by Brian DeChesare Comments (93)

What Do You Do as a Venture Capitalist?

What Do You Do as a Venture Capitalist?

Last time around, we discussed at length how to get into venture capital, what VCs and headhunters look for, and how resumes, networking, and interviews differ when you apply to VC jobs.

Now we’re going to jump into all the questions you’re really curious about:

  • What you actually do each day as a venture capitalist
  • How you advance to the Partner-level
  • How much you work and how much you get paid
  • The economics of VC firms and why your pay is so dependent on the firm’s size
  • Trade-offs of venture capital vs. investment banking, private equity, and entrepreneurship

So let’s dive right in.

A Day in the Life

Q: So what’s an average day in the life of a VC like? I’m assuming that you don’t have to fix printers or run to Starbucks quite as much.

A: A lot of meetings. Most days are dominated by meetings with entrepreneurs and portfolio companies and networking at conferences and other events.

You do spend some time on research and due diligence for active deals, but most of my days were spent meeting people and networking.

After the close of business each day, you might go home “early” or you might stay late depending on what’s going on – just like investment banking, you’re busiest when you’re working on a deal and it’s close to the finish line.

Q: When you say “meeting people,” are you talking about tagging along with Partners, or going out and setting up meetings yourself? How much independence do you have?

A: At my old firm, the pre-MBA Associates contacted companies and set up everything by themselves. Sometimes Partners and Associates would go to the same meeting, but more often than not I did everything by myself.

Associates are the “front-line filter” – they meet with companies initially and figure out which ones are interesting, which ones might be good investments, and so on.

Once I pre-qualified the company, I would bring it to the Partners and say, “This company might be interesting – we should take a closer look at them” and then the Partners would become more involved and start meeting with them as well.

Q: So it sounds like your firm was very sourcing-heavy. How much of your time was spent on sourcing vs. deal execution?

A: I don’t have an exact split for you, but early-stage firms tend to do more sourcing and late-stage firms do more due diligence, modeling, and deal execution work.

Although my firm was late-stage, they still focused on sourcing and the majority of my time was spent meeting with companies we might invest in.

Even when deals came along, 99% of them would never go anywhere – we might start doing due diligence, find something we didn’t like, and cut off the investment process right there.

This is very similar to PE firms, where you might look at hundreds of companies each year but only make 1 or 2 investments.

On the buy-side you spend a lot of time saying “no” to people.

Q: On a similar note, I’m assuming that you didn’t do much modeling?

A: For truly early-stage companies – pre-revenue – we didn’t do much modeling.

For later-stage companies with revenue and profit, we did the usual modeling and valuation exercises.

It’s not as “intense” as what you see in investment banking because we don’t spend time trying to make everything perfect and adjust for every last non-recurring charge.

All About Advancement

Q: So that’s what you do as a junior VC: find interesting companies, filter the best ones, and bring them to the Partners who make the actual investment decisions.

How do you advance to the Partner-level? Is it just a matter of finding the next YouTube, getting a 41x return on investment in a year, and then moving to the Bahamas?

A: It depends on the firm you’re at and how their partnership works, but you need to find good investments and generate solid returns for the firm in order to advance.

You don’t need to find the next YouTube to advance to the Partner-level – that only happens once a decade. It’s more about getting consistent base hits rather than the elusive grand slam.

You need to build a track record over time and become genuinely involved with your portfolio companies – source the deal, sit on the Board, advise the company and help with strategic issues, and then achieve a solid exit.

You don’t need to wait for the actual distribution of proceeds from your exited investment to advance – an acquisition, IPO, or even a situation like Facebook where they’ve grown an incredible amount and are clearly going to have a huge exit – are good enough to “prove” yourself.

Q: Right. But what about making the move from junior Associate to more senior levels at a VC firm? How does that happen?

A: First off, 90% of the time if you come in as a pre-MBA Associate you won’t be able to advance to the Partner-level at all.

You’re not on “Partner-track” and no matter what companies you find, you’ll be expected to stick around for a few years and then go to business school or do something else.

Most of the time you need to come in at the post-MBA level to have a chance at advancing to Partner.

The exact process is tricky to describe, but the more interesting companies you source and the more work you do, the more the VC firm will trust you to start making decisions on your own.

Until you’re an official Partner, you can’t make investment decisions but you can present your case to the Partners, argue for investment, and become actively involved with the company itself.

