover salaries and expenses, assuming a 2% management fee.

Is it harder to get into VC or PE? ›

It is quite a bit easier to break into the venture capital industry. You won't need specific experience in investment banking either. It's more important that you bring unique experiences, knowledge of technology, a strong network and an ability to win deals in venture capital.

Even once you raise venture capital, you generally only sell so much, and give up so many board seats, in 1 or 2 rounds. After just 1 seed round, rarely do VCs have much more than 1 board seat and no control. But after several rounds of venture capital, your VCs often control the board. That's when they can fire you.

At the large VC firms, Pre-MBA Associates earn $150K to $200K USD in base salary + bonus, while Post-MBA Senior Associates might earn closer to $200K to $250K. If you're at a smaller/newer firm or outside major financial centers, expect lower compensation.

Pre-MBA. While many VCs earn their MBA, many others join venture capital firms before getting an MBA. Most pre-MBA hires have worked in prestigious management consulting, investment banking, or operational roles within successful startups or tech companies (e.g. sales, business development, or product management).

No. VC and PE are totally different ball games. And PE generally looks down upon VC (considers them speculative investors and market trend followers). They require very different investment approaches, skill sets and skin thickness as well to do well in either.

Venture Capital is a high-pressure job and a competitive career choice. It's adventurous, involves risk-taking, and offers a range of experiences. If you're ambitious and eager to be part of the exciting financial ecosystem, then it is an ideal career choice for you.

Generally speaking, employers always prefer candidates who are passionate about their work, be it a service, a product, or a mission. As such, pointing out that you're not just applying to get hired but because you're actually knowledgeable and passionate about that line of work is a great way to answer this question.

When your values are in alignment with the company's values, your answers will come across as honest and sincere. Why this position? Explaining why you will excel at the position requires talking about specific aspects of the role that you enjoy and how you've made an impact doing this kind of work in the past.