If you told someone that your occupation was a “venture capitalist” (VC), they’d probably look at you like some big shot with bags of wealth, loads of ambition, and a ton of Wall Street knowledge to match.
While this might very well be true for the top brass of VCs, the truth is that the day-to-day job of a VC is usually much less glamorous and includes a lot more hustle than a layperson expects.
Rather than let venture capitalism, like antler vc, be this obscure profession that is largely misunderstood, this article is going to help explain it all for you.
What Is the Role of a Venture Capitalist?
Simply put, a VC invests in start-up companies.
As most start-ups don’t have the capital they need to expand, VCs fill this role by providing them with investments. Now, you may be thinking, why would VCs do this?
Well, if the company that a VC invests in becomes successful in the future, the VC would get a substantial return on investment.
In other words, investing in a potentially successful start-up would make the VC a lot of money.
How Do You Become A Venture Capitalist
As you probably already know, there isn’t a specific degree that you can get to become a VC. In act, VCs come from all walks of life and professions.
However, you’ll tend to see more investment bankers and entrepreneurs become VCs in the later stage of their careers.
This is because they’ve most likely amassed a substantial amount of money to be able to invest in new companies or have had prior experience in investing.
Another misconception that most people have is that VCs must be rich. Though we mentioned that most VCs are pretty wealthy, you don’t actually have to be a high-flyer to become a VC.
This is because the money that VCs invest doesn’t have to come from their own pockets. In fact, many VCs pool together assets from multiple individuals to form an investment fund.
At this point, you may be wondering if this is the case, what’s the difference between a VC and an equity investor.
Well, VCs typically deal with third-party assets.
As VC is a lucrative career, many are attracted to joining the profession.
However, like many high-paying jobs, you’ll face intense competition if you’re trying to get into VC.
Even if you’re highly skilled and have a ton of investing experience, it doesn’t guarantee that you’ll make it in VC.
Breaking into VC depends a lot on your connections to people in the industry.
So, if you’re thinking of becoming a VC, you may want to start dipping your toes in the industry by interning at a VC firm.
What You Should Know Before Becoming a Venture Capitalist
Like all things in life, nothing is guaranteed.
The same can be said for VC.
Though the companies your VC firm invests in sound promising and the possibility of them becoming successful in the long run looks hopeful, it’s important to remember that over 90% of start-ups fail.
As much, it takes a lot of experience to source good start-ups that will generate good returns on investments. And, if looking for potentially successful start-ups was so easy, then everyone would become a VC!
During the COVID-19 pandemic, the VC industry hit a record high, generating over $130 billion in investments.
The total value of investments increased from 2019, however, the total number of deals fell.
This means that though fewer start-ups got funded by VC firms, those that managed to cinch investment deals received more funding.
Yet, though the VC industry is on the rise, it does have competitors. One of the VC industry’s biggest competitors is crowdfunding.
Crowdfunding basically refers to companies who raise capital from independent individuals, rather than through VC firms or other traditional means.
These individuals usually only contribute a small amount.
But, because of the sheer number of people investing, the capital raised usually amounts to a sizable investment.
Usually, socially responsible and sustainable businesses are able to raise capital through crowdfunding as more and more consumers are becoming aware of the need for corporate social responsibility and to protect our environment.
What You Need To Prepare Before Becoming A Venture Capitalist
If you’ve read through all that and you’re still passionate about going into VC, kudos to you!
However, it to not enough to know about VC, you also need skills and experience to back it up.
Before starting your own VC firm or joining the VC industry, here are some questions you should ask yourself in advance:
- Do you have a university degree? If you do, is it an MBA? More than half of VCs have MBAs and a substantial amount of them are graduates from Ivy Leagues like Harvard.
- Do you have any working experience? If you do, is it in any one of these fields: investment banking, technology, consulting, or media?
- Are you active on LinkedIn? Do you have a large following? Many VCs gain connections in the industry by liaising with people through LinkedIn. This social media app is great for networking if you’re an aspiring VC.
- Are you up-to-date with the latest VC news? Do you regularly read about technology and start-ups?
- Do you have experience in investing? If you do, have you been successful or have you always blown your portfolio?
How Long Does Becoming A Venture Capitalist Take?
To wrap up, you must be wondering, how long does it take to become a VC? Becoming a VC doesn’t happen overnight.
In fact, you should have at least eight years of professional working experience in relevant industries like finance or business.
It is only through gaining experience that you’ll be able to understand how to analyze companies and whether or not they’ll be good investments.
With that, we’ve come to the end of our article about VC.
We hope that we’ve managed to shed some light on the lucrative VC industry.
If you’re an aspiring VC and this article has intimidated you, don’t give up just yet!
Remember, all VCs started off where you are right now. What matters is what you do after reading this article. If you truly want to succeed as a VC, you need to start equipping yourself with the necessary skills and try to gain relevant working experience.