So as you start finding better investments, the Partners will give you more responsibility, then you can use that added responsibility to find even better companies, and that process repeats until you reach the top.

Q: Ok. Now let’s play devil’s advocate and assume that you’re just not a good investor no matter how long you’ve been in the game, and that you can’t find any quality companies.

What happens if you can’t make the investments you need to reach the Partner-level?

A: Unlike investment banks, VC firms will rarely make a show of firing people just to say they fired people.

Instead, they might just pull you aside and say, “You’ve been here 5 years but haven’t built up much of a track record and we’re not sure you can get to the Partner-level. We can keep you on awhile longer, but you need to get some good results soon.”

Other times, they might just reduce the economics for you and pay you less if you’re at the Principal-level (just before reaching Partner) and use that as a signal for you to leave.

There’s no formal layoff process – VCs are far more subtle about hiring and firing than bankers.

Q: So let’s say you’ve been working in VC for a few years but can’t advance, so you get asked to leave. What’s your next move?

A: Common paths are to join a portfolio company, start your own firm, or go into business development.

As you move up in venture capital, you focus 100% on developing your network, making lots of contacts, and getting to know your industry well – all of which are useful for business development or working at a portfolio company.

Starting your own VC firm is tougher to pull off and you need more of a track record to do that – if you’re a junior Associate with no investments behind you, you won’t be able to raise capital at all.

Experienced investors can struggle to raise even “small” amounts of capital, so starting your own investment firm is the most difficult of these options.

Pay, Hours & Likes and Dislikes

Q: Let’s talk about money – specifically, how much money did you make?

A: Do I need to give you an exact number?

Q: I like numbers. But estimates are fine if you don’t feel comfortable with that.

A: Your base salary in VC will be higher than what you earn as an investment banking analyst – similar to how your base salary generally increases when you move into private equity.

Bonuses are lower at early-stage firms because there’s not as much money to go around and the fees are not high enough to pay everyone millions of dollars.

At late-stage VCs and more PE-like firms, bonuses are higher and are closer to what you’d make in banking or traditional PE.

Pre-MBA Associates usually won’t get carry, whereas post-MBA Associates may or may not depending on the firm.

Q: Let me stop you right there because some readers may not be familiar with “carry.” Can you explain what it is and how you get paid in VC?

A: Sure. There are 3 ways you make money as a venture capitalist:

  1. Base Salary
  2. Year-End Bonus
  3. Carry

“Carry” refers to money you invest alongside the firm when they invest in a company.

Let’s say that your firm is making a $5 million investment in an early-stage company – if you have carry, you might be allowed to invest $50,000 of your own money along with the firm.

Then when they exit, you’d also reap the profits – or losses – on your investment.

Carry is seen as a big perk because of the potential to make a lot of money, but it’s quite rare to find the next YouTube that gets you a 41x return on investment.

More often than not you’ll get a small bonus but you won’t become a billionaire with these investments – to benefit from carry, you need to be at the firm a long time and invest in dozens of companies.

Q: You mentioned how bonuses are lower at early-stage firms because there’s not as much money to go around – can you explain the economics of VC firms?

A: Sure. Let’s say the firm has $100 million under management – they might charge investors a 2% management fee each year and 20% of their return on investment (the carry).

That 2% management fee – $2 million each year – is used to pay base salaries and bonuses.

So a fund like this with $100 million under management would not be able to hire that many people – maybe 1-2 Partners and a few Associates.

Everyone wants to make millions, but if you have less than $2 million to go around that’s not possible unless you consistently find winning investments.

That’s why larger firms pay bigger bonuses: if you have $1 billion under management rather than $100 million, 2% now represents $20 million each year.

And just because they have 10x as much capital doesn’t mean they’ll hire 10x the number of people – so there’s more bonus money to go around.

Smaller firms don’t want people who are in it only for the money.

It’s not “Work 100 hours a week for me right now and you’ll be rich at the end of the year” – it’s more about long-term incentives and being genuinely excited about what you do.

Q: Speaking of hours, how much did you work as a junior VC?

A: Less than in banking. Weekends were free most of the time, but sometimes I stayed late at work if we were busy with deals.

On average I put in 60-hour weeks, though that dropped when we were in “sourcing” mode and rose when we were in “deal execution” mode.

