Accountants compile, analyze, verify, and prepare financial records.Auditorsensure that financial records are accurate, complete, and in compliance with local, state, and federal laws. More than 1.3 million people are employed as accountants and auditors; only a tiny fraction of this number are employed in the venture capital industry.History
In recent years, demand has grown for accountants (especially certified public accountants, or CPAs) and auditors as a result of the growing complexity of business transactions and the passage of a variety of laws (such as the Dodd-Frank Wall Street Reform and Consumer Protection Act) that require companies to be more transparent regarding their finances. “During the last 20-odd years, CPAs have become some of the most important decision makers in business,” according to Start Here, Go Places, an accounting career Web site created by the American Institute of Certified Public Accountants. “If it wasn’t for CPAs, businesses wouldn’t know when to invest more capital. Or when to grow. Or downsize. They might even be out of compliance with current laws. Their superhuman ability to create, analyze, and interpret financial info makes them the first to know where the company stands and where it’s headed.”The Job
Accountants and auditors are important behind-the-scenes players in the business world. Smart executives know that their organizations are only as good as their accounting and auditing departments.
Job responsibilities for accountants in the venture capital industry vary by the size of the employer, the stage of the fund’s investments, and other factors, but major responsibilities include:
- working closely with partners during the launch and set-up of new funds, during the acquisition of portfolio companies, and during exits (i.e., mergers, the sale of the company, or an initial public offering)
- maintaining and updating financial data in investment databases
- reconciling cash received from investors and investments
- managing general ledgers for the firm and its portfolio companies
- documenting financial variances and responding to investor inquiries
- determining the fair value of the firm’s portfolio for limited partners (fair value is defined by the Financial Accounting Standards Board as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”)
- preparing financial statements (e.g., assets and liabilities, operations for the latest investment period, cash flows, and changes in net assets)
- preparing tax returns and being responsible for other tax-related issues
- providing monthly or quarterly accounting of investor contributions and withdrawals and computing profit and losses for the accounting period
- preparing semi-annual and annual reports for limited partners
- overseeing monthly fund transactions (e.g., interest calculation, investor subscriptions, invoice payments, expense accruals tracking, etc.)
- collecting and preparing data for regulatory filings
- working closely with external and internal auditors during year-end reporting
- assisting the chief financial officer with the preparation of financial forecasts
- providing accounting services, as needed, to the firm’s portfolio companies
Specialized accountants known as auditors ensure that financial records comply with government regulations and that they have been prepared according to generally accepted accounting principles. Those who work as salaried employees of companies or other organizations are known as internal auditors. “The role of internal audit is to provide independent assurance that an organization’s risk management, governance, and internal control processes are operating effectively,” according to the Chartered Institute of Internal Auditors. The work of internal auditors is checked and verified by independent auditors, who are typically employed by public accounting firms. Major duties for auditors include:
- reviewing the general ledger and other financial documents for accuracy
- identifying and addressing client issues discovered during the audit process
- recommending improvements on internal controls, operating efficiencies, and profitability to management
- conducting due diligence on a company the client is considering acquiring
- validating financial and nonfinancial data for internal and external review
- performing an annual risk assessment of the business and continuous monitoring of the firm’s risk management plan based on its risk analysis
Accountants and auditors earned median annual salaries of $78,620 in May 2014, according to the U.S. Department of Labor. Salaries ranged from less than $40,850 to $115,950 or more.
Public accounting firm accountants and auditors who provide audit/assurance services to businesses earned salaries that ranged from $49,500 to $191,750 in 2015, according to Robert Half Accounting & Finance’s 2016 Salary Guide.
