Career insights by GGI is a new series by GGI sharing hacks and tips around management consulting, MBA, product management and public policy.
In this GGI career insight, we will be sharing insights into: the work profile of a Venture Capitalist
I will be sharing the 4 things that nobody will tell you about the world of venture capital.
I have personally never worked as a VC, so I reached out to my friends who have worked in prominent VC firms like Sequoia and EVM.
As a full-time entrepreneur, I have also had really interesting conversations with VCs. I’ll be using these insights to shed more light on the life of a VC.
1. Work Responsibility
The fundamental here is that VCs do not invest their own money.
They raise it from partners, family members and endowments. Then they eventually invest and circulate that money in various kinds of organisations.
They primarily advise, share their network and fund early stage and growth organisations.
They can invest their money in various stages such as seed or pre-seed rounds. In such a case, they could get as good as 100x returns. While they are putting in less money and gaining more equity, they are also taking a substantial risk.
The next stage could be the growth state. Here, they get relatively less equity and the risk appetite also reduces.
Next, in the late stage, the equity and risk are much lower. And the returns could be as high as 10X.
VCs are always looking for a return on their capital. Eventually, they would want to exit. This could come in the format of a sale or an IPO.
They typically get these returns within the span of 5-10 years.
2. Day to day responsibilities
As an analyst, you typically pick an industry.
It could be- consumer tech, EdTech, or Health tech. and so on.
Their most important role on a day to day basis is sourcing new deals. This could involve sending out a lot of outbound emails, responding to cold emails and participating in networking events that are taking place in the world of VC and start-ups.
Their next role involves doing due diligence. Sometimes this is outsourced to management consultants as well. This involves looking at pitch decks and the financials of organisations.
Next, they are concerned with monitoring operations and managing portfolios. Now that they have a deal, they apply a lot of their industry knowledge to ensure that the organisation adopts the best practices of the industry.
As they climb the ladder and become a partner, they are responsible for raining more money.
We can now get into what the working hours and salary is like.
In the VC world, the average working hours are 60-80 hours per week. I know a lot of friends who have spent up to 100 hours a week as well. VC is not for the light-hearted.
Having said that, VC, unlike consulting, is a more autonomous industry. There could be weeks where you are just sending emails and networking to ensure a good supply of deals. Or, other weeks could revolve around only ensuring that your current portfolio is performing to the best of its ability.
Coming to the much-awaited part of salaries.
You typically join as an analyst. In India, you can join after an investment banking role or a consulting role at the MBB.
After working as a consultant at BCG, I was offered a role in a leading VC firm in India. Though, I chose an opportunity at an international affairs firm, as my interest lay there.
In the US, you can join as an Associate after completing your education at a top Ivy League like Harvard, Tuck and Stanford.
At an Analyst level in India, the average CTC is about 27 LPA. This could vary because of bonuses and the type of organisation you are working in.
4. Who should become a VC?
Vinod Kholsa, a celebrated Indian-American and a VC shared his views on what makes you a good VC and I am completely aligned with it.
He shared that he does not hire anyone unless they have been an entrepreneur before. In his opinion, such people lack the credibility and ability to give funding and advice to other organisations.
To give some context, VC was actually started in the US. They would attract former entrepreneurs who had sold their organisations and wished to come back to the corporate world.
However, in India, VC has become more of a pedigreed work where it is believed that coming from a good educational background or a premium organisation makes you good a VC.
I don’t believe this is the right way VC should take place.
This is where angel investors are really disrupting the space in India. They understand entrepreneurship and what role funding would play in the larger equation. They are largely able to nudge you in the right direction.
If you need more help getting into management consulting and product management, feel free to check out my education venture- Global Governance Initiative. We invite industry leaders to host Masterclasses and teach our students the hard and soft skills required to excel in their careers.
Author: Shatakshi Sharma, Co-CEO Global Governance Initiative, Ex-BCG Management Consultant, Former Policy Advisor, Tony Blair Institute for Global Change
If you are interested in learning about GGI's MBA Scholar program, you can learn here.