Off the Record

Q: A lot of people hype up exit opportunities because they view the end game as superior to banking itself.

Having worked in investment banking, then at a late-stage VC firm, and now at an early-stage firm, what did you honestly like and dislike about the industry?

A: One of the hardest points to assess when you’re recruiting is cultural fit – you can chat with Partners all day long, but it’s hard to say how well you’ll fit until you actually work there.

VC firms are more like family businesses than rigid conglomerates – sometimes they treat you like a temp, and other times they treat you as a peer.

But it’s difficult to ask them about this directly and get good answers – so joining any VC firm is riskier than moving to a bank, where there are lots of people and many sources of information.

If you compare venture capital to investment banking, obviously the work/life balance is much better – but on the flip-side, you also lose a lot of the camaraderie you find in banking.

You work alone 90% of the time, and you’re going out there and making things happen on your own.

That gives you a sense of empowerment, but it’s also lonelier than banking because you’re always meeting new people but rarely getting to know anyone well – and you don’t hang out with your co-workers.

It’s like how you pointed out before that the buy-side and entrepreneurship are both lonelier than working on the sell-side.

VC is similar to being a “mini-entrepreneur” because you have to make decisions without following specific orders – completely the opposite of banking.

Q: Right. When I explain to people “what I do” I give the same type of summary and they look at me like I’m crazy because they don’t understand how there are downsides to everything.

What are your future plans now that you’ve done banking, VC, and returned to VC?

A: Once you work in venture capital, it gets more difficult to become an entrepreneur – you can’t beat the lifestyle, and you can bet on companies without taking nearly as much risk as the founders themselves.

I was thinking of going the startup route, but I decided to go back to VC and work at an early-stage firm after I graduated from business school.

I had planned to pursue startups while at b-school, but it was impossible to fit in – you have a lot of work, and unless you’re also networking constantly it’s a waste of time and money.

So I’m planning to stay at my current firm for the near future, and then pursue my own projects on the side in my free time.

Everyone interested in venture capital wrestles with the investor vs. startup founder choice, and that’s what I’m debating right now.

Q: Yup, I know how that goes. Thanks for your time – that was a great interview and I learned a ton about venture capital.

A: No problem. Let me know if your company is looking for investors!

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Brian,

    First off, thank you so much for this post. It was extremely educating, and I am sure to come back again and again to it, so ain’t nothing is lost :).

    I recently started working as an associate at a new VC firm and I am loving it atm. I am putting in 60 to 70 hours and I am only more so addicted. I realized that the fastest way to learn about markets and their issues, is to talk to as many Entrepreneurs as possible.

    So are their any tips and tricks on getting CEO’s to accept your meeting invitations on Linkedin? The best practices. We just started out and we need to build some reputation for ourselves.

    1. This is not really a topic we cover, so I can’t advise you on that one. Maybe check some VC blogs from people like Fred Wilson, Brad Feld, etc., and see if any articles cover this topic. I suspect the answer is “Rely on referrals rather than cold contact.”

  2. Hi, Brian, what do you think about VC in Latin America, Colombia for example. Have you listen about how is the market there and some comments about to accept a job opportunity there,

    1. Don’t know enough to comment on it, but we hope to cover this topic in the future.

  3. As a recent college grad with experience in technology commercialization in the medical device industry, how does one get into a VC pathway? Would you recommend joining a startup first, gaining experience and then transitioning to VC?

    1. The most common path is to go from banking or consulting into VC at the junior level or to work in the industry, become more senior at a company, and then move into VC. Joining a startup might help you, but you’re more likely to get into VC from banking or consulting.

  4. hello, i was wondering if i would

    I’m graduating from a top US university with MBA and have over 10 yrs experience in FX trading (vice president). Now i’d like to get into either asset management, VC or PE. But would I have to take a cut back and start as a juniour or can I make a lateral move into one of the above type of firms?

    would appreciate response.

    1. You will have to take a substantial compensation and seniority cut to make that big a change. FX trading is very specialized.

      1. thanks Brian. What’s your advice on where I could use my MBA + trading background.
        Obviously no pressure, happy to hear your thoughts. Others welcome too.

        appreciate it.

        1. It is tough because FX trading is so specialized. Maybe think about Treasury roles at normal companies or some type of Big 4 advisory role where you need to know a lot about FX and the hedging challenges companies face, and use that to eventually get into banking.