Accountants and auditors receive a variety of benefits, including health insurance, savings and pension plans, paid vacation and sick days, tuition reimbursement, and performance bonuses.Work Environment
Unlike some of the more high-profile VC jobs (such as venture capitalists), accountants and auditors enjoy a good work/life balance. Their work hours are pretty standard (i.e., 9-to-5, Monday-Friday). Advances in technology even allow some accounting and auditing professionals to work at home or in other remote locations (such as at a coffee shop or even on the beach). Some employers offer flexible work schedules (e.g., Fridays off during the summer in exchange for longer hours during the rest of the week).Exploring
To familiarize yourself with the basics of accounting and auditing and the venture capital industry, check out the following resources:
- Accounting For Dummies (For Dummies, 2013)
- Principles of Auditing & Other Assurance Services (McGraw-Hill Education, 2015)
- Some Basics of Venture Capital: http://zoo.cs.yale.edu/classes/cs155/fall01/kearns.pdf
- Venture Capital 101: https://www.youtube.com/watch?v=Wq8jKqHyd4o
Additionally, talk to venture capital accountants and auditors about their jobs. Ask your counselor or business teacher for help arranging an interview.Education and Training Requirements High School
Does high school matter for aspiring VC accountants and auditors? The answer is a resounding yes. High school classes help you to grow intellectually and as a person, and excelling in your courses will help you to earn a high GPA, which will get you into a top college. And since venture capital partners prefer to hire applicants who attended top colleges, you can now see why your high school education is important.
In addition to obvious classes such as accounting, statistics, economics, and mathematics, you should also take English and speech courses because, in addition to being able to crunch numbers, you’ll also need to write reports and discuss financial issues with limited partners, your department manager, and partners in the firm. Other important classes include government, social studies, and science.Postsecondary Education
A minimum of a bachelor’s degree in accounting, economics, finance, or business administration is required to work as an accountant or auditor in the venture capital industry. U.S. News & World Report provides a list of the best undergraduate accounting programs in the United States at http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/business-accounting. Some partners prefer candidates who have a master’s degree in accounting, economics, business administration, or finance.
AACSB International accredits colleges and universities that offer undergraduate and graduate degrees in accounting and business. Visit http://www.aacsb.edu/accreditation/accreditedmembers.aspfor a list of accredited programs. An additional list of postsecondary accounting programs (associate through graduate level) can be accessed at https://www.thiswaytocpa.com/education/college-search.
The Institute of Internal Auditors has created a formal endorsement program for colleges and universities that offer an internal auditing curriculum within a degree program (undergraduate or postgraduate). Visit https://na.theiia.org/about-us/about-ia/pages/participating-iaep-program-schools.aspx for a list of schools that offer this curriculum.Other Education or Training
Many accountants and auditors participate in continuing education (CE) classes, workshops, and webinars to improve their job skills, to stay up to date with industry trends, and, if they’re certified, to satisfy CE requirements for recertification. Many professional associations provide these opportunities. For example, the Institute of Internal Auditors offers seminars and e-learning opportunities on audit report writing, finance and compliance fraud, operational/performance auditing, risk issues, technology, and personal development (communication, strategic thinking, and problem-solving). Other opportunities are provided by the American Institute of Certified Public Accountants, CFA Institute, Chartered Institute of Management Accountants, Institute of Management Accountants, and the National Venture Capital Association.
