The world is full of people with brilliant ideas waiting to be implemented and served on a platter. However, some of the best ideas in the world often die down even before they are started because of the lack of sufficient funds. It is essentially the role of Venture Capitalists to provide external funding to these entrepreneurs.
Roles Performed by Venture Capitalists
To understand how to become a VC, you need to first understand the various roles one is expected to perform. Starting from evaluating investment opportunities to identifying risks, performing detailed financial analysis and interacting with potential clients, advisors, financial institutions and management and finally executing the deal all fall under the gamut of jobs a VC must undertake.
Closer Look at Becoming a Venture Capitalist
- Getting the Right Education
A significant requisite for a successful VC is inculcating the right business skills. To be able to become good at this job you should be able to select right opportunities with potential, and also be able to guide these businesses in their start-up phase. While you needn’t acquire a degree from an Ivy League, you need to optimize your graduate and post-graduate years to make contacts that can help boost your career.
- Gaining the Right Experience
Once you are qualified for the job, you will need an impressive resume to get hired. There are a host of firms that hire candidate’s fresh out of college, there are others that prefer those with some work experience in the related domain. If you have spent your academic years networking, this stage should be easy to overcome. Consider pursuing a short stint with some successful public firm to delve deeper into the industry.
- The Math of Money Making
It is important to understand the methods through which VCs are able to build income. One way to do this is by charging management fees and the other is through return on investment. If the VC firm has partners, the management fees are used to incur all the business expenses. The profit left behind is what the partners keep for themselves. On the other hand, if you are not a partner, you are considered a cost-center. It is thus important that you understand the math behind your income before you venture into this career.
- Networking
An extremely important step to finding success as a VC is to be smart with your networking. Perform a basic reconciliation of your contacts associated with the VC market. While it may be a long process to get in touch with everyone, pursue this with extreme patience. You can start by getting in touch with people from your college and the results will most likely be favorable.
You may also want to build relations with other VCs in your area. Consider investing with a reputed investment bank or look for internships with other VCs. While the initial stages of trying to break into this career may seem like a daunting task, if you inculcate the right skills and some perseverance, you can become a notable VC in a short time.
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