          1. hey Brian, just wanted to see what your view was if I get an entry into fairly small VC firm i.e. only 5 yrs old with under 200m in investments but is part of a firm that is worth over $2B. They’re looking to grow & invest mainly into Fintech.

            wondering if the trade off i.e. getting into VC at this late stage in my career Vs a small VC firm is a good risk to take?

          2. What do you want to do long term? If you don’t care and just want to get out of FX, then yes, it’s worth it. But if you want to move into something more specific, like IB or PE, then joining a small VC firm probably isn’t a great idea. Undergraduate interns can get away with it because they have no work experience and don’t know any better, but it’s tougher to spin with that much work experience.

  5. great website.. great article. it almost answered all my questions as im looking to gather info into VC.

  6. Avatar


    First of all thanks for the great article it certainly helps a lot!
    I guess I however have one main question to which I am not able to find the answer.

    I am from a top business school in Europe and looking to move into IB (M&A) or consulting (think MBB) for my first job, I have corporate banking in top European bank and corporate finance in a big tech company and I have the opportunity to do a final internship. I have the option to work into early stage VC.

    I guess my questions are:

    – Will doing an internship early stage VC help me get an interview for consulting and M&A or will it be considered “out of the scope”?

    – Also, what are the exit opportunities for a VC analyst?

    – Should I play it safe and try to get an internship in M&A/Consulting straight away ?


    1. I don’t think an early-stage VC internship will help much, especially if you have previous corporate banking/finance experience. Exit opportunities from VC analyst roles also aren’t great, so it’s better to go for an M&A/consulting internship.

  7. Hi –
    I didn’t see much info about someone going from an 18+ year career in the IT world with over 15 in a Fortune 50 (think Amzn, google, msft). I’d like to transition as an Operating Partner (MD level) in either a VC or PE firm. How possible is that and what are the best ways to do that and is it easier in VC vs. PE? I have tonnes of global experience in high tech (SW and HW) sales, bus dev, strategy, management etc…Appreciate any guidance. Thx

    1. It’s tough to get in with that level of experience. Your best option is to come in as an Operating Partner in PE, or potentially to join a VC firm as an “entrepreneur-in-residence” or something similar. You’ll have to do a lot of networking on your own because recruiters may not be responsive given your experience. Please see:

  8. Avatar

    Hi, I got a question. When an investor put money into a VC firm, is it in a form of loan, equity or something else?

  9. Avatar
    Mike Moritz Jr.

    You do not need a finance/consulting background to go work at an early stage fund. It is super nice to have but here is the reality for an associate:

    1) You’re going to need to win the trust of the portfolio CEOs and if you can’t do that you’re not going to be useful to the fund.

    2) The financial modelling isn’t a huge part of the job so if you have done 2 years of IBD then you won’t use much of it unless your firm looks at a company that has $1-2m+ in revenue at a strong gross margin

    3) Companies have problems, lots of them. If you cannot come up with solutions to problems such as: finding real estate for a growing company, helping them understand their marketing efforts (what works, doesn’t work) along with a whole host of other operating issues you’re not going to do well here.

    The partners at these firms do not want you to just support them on the financials/due diligence which is quite simple given most firms use templates all day long and customize from those templates. You need to focus on helping those entrepreneurs do well!

    I have worked for an early stage venture fund and I have many friends doing the same who were ex-Goog/TWTR/YouTube etc. Each of them are far more useful to the portfolio co’s and they can easily do the modelling part b/c any junior person in any other industry is going to be working off excel and doing some sort of modelling. That isn’t a strong enough sell.

    You will also spend a LOT of time marketing yourself to these firms in order to source deal flow, build a name, develop an expertise in a sub-sector and hustle your way infront of people. Not everyone is able to come across as a likeable person especially when the absolutely star entrepreneurs can be very difficult people to deal with.

    If you want to go work in an early stage fund go and work for a high growth company (series a or beyond – so you get paid a market rate) or a market leading tech co i.e twtr, goog, amzn, fb etc. After two years you will easily have some solid expertise, you’ll have the same skills as a finance candidate and it is your job in that time to actually develop your brand name, your expertise and meet partners well ahead of applying to these places.