Many top public accounting firms provide classroom-based and online learning. For example, PricewaterhouseCoopers offers self-study classes such as Venture Capital Funds, Overview of Investment Companies: Fund Accounting Concepts, and Taxation for Regulated Investment Companies.Certification
The American Institute of Certified Public Accountants offers a certificate in International Financial Reporting Standards to those who complete 25 online, self-study training courses. Topics include financial statements, interim reporting, and cash flows; investments in associates and joint ventures; and fair value measurement. Certificates programs are also offered by the Chartered Institute of Management Accountants (business accounting) and the Association of Chartered Certified Accountants (international auditing and international financial reporting).Certification, Licensing, and Special Requirements Certification or Licensing
Many accountants and auditors become certified to improve their skills and demonstrate to potential employers that they’ve met the highest standards established by their industry. Becoming certified can also translate into higher earnings. According to the Institute of Management Accountants, those who hold the certified management accountant (CMA) credential earned 63 percent more in total compensation than non-CMAs in 2014. Robert Half Accounting & Finance reports that the CMA credential is one of four certification designations that are in especially strong demand. The other credentials include:
- certified internal auditor (Institute of Internal Auditors)
- certified public accountant (American Institute of Certified Public Accountants, AICPA)
- chartered global management accountant (a joint venture of the AICPA and the Chartered Institute of Management Accountants)
Additionally, some accountants and auditors earn the following certifications:
- credited business accountant/advisor, accredited tax preparer, accredited tax advisor (Accreditation Council for Accountancy and Taxation)
- certification in control self-assessment, certified financial services auditor, certification in risk management assurance (Institute of Internal Auditors)
- certified financial manager (Institute of Management Accountants)
- certified treasury professional, certified corporate financial planning and analysis professional (Association of Financial Professionals)
A large percentage of accountants are certified public accountants (CPAs). Those who receive this designation have passed a qualifying examination and hold a certificate issued by the state in which they wish to practice. The Uniform CPA Examination, which is administered by the AICPA, is used by all states. Nearly all states require at least two years of public accounting experience or the equivalent before a CPA certificate can be earned.Experience, Skills, and Personality Traits
Completion of at least one internship in college is highly recommended to prepare for entry-level accounting and auditing positions at public accounting firms. Jobs at venture capital firms require at least one year of experience at an investment bank, a portfolio company of a VC firm, or at a public accounting firm that provides services to the VC industry.
According to the American Institute of Certified Public Accountants, certified public accountants need a combination of strong leadership ability, communications skills, tech know-how, and business savvy. At the organization’s Web site, http://www.startheregoplaces.com/students/why-accounting/cpa-skills, you can learn about the steps to take to develop these qualities. Other important traits include a detail-oriented, organized, and analytical personality, strong problem-solving skills, the ability to work both independently and as a member of a team, and honesty and strong ethics. Accountants and auditors must be proficient in the use of financial-related software and databases (such as Microsoft Dynamics Great Plains, Oracle PeopleSoft, and SAP) and office software (PowerPoint, Excel, and Word).Employment Prospects Employers
Accountants and auditors are employed by venture capital firms, which are headquartered throughout the United States, but especially in cities and states with strong start-up communities such as New York, Boston, and California. They also work for public accounting firms (including the Big Four: Deloitte, EY, KPMG, and PricewaterhouseCoopers) that provide services to VC firms. Additionally, there are many employment opportunities for accountants and auditors outside the alternative investments industry—with Fortune 500 companies, small- and medium-sized business, at nonprofits, and at government agencies such as the U.S. Government Accountability Office and the U.S. Department of Commerce.Starting Out
Many aspiring VC accountants and auditors break into the industry by first working at a public accounting firm (such as PricewaterhouseCoopers) that provides services to the VC industry. Pursuing this strategy will provide you with good experience before you seek out job opportunities at VC firms.
To learn about employment opportunities, visit the Web sites of public accounting firms. At some Web sites, you can even apply for jobs. Many firms have a strong presence on college campuses via career fairs or through career exploration programs. They also offer internship programs, during which you can try out accounting jobs and make networking contacts that can lead to a permanent position.
Check out the American Institute of Certified Public Accountants Web site (https://www.thiswaytocpa.com/career-tools/articles) for information on job-search strategies, career paths, writing effective resumes and cover letters, and preparing for and performing well during job interviews.Advancement Prospects
Large venture capital firms and public accounting firms provide the best advancement prospects because they employ a large number of accountants and auditors, and provide a clear-cut promotion path to their employees. At a VC firm, an experienced accountant can advance to the position of chief accountant, and then to controller, and chief financial officer (CFO). Highly experienced and skilled CFOs may be offered a partnership stake. Accountants and auditors at public accounting firms can advance to managerial positions and then to executive-level careers such as chief financial officer, CEO, or chief operating officer.Outlook
Employment for accountants and auditors who work with funds, trusts, and other financial vehicles will grow by more than 18 percent through 2024, according to the Occupational Outlook Handbook. It reports that “as more companies go public, there will be greater need for public accountants to handle the legally required financial documentation. The continued globalization of business may lead to increased demand for accounting expertise and services related to international trade and international mergers and acquisitions.”
