There are many ways to learn more about venture capital and careers in the field. The U.S. Small Business Administration offers a concise overview of venture capital at https://www.sba.gov/business-guide/plan-your-business/fund-your-business. You should also check out venture capital newsletters such as the Wall Street Journal’s "Venture Capital," https://www.wsj.com/pro/venture-capital. Talk to venture capital associates about their careers. Try to develop relationships on LinkedIn or ask your professors to recommend some venture capitalists who would be willing to discuss their careers and what a typical day on the job is like for associates.
Associates have three main functions at venture capital firms: 1) sourcing deals, 2) performing due diligence on potential investments, and 3) supporting the portfolio companies. Here’s a breakdown of their duties in each category:
In an early stage VC firm, you will be expected to source deals. You need to reach out into the world and bring investment opportunities to the firm. This amounts to calling and visiting companies to ascertain their attractiveness and interest in raising capital. This isn’t as easy as it sounds. Deal sourcers will go to trade shows, talk with their networks of friends, read the trade press, work with other venture capitalists, attend local networking events and investment conferences, read unsolicited business plans, and talk to portfolio company managers. There are hundreds of deal sourcers at work at any given time—and being the first venture capitalist to contact a company matters. When sourcing deals, schmoozing is key. Any acquaintance or friend might give you the next lead on a company. Venture capital associates must build personal relationships with business partners to increase the level of trust and interdependence.
Associates support partners in the due diligence analysis of an investment opportunity. Later-stage companies are normally no secret (they’re typically large enough to have attracted press and other attention). The goal is not to uncover the investment opportunity, but to get a company to take your money. Consequently, the partner is usually the one to source later-stage deals. Associates perform due diligence: building spreadsheets and running sensitivity analyses, calling references, investigating competitors, validating legal contracts, visiting remote locations, coordinating with other investors, and so on. Ultimately, associates and partners must decide how best to use the most precious resource: time. Which markets to research? Which company to work on? Which entrepreneur to call back? Which spreadsheet model to build? Which references to call? Which trip to take, which meeting to make? As an apprentice venture capitalist, associates must make decisions all day long. Many of those decisions have to do with which potential assignments to pursue. A venture firm is responsible for the money in its fund, and the clock is ticking.
In this role, associates conduct research about target portfolio companies and assist partners during the acquisition process (including negotiating and working with investment bankers, raising more money from other equity sources, negotiating with banks for debt financing, etc.). Once a company is acquired, associates attend board of directors meetings, help locate and screen potential additions to a company’s management team, convince new recruits that they should work with the associate's portfolio company, support the management team (this can be anything from being a friend to “handholding”), and keep partners up to date on changes, problems, and successes. Associates also analyze potential exit opportunities for portfolio companies.