As easy as it might seem, getting started as a venture capitalist can be quite tricky. More so if you don’t have the right resources to work with from the beginning. However, if done in the right way, venture capital can very profitable in the long run. Nowadays, the process has been made easy with the availability of Venture capital software that incorporates most of the processes involved in being a venture capitalist. Despite the tremendous advantages that they offer, the optimal use of venture capital software requires fully understanding how venture capital works.
What is Venture Capital?
A venture capital firm is responsible for raising capital from limited partners. This can range from endowments, pension funds etc. Once the funds have been raised, they are then invested in early-stage companies that show high growth potential. This investment is done in exchange for equity in these companies.
A venture capitalist focuses on growing companies with the intention of an eventual exit either through an acquisition or Initial Public Offering (IPO).
On most occasions, companies with high growth potential are tech related with affiliations to other industries like healthcare, education, cleantech, retail etc. Considering the high risk associated with venture capital, it is vital to have the right resources for proper risk assessment before investment.
Why Consider Venture Capital?
Although the compensation is not immediate, the right venture capital investment can be very profitable in the long run. This is why venture capital is not advisable if you are looking for a method to get fast returns.
For junior-level venture capital jobs, there are fewer chances that it leads to partner-track positions. The implication of this is that you most likely will not get a senior position in two years. The advantage, however, is that you get to spend more time on research and finding companies. So, if you are passionate about startups, the role offers a fantastic opportunity to learn and build a network in the process. You can also use the experience to work towards other opportunities that are related to startups in the future.
Getting Started in Venture Capital
There are three major entry points in venture capital. These are;
- Pre-MBA
After college, you gain some experience in management consultancy, business development, product development, investment banking or sales.
- Post-MBA
In most of the post-MBA scenarios, you might have some background in the healthcare, tech, finance or any other industry. After this, you then went to business school.
- Operating Partner
This is mostly for people who successfully founded and exited a startup. This also includes high-level executives in large companies that operate in industries of interest to venture capitalists.
The pre-MBA venture capitalists are the most common in the industry.
In conclusion, venture capital can be a profitable opportunity to get amazing returns on your investment. Although the risk associated is high and it might take some time before you begin to get returns on your investment. With the right information and risk assessment resources, you might just be buying equity in the next multinational sensation.