Despite these positive predictions, it’s important to remember that it’s extremely difficult to land a job in the venture capital industry. Those with advanced degrees, certification, and experience in some area of alternative investments (e.g., hedge funds, private equity, etc.) will have the best job prospects.
Become a certified public accountant. It will give you an edge over other applicants.
Check out The Edge (http://www.aicpa.org/InterestAreas/YoungCPANetwork/TheEdge), an online newsletter that provides advice to young professionals about job hunting and networking.
Use LinkedIn to network with people in the venture capital industry.
Become active in your school’s business or finance club.
Venture capital analysts are entry-level professionals who conduct due diligence and deal sourcing, and perform a variety of administrative and support duties. They are typically hired only by large venture capital firms.History
The venture capital (VC) industry as we know it today began in 1946 when Georges Doriot (who is often considered the “father of venture capital”) and others started American Research and Development Corporation (ARDC), the first publicly owned VC firm. During that same year, three wealthy families established professional VC operations (Rockefeller Brothers Inc., J. H. Whitney, and Payson & Trask) in New York City. From 1946 through 1957, ARDC and the three family operations engaged in VC investing, but no other VC firms were founded.
Technological, political, financial, and regulatory events fueled growth in the VC industry starting in the late 1950s onward. One major milestone during this period was the funding of the first venture-backed start-up (Fairchild Semiconductor) in 1957.
Many well-known VC firms were founded in California and on the East Coast in the 1960s and early 1970s—including Sutter Hill Ventures (1962), Greylock Partners (1965), Kleiner, Perkins, Caufield & Byers (1972), and Sequoia Capital (1972).
As the industry grew, venture capitalists began to form professional associations to represent their interests in Washington, D.C., and in foreign capitals, and to assist venture capitalists in their work. In 1969, the first official nonprofit VC organization in the world—the Western Association of Venture Capitalists—was founded. Today, it is comprised of more than 100 venture firms and more than 1,000 venture capitalists. In 1973, the National Venture Capital Association was founded in the offices of the Heizer Corporation, a leading VC firm. It has more than 300 members.
Today, there are more than 800 venture capital firms in the United States alone.The Job
Many industry experts describe the job of venture capital analyst as an “in-and-out position” because it is not a partner-track position and analysts must leave the firm after a few years of employment to earn their MBAs, launch a start-up, or otherwise obtain operational and entrepreneurial experience to become qualified for an upper-level position at a VC firm.
The primary duties of analysts are to help associates, principals, and partners conduct due diligence and deal sourcing. They also have administrative and support duties.
During due diligence, the analyst might be asked to screen 20 business plans, selecting the most promising one or two to send up the pipeline to partners. To make this decision, they review financial data, talk with the founders of start-ups, investigate competitors, try out prototypes of start-ups’ products or services (if available), talk with their network of friends in the business world, and read industry publications, blogs, and Web sites.
Analysts also source deals, which means that they identify investment opportunities. They attend trade shows and investment conferences, read business journals, talk with business experts and entrepreneurs, and use other sources to identify promising companies. When they discover a good target, they prepare a report on their findings and pass this information along to their manager for review and consideration by the firm’s partners.