    If you’re actually entrepreneurial there is no harm even trying to help an early stage co with some aspect of their business. Then if you do well, ask entrepreneurs to give you a supportive reference/intro to venture partners so they will take you even more seriously. I helped a business generate £1m+ in revenue 8 months post-graduation and this led straight to me getting an associate gig at a fund. You don’t need the finance experience if you can prove you can learn incredibly quickly and help the portfolio companies.

    Almost no one who goes to these funds is focused on helping portfolio companies. This is as important if not more so than helping the partners source for quality deals b/c almost every fund I know of spends a huge heap of time helping the struggling companies. The successful companies don’t need as much hand holding from partners.

    1. Hey “Mike”,

      Really appreciate your insight on this! Would you be willing to help answer a few questions via email? As a entrepreneur looking at eventually going to VC would love to pick your brain and get your thoughts on the industry?

      If you can spare a few minutes, please reply here and I’ll send my email.


  10. Mainly interested in how you think they would value my experience/background.

  11. Very good article and interview, I really enjoy your insights. Wondering how feasible it would be for me to get into VC. I have an undergrad in Finance, started a business while in college – a small niche service business but built it to about $2MM per year within a few years. So I have experience in B2B sales, operating a startup, and am very interested in evaluating and helping other startups get to the next level. I am Pre-MBA and don’t have many connections in VC or other related finance fields due to the nature of my business (completely bootstrapped, raised no funding). Do you think it would be wise for me to go the MBA route or just cold-call VC firms to try and get in?

    Thanks for your feedback!

    1. Avatar
      M&I - Nicole

      I think many VC firms offer pre-MBA internship positions and you may want to explore them. Yes I think you can still explore the MBA route and talk to VC firms in the meantime. I would start connecting with VCs on LinkedIn and also try cold-calling their firms. You may want to identify a few firms you’re most interested in and reach out to individuals there

  12. Avatar

    Hey! Great thread – I enjoyed reading this.
    I would like to work in VC (esp tech investing) in the future. However, I’m confused what my best option is to get there. I am an undergrad at a ‘target’ in the UK at the moment. I have an offer from Google and will start this year. What types of roles at Google will help me leverage into VC? Or am I better off in a banking role? Also I know you mentioned an MBA is needed to reach partner level? So could I do: Google –> MBA –> VC? Also while working at Google is it ok to run a side tech business to show interest. I run a business at the moment but I’m looking to launch something bigger. What do you think? Finally couldn’t I network and land an analyst position in a VC firm?

    1. Avatar
      M&I - Nicole

      Yes Google –> MBA –> VC works, though you may find that you develop relationships through Google and you venture out to do your own thing or join other tech startups or potentially build your VC network there.

      Yes I believe you can run a side tech business as long as there’s no conflict of interest.

      Yes you can but it can be harder if you don’t have the experience they’re looking for –

      1. Avatar

        haha awesome link – thanks!
        They seem to like ‘sales’ backgrounds? So can it be a ‘sales’ role at Google?
        Do you think Google gives me an edge into VC or would banking/consulting be a better start?

        1. Avatar
          M&I - Nicole

          Yes this would be fun. I think it depends on the department in Google and the sort of bank you’ll be working for. If you’ll be working in a bank targeted in tech deals with huge network and exposure to VCs yes this can be very helpful. Otherwise, perhaps Google maybe a better option. Quite a few startup founders worked there I believe.

  13. What do you mean by operating experience? Thanks!

    1. Avatar
      M&I - Nicole

      Experience of operating and running a company

  14. Hello,

    I’ve read quite a few of your posts, and they’re very informative. However, I haven’t really found any that address my situation. I work for the IRS, which is a financial institution, and have worked there for about 4 years. Within the next week or so I’ll know if I will transfer into the position of IT specialist (very high possibility of selection), which I know is rather important for VC. I’m very interested to try any of PE, VC, hedgefunds, etc. Just wanna see which I have the best shot at currently.

    In addition, I will be finishing up my MBA this coming May. I see a lot that going to a top B-school is important. I’m not going to a “top” school, but an AACSB accredited school nonetheless. Just wondering what my chances would be to break into any of these fields with my current résumé. Do I need need to try IB first? What’s my likelihood of breaking into that? If selected for the IT position, should I gain a few more years in that before trying to break into any of these fields? What should I do to best improve my chances?

