How to Become a Venture Capitalist Without Your Fortune

venture capital

How have you become a venture capitalist? Do you need to be rich or born with the right connections? The answer to the latter is not, but becoming a VC can seem shrouded in mystery.

The fact is that there are several different paths to becoming one, and it’s not a world that cannot be breached, however much it may seem that way. Without a considerable amount of your cash to invest, rather than starting your own company, you’ll move into the VC world from related industries and work your way up.

Getting Your Degree

Venture capitalists come from several different types of backgrounds, so there is no single major that will set you up for success in this area. Finance, accounting, math, economics, and statistics are all majors that can prepare you for a career in this area. Later, after you’ve had some work experience, you may want to consider getting an MBA, but for now, focus on your undergraduate degree. You can look online to find out more about scholarships for college students that can help you cover the costs of your education.

Understanding the Job Market Itself

Since we have already detailed that there is no set course of study to help you break into this sector, you probably want to know what your days will look like as a professional in this industry. Traditionally venture capitalists provide funds for little-known startups and allow them to become high-growth companies. The tradeoff is that these firms will have a higher percentage of control over the company and, inevitably, the profit margin. 

Since you will need experience before becoming an actual VC, one great way to gain is to hold another position at a venture-backed venture. This opens the job market up for you to be much larger, especially starting. This job market is notoriously competitive and naturally weeds out people who lack the necessary skills based on the grit required to enter the industry. It is critical that you understand this to be a competitive candidate yourself. 

Your First Job

You are unlikely to go straight into working for a VC firm with the ink still wet on your diploma. Financial advisors and some academics may move into this career path, but investment banking is one of the best places for you to focus and start gaining the experience and contacts you’ll need. Work hard on your networking skills since this ability will be critical to your later success as a VC. Pay attention to beginner investor guides and strategies so that you learn the fundamentals of the industry while you build up your professional network. 

Becoming an Associate

You’ll most likely start as a VC associate at a firm on the career ladder to become a partner. One alternative that you may want to consider is working in private equity. This differs from becoming a VC because it focuses on established companies rather than up-and-coming ones. If you love the thrill of discovering the next entrepreneurial stars and helping them move to the next level, stick with the VC side of things. Still, if you are interested in working with companies that have been around for a while to find funding, private equity might be the right choice. What you don’t need to succeed at this stage is a large amount of personal wealth; the money you are investing belongs to a third party, not you personally.

Benefits and Items to Consider When Taking a VC Career Path

One of the most significant benefits of being a professional venture capitalist is that you can spend your days surrounded by some of the brightest and most innovative entrepreneurs in the business world. Having the opportunity to help make multiple companies find success through your efforts is incredibly rewarding. Your take-home pay and a certain level of freedom of schedule are two significant benefits you will enjoy.

However, one of the biggest things you will need to consider is how practical your communication skills are and how adaptable your people skills are. A considerable part of this job will include dealing with your partners, and you need to understand that many of these interactions will be fueled by passion and have the potential to be challenging. Another thing to consider is the possible volatility of the companies you invest in. Part of the allure of startups is that they can provide some high highs but don’t neglect to understand what the tradeoff of that means. 

Other Tips

If you are an expert in a particular technical field, this can be helpful if you focus on funding companies in your area of expertise. Whether or not you focus on a single industry or type of technology, you should stay abreast of what’s happening in the VC world and maintain a strong presence on social media platforms. When it is time to get your MBA, try to get into the best school you can because you will be competing against others whose educations were at the best universities in the country.