Lastly, analysts perform administrative and support duties. These range from serving as a “gofer” (fetching coffee or lunch and making photocopies) for partners, to organizing and reviewing basic financial data for associates or principals.Earnings
Financial analysts earned median annual salaries of $78,620 in May 2014, according to the U.S. Department of Labor. Salaries ranged from $48,170 to $154,680 or more. Analysts usually receive benefits such as paid vacation days and sick leave, health and life insurance, a 401(k) or other retirement savings plan, and closing bonuses (for sourcing or doing due diligence for an investment deal that is closed). They do not receive carry (a small percentage of the profits the firm makes) or the opportunity to co-invest (invest their own money alongside the firm in some deals).Work Environment
Although it’s understood that they will have to leave their firm after a few years on the job to earn an MBA, most analysts still view their position as a chance to impress the partners and win a coveted invitation to get on the partner track. What does this entail? A lot of grunt work, repetitive job duties, and long hours—including at night and on weekends. In fact, 51 percent of venture capital and private equity professionals—typically associates and analysts, but sometimes managers—worked at least 70 hours a week in 2014, according to the 2015 Private Equity and Venture Capital Compensation Report. Analysts also travel to meet with the founders of prospective portfolio companies and to attend industry conferences and networking events.Exploring
Check out the following resources to learn about the work of analysts and the venture capital industry:
- Financial Analysts Journal: http://www.cfapubs.org/loi/faj
- Venture Capital Journal:http://www.privatemarkets.thomsonreuters.com/Venture-capital-journal
- Venture Capital Post: http://www.vcpost.com
In college, join venture capital and finance clubs, which offer job shadowing opportunities, investment competitions, networking events, peer industry panels and coffee chats, and mentoring programs. Check with your school to see what types of clubs and programs are available.Education and Training Requirements High School
Exceptional grades are needed to get into an elite college, so you need to be very dedicated to your studies in high school. Take as many classes as possible in business, microeconomics, macroeconomics, statistics, accounting, mathematics, computer science, foreign language, English, and speech. Any classes and activities that help you to develop your critical-thinking, analytical, and communication skills will be useful.Postsecondary Education
Since there are so few analyst positions available, your educational credentials must be outstanding (i.e., a degree from an Ivy League or other top tier school, excellent grades, active participation in business and investment clubs, and participation in at least one internship at a top VC firm, investment bank, Big Four accounting firm, or other prominent employer). Analysts typically have bachelor’s degrees in business, finance, entrepreneurism, or a related major.Other Education or Training
Many professional associations provide continuing education classes, webinars, and workshops. For example, the Market Technicians Association offers webcasts such as Building a Career Using Technical Analysis and U.S. Financial Market Update. Such educational offerings give you an opportunity to build your skills and impress hiring managers. Professional development classes and webinars are also provided by the CFA Institute and the National Venture Capital associations. Contact these organizations for more information.Certification
The Investment Management Consultants Association offers the Fundamentals of Alternative Investments Certificate Program. In this online, self-paced course, you’ll learn about the differences between traditional and alternative investments, due diligence, risk management, investment returns and risks, venture capital and private equity, and other topics. Visit https://www.imca.org/pages/Fundamentals-Alternative-Investments-Certificate for more information.Certification, Licensing, and Special Requirements Certification or Licensing
Becoming certified is an excellent way to demonstrate your skills and knowledge to prospective employers. Many certification programs are available, but some are only open to those with several years of on-the-job experience. One credential that’s available to those with either a bachelor’s degree or those who are in the last year of undergraduate study is the three-level chartered financial analyst (CFA) program, which is administered by the CFA Institute. Although it takes an average of four years to complete the CFA program, pursuing this credential will impress potential employers and provide you with excellent knowledge about financial analysis. Another useful certification is the chartered alternate investment analyst credential, which is offered by the Chartered Alternate Investment Analyst Association. Applicants must have a bachelor’s degree, and have more than one year of professional experience, or alternatively, have at least four years of professional experience.Experience, Skills, and Personality Traits
Aspiring venture capital analysts must complete at least one internship or co-operative educational experience at a top venture capital firm, Big Four accounting firm, investment bank, or other prestigious employer.