    1. Avatar
      M&I - Nicole

      Its probably easier for you to move to back office roles at PE/HF/VC if you were to transfer from the position of IT specialist. I think all 3 are equally “difficult” to break in. Yes going to a top school will help you retool yourself and increase your chances significantly. In your case, you may have to rely on networking and cold calling to break in. Gaining a few more years in IT may not necessarily help because your network and experience with those firms matter most.

  15. Hi, I’m currently in a product management role at a startup, but thinking of switching careers. Prior to that co-founded a startup. If I am interested in a VC in the long run, which of the following positions is a logical step in that direction?

    Corp dev, innovation, product management, business dev

  16. I will be doing an internship at the (remove the spaces) F E N O X venture capital this summer in Sillicon Valley. It will be unpaid. How do I know that this is a legitimate opportunity? They didn’t even give me legal documents to sign saying they accepted me.

    1. Avatar
      M&I - Nicole

      I’d wait till they give you the legal documents first :) You’re not officially employed yet!

    2. Hey Josh, what did you think of the internship there?

      1. I meant to say Mark, sorry.

  17. Avatar
    Summer Banker

    I work in VC. However, unlike traditional VC firms, my firm does a lot of work with debt (approximately 20% equity / 80% debt). Given the nature of my firm, it is not very sourcing heavy. My background is in tech IBD and I worked a lot with software and internet digital media companies (mostly M&A (60%) and debt (20%) and equity (20%) financing).

    The end-game for me (post MBA) would be to work in a late stage venture or early stage growth equity firm. Would I need to go to business school to have a shot at a senior associate position at one of these firms (think Meritech, Tenaya, Scale, Norwest, TCV…etc.)? Or should I try to get a product manager role post my 2 year gig in VC?

    Does the above make sense (or even work)? Or is there something else I should pursue. Your input is greatly appreciated.

  18. Hi,

    Great site+article! Especially enjoyed the recent infographic on IB bonuses.

    I hate to reiterate what may have been asked in the past, but I feel like I should get it off my chest anyway – a networking question.

    A bit of background first: I am a rising junior at a semi-target in Canada and have so far done an IB internship at a tech boutique and currently work at an early stage VC firm. I’m also working on my own business on the side. For next summer, my goal was to land a gig at a BB or do Financial Services at a top-tier consulting firm. Ultimately, I’d like to end up in VC.

    I just discovered that a very close family friend’s nephew is currently a prominent investment partner and MD at a late-stage VC firm in California.

    My question is if it would be wise to approach my fam friend’s contact NOW for a position next summer, or get that summer internship next year, and talk to him for FT recruitment? I know it is unheard of, but is it even possible to land a FT Associate position at a VC firm right out of undergrad with a couple of solid internship experiences under my belt?

    My apologies for the long post, but any help would be appreciated!

    1. Avatar
      M&I - Nicole

      Yes. Speak with him now. No it is never too early to network now. As long as you know what you’re talking about and why you want VC, I’d speak with him.

      1. Thanks. Do VCs ever take recruits from right out of undergrad? Have you ever heard of such a thing? I know its a noob-like question, but I’m really curious.

        Any help is appreciated.

        1. Avatar
          M&I - Nicole

          Yes, sometimes. I don’t it happens often. Check out

  19. awesome read. but a quick question.

    im about to be a sophomore at Duquesne University in Pittsburgh. (probably isn’t a big school in the business world at the national spotlight but a lot of pittsburgh business people went to Duquesne so the connection locally is pretty good)

    but right now im studying finance and accounting. I have plans to become an accountant or auditor at a Big 4. I dont think IB is for me because im not sure i want to make that big of commitment in terms of hours. Is it possible to get in VC with Big 4 Accounting experience? I feel like having that kind of experience could be good for a VC.


    1. Avatar
      M&I - Nicole

      Honestly, I don’t know how relevant big 4 accounting backgrounds is to VC firms. You might find the links below useful:

  20. Avatar


    You’ve talked about exit strategies and moving from IB to PE or from IB to hedge funds. But for one who’s starting out at a PE firm, what are the chances of moving from PE to a VC firm or from PE to corporate development at a tech firm??

  21. Avatar


    You’ve talked about exit strategies and moving from IB to PE or from IB to hedge funds. But for one who’s starting out at a PE firm, what are the chances of moving from PE to a VC firm or from PE to corporate development at a tech firm?

    1. Avatar
      M&I - Nicole

      I personally haven’t heard of too many cases in the first category. If you work in a PE firm and the firm has a tech portfolio company, you can try to move to that portfolio company.

