Venture Capital Business Development Manager Salary
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Kison Patel is the founder and CEO of Chicago-based diligence management software that uses Agile principles to innovate and modernize the financial industry. As a former M&A consultant with more than a decade of experience, Kison developed after seeing first-hand the numerous deep-seated structural problems and inefficiencies throughout the industry.
Venture Capital Business Development Manager Salary
As the legend goes, in a span of fifty years the venture capital industry has gone from a few information technology pioneers working out of their garages in Southern California to a global industry.
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It seems like every week a new unicorn is being forged – a VC-backed company valued at more than $1 billion. The VC industry has spawned a number of popular television shows.
So it should come as no surprise that venture capital jobs are in high demand. The problem is that there aren’t many of them.
Deloitte’s research on human capital in the VC industry found that VC firms have an average of six employees and an average of 14 in 2020, meaning the job supply is tight.
In this article, we look at some of the roles in this industry and how potential candidates should position themselves to land them.
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Venture capital firms invest in early-stage, high-growth companies. Typically, these companies are not yet commercialized and turn to venture capital funding for funds to invest in marketing, recruiting and technology.
To invest equity capital in these high-risk companies, VC firms may demand better terms than they would expect from more established firms.
For example, it is not uncommon for VC firms to hold up to 30% of young companies, allowing them to cash out when the company goes public or is acquired by another company.
The organizational structure of most venture capital VC firms mimics those in other parts of the investment industry.
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At the bottom are the analysts or associates, who do most of the so-called lower value work, further up the food chain, there’s the boss, before we hit the partners at the very top.
Analyst: As with any analyst position across the investment spectrum, the role of a VC analyst includes financial modeling, assisting with due diligence and providing insight when requested.
They’ll usually be on email, filtering through opportunities that come through the company’s website and delicately rejecting companies that don’t fit the VC firm’s strategy or ambitions.
The work done by the analyst affects the work done by the rest of the team. When a bright-eyed startup founder sends a pitch that makes bold claims about the industry, the analyst’s role will be to fact-check and confirm or deny the industry’s outlook. There is very little, if any, client facing involved in this role.
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Associate: Associates oversee the analyst’s work and have additional responsibilities within the company. They typically spend most of their time analyzing attractive companies, interviewing startup founders about their company and its prospects, and bringing relevant prospects to the attention of principals and partners.
The collaborator therefore plays a key role. They should possess a range of commercial and financial skills that enable them to separate excellent opportunities from overly ambitious ones (a motif that runs through the VC industry).
Think, for example, of the fellow VC who was willing to listen to Airbnb’s proposal, while dozens of others dismissed it as something that could never work.
Principal: Principals are senior members of a venture capital firm’s investment team. Similar to principals at private equity firms, they are instrumental in the VC firm’s fundraising efforts, as well as making strategy and investment decisions.
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Partner: A VC firm’s partners are its owners, usually industry leaders who have been through numerous fundraising processes, launched (and exited) several businesses of their own, know the industry inside out, and have the battle scars to prove it.
As always, their ability to communicate is important. A partner will typically spend a lot of time talking to outside investors, speaking (i.e. promoting the fund) at startup roadshows and workshops, and spending time with the owners of companies nearing an IPO.
As most startup investments are led by one VC firm that brings in several others, their contact book is also of utmost importance.
There is no doubt that VC roles bring a very specific set of challenges quite different from those required in other areas of finance. If anything, the skills needed to succeed in venture capital are broader than virtually any other field of finance. That includes:
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Let’s start with the bad news: VC firms rarely hire young talent. There are no training programs to speak of (that would go against the ethos of the industry, which prides itself on its agility).
Of the few that do exist, the odds of getting a spot on the program are bleak – better to focus your efforts elsewhere to ensure your job search is more productive.
You don’t need to graduate with honors from a Wharton MBA class to land a position in the VC industry.
So, given the rather unstructured path to VC that most analysts and associates face, the following points should be considered a rough guide to increase your chances of landing a role.
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Unlike the private equity and investment banking industries, the venture capital industry has different salary levels.
Those who work at top firms—say, such as Andressen Horowitz, Sequoia, or Accel Partners—can expect to earn more than those who work at lesser-known venture capital funds.
The scale of these businesses is shown by their AUM (assets under management), with an assumed large-cap split of $500 million.
The number of people employed by VC firms can mean that the industry is even more difficult to break into than investment banking or private equity.
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Anyone who can demonstrate these qualities in large doses, network with the right people, and keep abreast of industry developments is giving themselves an excellent opportunity to land a role at a venture capital firm.
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I took a closer look at the results of J. Thelander Consulting’s annual survey of venture firm compensation and, unsurprisingly, VCs make a lot of money.
Just how much? Well, of the 204 VCs surveyed (172 men and 32 women), the average general partner expects to make roughly $634,000 this year, including a 2017 performance bonus.
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The averages varied slightly depending on the size of the company. For example, value equity in firms with less than $250 million in assets under management (AUM) earns less than their counterparts in larger firms.
GPs, who are at the top of the ranks at VC firms, have the highest compensation packages. Their annual bonuses are on average higher than the average base salary of an associate or seed investor.
The research did not analyze data from companies with billions of AUM, known as the Sequoias, NEAs or Kleiner Perkins of the world. Those people, if the above is any indication, earn more.
Please note: this is all in addition to the VC’s carried interest or percentage of the fund’s profits paid to the firm’s partners. Society advances through innovation. However, “new venture” is written as cost and risk, with the result that external financing is the most appropriate solution, primarily to spread the risk of failure.
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In exchange for taking on some of the burden of risk, investors who invest in such companies receive equity at a supposedly discounted value. This marriage of convenience gives startups access to funding, allows them to reduce risk, and generates attractive returns for investors.
Venture capital (VC) is a subset of private equity. By definition, it refers to the financing of startups and small businesses with exceptional growth potential that they receive in exchange for, usually, an equity stake.
However, the transaction doesn’t always have to be monetary as some VCs offer technical expertise or management experience instead of briefcases full of cash.
Venture capital investors, called venture capitalists, often include venture capital firms, high net worth individuals (angel investors) and other financial institutions. They can also include Crossover VCs – the term given to the VC arms of PE firms and hedge funds. Moreover, VC employees can sometimes also be called venture capitalists.
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Investors looking to hire generally want those who have not only technical knowledge, but also a passion for startups and the ability to understand the market.
In this regard, late-stage and growth equity firms look more at technical skills and business experience, such as those gained in IB and PE, while early-stage firms look at the candidate’s abilities as a business development specialist who can network and find diamonds among the rocks.
We can see some of you shaking your heads, saying, “Bro. Bro. I just wanna know how much $$$ I can make.”
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