How to Become a Venture Capital Associate (2024)

FAQs

How to Become a Venture Capital Associate? ›

As in private equity, most VC pre-MBA associates come to a firm with some type of experience. This can range from a stint as an investment banking analyst to some kind of industry‑specific training. Firms expect pre-MBA associates to stay for two to three years and then exit to business school or another employer.

As in private equity, most VC pre-MBA associates come to a firm with some type of experience. This can range from a stint as an investment banking analyst to some kind of industry‑specific training. Firms expect pre-MBA associates to stay for two to three years and then exit to business school or another employer.

Jobs in Venture Capital are notoriously hard to land. They don't come by often, and they are seldom advertised—except in large VC firms, mainly for entry-level positions. Aspiring VCs often don't understand Venture Capital well enough to apply at the right type of firm, or one that is interested in their skillset.

Venture Capital Associate Salary and Bonus Levels

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.

Highly analytical with an interest in sifting through, and identifying trends within, large volumes of data. Basic understanding of financial modeling and accounting. Demonstrated ability to thrive in an entrepreneurial environment with limited supervision (including proactively seeking guidance when needed)

You earn high salaries and bonuses at all levels, relative to most “normal jobs.” Unlike traditional finance fields, you do something useful for the world in venture capital because you fund companies that could transform industries or literally save peoples' lives.

$91,245 is the 25th percentile. Salaries below this are outliers. $182,490 is the 75th percentile. Salaries above this are outliers.

VC, Venture Capital

Venture Capital is the riskiest sub-sector of Private Equity since it implies investing in young startups that sometimes have little to no clients, no fixed business model, etc. rather than fast-growing & mature companies with predictable growth & business models as is the case with Private Equity.

Compensation. Consulting salaries are pretty predictable – you are paid on salary and a bonus based your and the firm's performance. VC, on the other hand, involves a lower base salary, almost no bonus, but part of the share of the fund. Your salary is paid out of the fund's 1.5-2% AUM charge.

Is venture capital a stressful job? ›

Understand that jobs in venture capital are stressful, competitive, rare, and aren't for everyone.

Venture capital associates are entry-level professionals who source deals, perform due diligence on potential investments, and support their firm's portfolio companies. Associates may also be known as researchers and deal sourcers.

Associates generally don't receive carry (i.e. a portion of profits in the fund), so we can just calculate cash and bonus salary to get to a decent answer.

You do not need a license. You need a significant amount of experience in the financial sector, ideally in investment banking or private equity. Having an MBA also helps your chances of becoming a venture capitalist.

Venture capitalists typically earn a bachelor's degree in business, since it can provide them with the skills necessary for reading and comprehending business plans, which is crucial when becoming an investor.

Entry into Venture Capital or Private Equity generally represents the start of a second career, following a career as an entrepreneur, Manager of a large established company, or Analyst in Investment Banking/Equity Research domains.

Venture Capital = Selling Money To the Best and Brightest

The first thing to understand about VC is that it is a sales profession.

In general, you'll earn significantly more across all three in private equity – though it also depends on the fund size. For example, in the U.S., first-year Associates in private equity might earn between $200K and $300K total. But VC firms might pay 30-50% less at that level (based on various compensation surveys).

Aspiring entrepreneurs are facing a worrying trend: venture capital (VC) funding is drying up. The current macroeconomic environment is driving up the cost of capital, making venture capitalists more reserved on the investments they are willing to make.

Amazon Venture Capitalist Salary | $278K-$388K+ | Levels. fyi.

How much does a Salesforce Venture Associate earn? ›

$57K - $94K (Employer est.)

The average Venture Capital Associate salary in New York, NY is $116,999 as of February 27, 2023, but the salary range typically falls between $105,788 and $130,970.

Buffer's founder Joel Gascoigne turned down a nine-figure VC check back when he was first building the business. He also said no to a hefty acquisition offer.

25-30% of VC-backed startups still fail

As a general rule of thumb for startups, out of every 10, about three or four fail completely. The other three or four return their original VC investments, and only one or two will produce substantial returns.

Working Hours

You usually start at around 8 AM and are in a position to leave by 6 in the evening. On a weekly basis, expect to spend about 50-60 hours at work. These hours are pretty good. But if you're responsible for managing some of the portfolio companies, then there is a downside.

The top-tier consulting firms are collectively known as MBB, which stands for McKinsey, BCG, and Bain. These three companies are the most prestigious management consulting firms to work for. MBB hires the smartest people, pays the highest compensation, and has the best exit opportunities.

2. The Entrepreneur – The entrepreneur is the most important player in venture capital.

Carried interest, also known as carry, is a share in the profits that general partners receive in compensation for the management of a venture capital fund. These profits can be long-term gains, dividends, short-term gains, or interest and a total of 20 to 25 percent of the fund's profits.

Is private equity prestigious? ›

Private equity is extremely prestigious. Compensation for both careers is very high, but the work/life balance in private equity is better, it is often the preferred exit route for investment bankers who have a few years of experience.

To become a private equity analyst, you will need a bachelor's degree in accounting, finance or a related programme and sometimes an MBA as well. Entry-level positions are available, but usually experience working in the financial sector is a requirement.

This is coupled with the fact that many funds don't have formal internship programs. So if you don't have the right connections, it can be tough to get your foot in the door. Tough, but not impossible. In a previous post, we shared some insights on how to break into VC and get a job as a VC associate.

You might be able to land a job in private equity without an MBA. Smaller private equity firms sometimes hire candidates with only a bachelor's degree. It can also be easier to get hired without an MBA if you complete an internship with the company first.

There isn't one defined path to break into venture capital. VC firms are filled with ex-investment bankers, consultants, operations managers and new grads. One background isn't necessarily better than the other, but playing into your strengths can help you land the first venture gig you want.

Business schools offer general business administration degrees and concentrations in areas like leadership, entrepreneurship, and accounting. The highest-paying business majors include marketing, finance, and international business.

To help with this conversation, I like to frame fund expenses in terms of what I call the Four C's of Investment Costs: Capacity, Craftsmanship, Complexity, and Contribution.

What is the difference between principal and associate in venture capital? ›

Principals at venture capital firms are senior employees who are more senior than associates and analysts. They're more junior than partners but may be on a partner track. Similar to an associate, principals may help source and execute deals for the firm.

Making partner requires more than a decade on average at funds of funds (12 years), mezzanine firms (12.7 years), institutional investors (12.8 years) and corporate VC firms/secondary funds/co-investment funds (13 years). For more on the Compensation Report, click here.

To become a private equity associate, you'll need a degree in finance, accounting, statistics, or economics. To increase your marketability, you can also become certified in private equity or financial planning.

The estimated total pay for a Private Equity Associate at BlackRock is $181,242 per year.

Larger fund size and more money involved are what makes private equity pay higher than venture capital. Moving up the career ladder, a director in PE can earn up to $800K, whereas the number for a partner in VC is $600K. However, both managing director of PE or general partner of VC can top out at $2,000K.

General Partner/Partner/Managing Director: General Partners or Managing Directors are the senior-most people in the team. They raise funds, sponsor deals, and take all the major decisions of the VC firm.

Carry is calculated as a percentage—typically between 20% and 30%*—of the return on investment after limited partners have been paid out 1X their investment.