Communication and interpersonal skills rank among the most-important traits for analysts, who frequently meet with start-up founders, industry experts, and others to source deals and conduct due diligence on potential investments. Analysts need to work well as a member of a team, and be able to effectively communicate their opinions to principals and partners. Other important traits include a strong work ethic; good research, organizational, and analytical skills; the ability to multi-task; and familiarity with financial statements and data.Employment Prospects Employers
Venture capital firms are located throughout the United States and the world. Analysts are typically only hired by large firms. They can also work for the portfolio companies of VC firms, investment and commercial banks, in other alternative investment sectors such as private equity, and for any other employer that requires financial analysis.Starting Out
The best way to land an analyst position is to participate in an internship or cooperative educational experience at a venture capital firm. You can find such opportunities by visiting the Web sites of large VC firms, utilizing the resources of your college’s career services office, and visiting job-search sites such as https://www.linkedin.com/jobs/venture-capital-intern-jobs and http://www.efinancialcareers.com. Interns compile performance and financial data, help partners prepare for monthly meetings/calls with portfolio companies, create spreadsheets to streamline processes and better analyze data, and work on other projects as directed by partners or the chief financial officer.Advancement Prospects
Unlike principals and some associates, analysts are not on the partner track. Most analysts typically work at a venture capital firm for two to three years before being leaving to earn their MBAs, work in operation roles at a portfolio company, or found a start-up.
An analyst who earns an MBA and obtains some operational and entrepreneurial experience might return to a VC firm as an associate or principal. After years of experience, they can advance to the position of general partner, and then managing partner. Some choose to work at portfolio companies or other businesses, with the most skilled gradually advancing to the positions of chief financial officer, CEO, and chief operating officer.Outlook
It’s extremely difficult to land an analyst position at a venture capital firm because the industry is so tiny and only a small percentage of firms hire analysts. Those with superior educational credentials, multiple internships at prestigious employers, and a large network of industry contacts will have the best prospects of landing a job.
Outside the VC industry, job opportunities are good for financial analysts. The U.S. Department of Labor (DOL) predicts that employment for financial analysts will grow by 12 percent from 2014 to 2024, or faster than the average for all careers. The DOL reports that “having certifications and a graduate degree can significantly improve an applicant’s prospects.”
Visit the following Web sites for job listings:
Join the International Association for Quantitative Finance (IAQF) and other professional organizations to participate in networking events, take continuing education classes and webinars, and receive discounts on conferences and publications. The IAQF offers membership options for college students and young practitioners.
Networking is key to landing a job in the VC industry. Visit http://www.jobsearchdigest.com/private_equity_jobs/career_advice/networking_vc_jobto read “Successful Networking for a Venture Capital Job.”
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.History
The venture capital (VC) industry as it is known today began in 1946 when Georges Doriot (who is often considered the “father of venture capital”) and others started American Research and Development Corporation, the first publicly owned VC firm. Arguably its best investment was the $70,000 it spent in 1957 to help fund Digital Equipment Corporation. Eleven years later, that investment was valued at more than $355 million after the company’s initial public offering.
