Venture Capital Principals
Exploring this Job
One easy way to learn more about venture capital is to read books and journals about the field, as well as check out Web sites. Here are some useful resources:
- The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies, by Mahendra Ramsinghani
- "What is Venture Capital?": https://pitchbook.com/blog/what-is-venture-capital
- Entrepreneur: Venture Capital: https://www.entrepreneur.com/topic/venture-capital
Do you know the meaning of VC words and phrases such as accredited investor, greenfield, and Series A round? If not, you should peruse PitchBook’s Private Equity & Venture Capital Glossary (https://pitchbook.com/blog/private-equity-and-venture-capital-glossary) to familiarize yourself with industry jargon.
In college, join venture capital and business clubs. Talk with your professors about VC investment strategies, funding stages, and potential careers. Perhaps he or she can connect you with venture capitalists who would be willing to discuss their careers and the best ways to break into the field.
Principals are key players at venture capital firms. As partners-in-training, they assist more experienced venture capital professionals, providing everything from deal sourcing to assistance with due diligence and portfolio company management. Their major duties include:
- identifying and assessing potential investment opportunities from their network of contacts (business colleagues, venture incubators and accelerators, etc.) and new sources
- preparing industry and competitive research on financing targets and presenting this information to the firm’s investment committee
- working closely with managing partners to conduct due diligence (market, management, product, legal, accounting, etc.) on target companies to assess the strength of investment proposals (this includes screening potential business plans and helping to value the company using market comparable and discounted cash flow benchmarking exercises)
- constructing financial models to assess a target company’s operation, financing, valuation, etc.
- building relationships with entrepreneurs and venture capitalists at other funds
- participating in the deal process (e.g., drafting term sheets and letters of intent, negotiation, audit, tax, legal, closing)
- providing support to portfolio companies by conducting research, advising senior management, assisting with financing and acquisition activities, and attending board meetings
- analyzing credit issues and equity opportunities at portfolio companies
- serving on the boards of portfolio companies (or functioning as a board observer)
- identifying and negotiating with potential buyers of the fund’s portfolio businesses
- assisting partners during the exit process (i.e., initial public offering or merger)
- supporting and mentoring junior staff at the firm