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How to be a legal Venture Capital Associate

Updated on May 8, 2018

Capital associate-most junior member

In exchange, the venture capitalists receive part ownership in the company and significant managerial oversight. In a venture capital firm, the venture capital associate is the most junior member. However, these positions are competitive which means that there involve a lot of responsibility and independent thinking, and command higher salaries.

Job Description of Venture Capital Associate

Venture capital firms are quite similar to private equity in areas of the deals they would make and thus sources of financing. Somehow, they differ in terms of the types of companies they pursue. In general, private equity firms, tend to gravitate to the established companies, whether small or large, while venture capital firms do financing for start-ups and smaller companies who do not have access to the capital markets. This distinction is important since it frames the roles of the associates at venture capital firms.

The two main functions of VC associates:

1: Source new deals

VC associates are on the front lines finding and screening all deals. They are expected to have a sales-like mentality and find potential deals, by cold calling companies and entrepreneurs and setting up relevant meetings. The associate then presents prospective deals to the firm partners.

2: Support existing deals

VC associates, similar to other finance analysts, support all aspects of any deal, from due diligence to modeling and execution. With due diligence, they produce the initial analytics that lead a firm to pursue or reject a deal. Similar to private equity, when a deal moves onto more advance stages, associates continue to work side-by-side with the partner. The work intensity and hours fluctuate based on how close the team is to concluding the deals. Like other finance analysts, VC associates can work extremely long hours when coming towards the concluding a particular deals. For the reason of the high demands and pressure, Venture Capital associates are often paid or rewarded with above-average compensation.

The type of VC firm distinguishes some of the functions of the associates. The VC firms that concentrate on early-stage financing do much more sourcing and very limited due diligence and modeling. While, the Firms that concentrate on late-stage financing do more of the traditional diligence, modeling and execution, similar to a private equity firm.

The advancement track is also a bit different at VC firms when compared to private equity. As in private equity, most VC pre-MBA associates come in with some reasonable level and type of experience. This can range from a stint as an investment banking analyst to industry‑specific training. Firms expect pre-MBA associates to stay for two to three years and then exit to business school or another employer. In fact many firms give a two-year contract at this level.

The post-MBA VC associate is on the partner track. If partnership is the end goal, and it usually is for post-MBA associates, then the way to get there is to establish a strong track record of sourcing companies, closing/concluding deals, thus positively impacting the portfolio company, and exiting the investment to generate solid returns for the firm.

Education and Training

Venture capital pre-MBA associates usually have bachelor’s degrees in mathematics, statistics, finance, economics or accounting. VC firms tend to focus investments on a specific sector and will sometimes pursue candidates in the industry who have no prior finance or venture capital experience. For example, a venture capital firm focused on healthcare may hire a biochemist that successfully started a pharmaceutical company.

Post-MBA associates, in general, get considered for a VC firm based on the school they attended. Candidates who attend top MBA programs are usually recruited for these coveted jobs. And depending on the type of VC firm (early versus late stage) the characteristics sought can differ widely. Early stage VC firms look for candidates who understand markets and industries, and who can perform analysis to determine market size and opportunity that may exist in the industry concern. Late-stage VC firms look for the more traditional skills of financial modeling and deal execution.

The Salary of The VC

Annual salary and bonuses differ broadly in this field depending on the size of the VC firm and specialization. In general, pre-MBA VC associates can expect an annual salary of $80,000‑$150,000, according to Wall Street Oasis. With a bonus, which is typically a percentage of salary, this can be much higher.

In addition, firms will compensate associates for sourcing or finding deals. At higher levels in a venture capital firm, bonuses involve multiples of salary tied to the portfolio and carry from investments.

The Bottom Line

Venture capital associates operate in a unique area of finance. Unlike investment banking and other finance analysts who focus on modeling and deal execution, VC associates have less structure. Even at the entry level, VC associates will be finding deals, meeting entrepreneurs and evaluating business ideas. This can appeal to a candidate who is interested in being involved and partnering with businesses. Entry into venture capital is extremely competitive and usually requires an MBA from a top business school in order to advance to the partner level.

By:

Mek Hepela Kamongmenan

February 05th, 2018


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