Associates are the “foot soldiers” of venture capital firms. Their primary duties are to source deals and perform due diligence to support the partners so they can deploy more money in profitable investments.The Job
Associates have three main functions at venture capital firms: 1) sourcing deals, 2) performing due diligence on potential investments, and 3) supporting the portfolio companies. Here’s a breakdown of their duties in each category:Sourcing Deals
In an early stage VC firm, you will be expected to source deals. You need to reach out into the world and bring investment opportunities to the firm. This amounts to calling and visiting companies to ascertain their attractiveness and interest in raising capital. This isn’t as easy as it sounds. Deal sourcers will go to trade shows, talk with their networks of friends, read the trade press, work with other venture capitalists, attend local networking events and investment conferences, read unsolicited business plans, and talk to portfolio company managers. There are hundreds of deal sourcers at work at any given time—and being the first venture capitalist to contact a company matters. When sourcing deals, schmoozing is key. Any acquaintance or friend might give you the next lead on a company. Venture capital associates must build personal relationships with business partners to increase the level of trust and interdependence.Conducting Due Diligence
Associates support partners in the due diligence analysis of an investment opportunity. Later-stage companies are normally no secret (they’re typically large enough to have attracted press and other attention). The goal is not to uncover the investment opportunity, but to get a company to take your money. Consequently, the partner is usually the one to source later-stage deals. Associates perform due diligence: building spreadsheets and running sensitivity analyses, calling references, investigating competitors, validating legal contracts, visiting remote locations, coordinating with other investors, and so on. Ultimately, associates and partners must decide how best to use the most precious resource: time. Which markets to research? Which company to work on? Which entrepreneur to call back? Which spreadsheet model to build? Which references to call? Which trip to take, which meeting to make? As an apprentice venture capitalist, associates must make decisions all day long. Many of those decisions have to do with which potential assignments to pursue. A venture firm is responsible for the money in its fund, and the clock is ticking.Supporting Portfolio Companies
In this role, you’ll conduct research about target portfolio companies and assist partners during the acquisition process (including negotiating and working with investment bankers, raising more money from other equity sources, negotiating with banks for debt financing, etc.). Once a company is acquired, you’ll attend board of directors meetings, help locate and screen potential additions to a company’s management team, convince new recruits that they should work with your portfolio company, support the management team (this can be anything from being a friend to “handholding”), and keep partners up-to-date on changes, problems, and successes. You’ll also analyze potential exit opportunities for portfolio companies.Earnings
Venture capital associates earned median annual salaries of $96,347 in 2015, according to Payscale.com. Salaries ranged from $52,151 to $169,416.
Venture capital associates usually receive a generous benefits package, including vacation days, sick leave, health and life insurance, and a 401(k) or other retirement savings plan. Associates may also receive a closing bonus (for sourcing or doing due diligence for an investment deal that is closed), the opportunity to co-invest (invest their own money alongside the firm in some deals), and sometimes receive a small percentage of carry (the profits the firm makes).Work Environment
In 2014, 51 percent of venture capital and private equity professionals—typically associates and analysts, but sometimes managers—worked at least 70 hours a week, according to the 2015 Private Equity and Venture Capital Compensation Report. Associates frequently travel to meet with representatives of potential portfolio companies and investment banks and attend trade events, industry conferences, and networking events. This career can be extremely stressful because associates face constant pressure to generate a steady flow of new investment prospects. Associates often work on nights and weekends to meet with business contacts or catch up on office work that they were unable to complete during regular office hours as a result of being out in the field working on deals.Exploring
There are many ways to learn more about venture capital and careers in the field. The U.S. Small Business Administration offers a concise overview of venture capital at https://www.sba.gov/content/venture-capital. You should also check out venture capital bogs such as the Wall Street Journal’s Venture Capital Dispatch, http://blogs.wsj.com/venturecapital. Talk to venture capital associates about their careers. Try to develop relationships on LinkedIn or ask your professors to recommend some venture capitalists who would be willing to discuss their careers and what a typical day on the job is like for associates.Education and Training Requirements High School
You’ll need at least a bachelor’s degree—and preferably a master’s degree—to work as a venture capital associate, so be sure to pursue a college-preparatory curriculum in high school. Recommended classes include business, microeconomics, macroeconomics, accounting, mathematics, foreign language, and computer science. English and speech classes will help you to develop strong communication skills to source deals and network with others in the VC industry.Postsecondary Education
Many venture capital associates have master’s degrees in business, finance, or a related major—typically from Ivy League schools or other prestigious colleges. Some are able to enter the field with just a bachelor’s degree in one of these majors.Other Education or Training
Executive education programs in venture capital and private equity are offered by the University of California-Berkeley, Harvard University, and other schools. The CFA Institute offers a class on general capital that focuses on concepts such as general partner due diligence, determining investor cash flows, and assessing fees. Continuing education classes are also provided by professional associations such as the Alternative Investment Management Association, Financial Management Association International, and the International Association for Quantitative Finance. Contact these organizations for more information.Certification
The Investment Management Consultants Association offers the Fundamentals of Alternative Investments Certificate Program. In this online, self-paced course, you’ll learn about the differences between traditional and alternative investments, investment returns and risks, due diligence, risk management, venture capital and private equity, hedge funds, and other topics. Visit https://www.imca.org/pages/Fundamentals-Alternative-Investments-Certificate for more information.Certification, Licensing, and Special Requirements Certification or Licensing
There are no specific certification designations for venture capital associates, but some earn financial certifications that provide them with additional expertise as they do their work. Some popular certifications include:
- hartered financial analyst (administered by the CFA Institute)
- chartered alternate investment analyst (Chartered Alternate Investment Analyst Association)
- certified investment management analyst (Investment Management Consultants Association)
- certified treasury professional, certified corporate financial planning and analysis professional (Association for Financial Professionals)
- certified investment management analyst (Investment Management Consultants Association)
Most associates have two or more years of experience in management consulting, investment banking, or private equity—ideally in acquisition due diligence or deal making. A small percentage of associates are hired straight out of college, but have internship or co-op experience at a venture capital, private equity, investment banking, or financial consulting firm.
To be a successful associate, you need excellent communication and interpersonal skills—and a high degree of self-confidence—because you’ll need to constantly be reaching out to source deals, interact with your colleagues and managers, and work with the management of portfolio companies. Other important traits include project management, organizational, and analytical skills; a strong work ethic; the ability to effectively manage multiple tasks at one time; and familiarity with financial statements and data.Employment Prospects Employers
Venture capital firms are located throughout the United States and the world. Many U.S.-based firms are headquartered on the East Coast and in California. Many venture capital firms have fewer than 15 employees. Associates can also find work at corporations that have VC divisions, at the portfolio companies of venture capital firms, and in related industries such as private equity.Starting Out
Venture capital firms are inundated with requests for interviews and information interviews. The time of venture capitalists is precious. If a VC firm lets it be known they have a single summer internship available, they can expect 300 resumes from people at the top 10 business schools. Now that you’re more aware of what you are up against, here’s a glint of hope—as a whole, venture capital firms are always hiring.
Your chances of landing a job greatly increases if you already have an MBA and have operational or deal making experience in a related industry (e.g., private equity, investment banking). If you don’t, it helps to develop a strong professional network—ideally, with current associates or other in the industry, since many job leads are obtained through word of mouth and in-house referrals. To build your network, attend venture capital conferences, become active on LinkedIn, and volunteer with venture capital—or general business—organizations. One such organization is the VC Taskforce (http://www.vctaskforce.com), which provides networking and educational events—panels, workshops, conferences, and roundtable meetings—for venture capitalists and entrepreneurs seeking funding. According to its Web site, VC Taskforce is looking for volunteers with one or more of the following skills: writing and editing, public relations and marketing communications, event management, sales and business development, research and interviewing, social media, corporate relationship building, and program development and management. A six-month commitment is required.Advancement Prospects
Most associates do not make partner because 1) the majority of firms are too small to offer advancement opportunities to their associates, and 2) most managing partners prefer their principals and general partners to have some sort of entrepreneurial experience before being trusted to make investments. As a result, most associates typically work at a venture capital firm for two to three years before being leaving to earn their MBAs, work in operation roles at a portfolio companies, or found a startup.
For associates lucky enough to be on the partner track, the typical advancement path goes from associate, to senior associate, principal, general partner, and then managing partner.Outlook
The U.S. Department of Labor (DOL) does not provide an employment outlook for private equity associates, but it does report that job opportunities for financial analysts who work for securities, commodities, and other financial investment and related firms are expected to grow much faster than the average for all careers from 2014 to 2024, according to the U.S. Department of Labor.
Visit http://www.jobsearchdigest.com/private_equity_jobs/career_advice/how_to_get_a_vc_jobto read “How to Get a Job in Venture Capital.”
Become active in your school’s business or finance club.
Be willing to relocate to venture capital hubs in California and on the East Coast. It will provide more opportunities.