  22. Avatar

    I am going into full-time recruiting soon and have an interest in doing VC later on in my career, as of now. Given that I would like to go get an MBA before trying to break into VC, is there any position in financial services that is more market-based than banking that could help me get there?

    I know DCM is basically a pigeon-hole and haven’t heard of many people going from S&T to VC, though I’m sure its possible with the MBA.

  23. The above article is good but to be honest. I have met quite a few guys in VC (early stage) and at the associate level who are actually leading the investments/closing the round etc and so forth. It all depends on the fund you’re at.

    You’ll get FAR MORE opportunity to do this if its a firm with only a few people than a very BIG firm. So if you really want to speed up your progress in these places go work at smaller vc funds.

    But as per usual M&I almost everything in this article is on the money.

  24. couldn’t find: pay for in house m&a research analyst.

    small-time, company doing only 5-6 micro deals/year

    company working for is s/w and 300mm revenue

  25. Brian,

    First, this is a great article!

    I have a question about different titles and levels of partners. I can see that there are quite a few:
    1. Partner
    2. General Partner
    3. Administrative Partner
    4. Associate Partner

    Are these different levels of partnership? What are the implications on the day to day role and compansation?


    1. Avatar
      M&I - Nicole

      Readers might be able to help you on this front

  26. Hi All,

    I am currently in the biotech industry and hold a BS in bio and have been in this industry for 7 years. I am planning to go back to get my MBA so that I may step foot into the VC world. I was wondering if it makes sense to even go back to get the MBA if you can step foot into VC without one?

    On a side note, I am also planning to start an online e commerce service that is geared towards the biotech niche market. What is the best way to fund this? Should I approach VC to fund such a project?


    1. Avatar
      M&I - Nicole

      No, if you can get into a VC firm w/o an MBA, don’t do it.

      Can you bootstrap? You can approach VCs though there are pros and cons to having VC money which I won’t go into details here.

  27. Currently an associate with a BB. If I want to eventually start a VC firm or a hedge fund, what carrier plan should be best for me. I do not hold a MBA at this time.

    1. Move to buy-side, earn solid returns for 10-15 years, leverage that track record to raise a fund of your own.

  28. Great site, but a couple of questions…It said here that an mba was required to get on the partner track, is that also true in most private equity firms? Also does your site have any articles about private equity pay, hierarchy, etc. Thanks

  29. Very informative article.

  30. Why wouldn’t experience in a VC firm help someone to transition into PE/HF? Thanks

    1. I just read the PE v. VC article. When it comes to salary in VC, is appear to be more less stable since it really depends on the ROI right? Also, should PE and VC that invest in late stage of a company be really that different?

      1. Yes there is a lot of overlap between the two esp. with later stage companies. Would not say pay is more “stable” in either as salaries are standardized and bonuses are always dependent on the economy and deals.

    2. It might help with PE but for HF not as helpful since HF market-based while PE/VC are deal-based

  31. Pay will all depend on the firm as this article mentions and the size of the fund. Small fund means less money going round.

    On the flip side the smaller the firm it means the more work you will do and the more you will be involved. I don’t necessarily agree that ALL you do is ‘sourcing’. It may be geared that way but partners don’t have all the time in the world so you will have to do work for portfolio companies, go spend time with those firms and muck in where necessary. Even early-stage firms may have portfolio companies that are mature and you may be doing more ‘PE’ related work like modelling and looking for how to exit this firm. It really does depend. Partners are also more likely to sit with you and show you ‘whats what’ if its a small firm versus a big firm. And hey, sourcing isn’t so bad if you genuinely want to go meet people/new entrepreneurs b/c you’ll get ACCESS to all the hottest events in your cities. Stop spinning sourcing as bad its not about 100 calls a day and annoying CEOs of start-ups who have. Its about r/ship building over time. In the words of Mark Suster ‘invest in lines not dots’

    1. Yes it’s not that bad but most people at the junior levels don’t want to spend all day doing it either

  32. Hey Brian,

    I noticed in the post(and some previous ones) it mentioned that late-stage VC firms tend to focus more on due diligence/valuation and modeling. And I can’t help wonder the specific “models” that are often used at a late-stage VC firm. Are they pretty much similar to the ones that are used in investment banking?

    I am currently working on a VC internship in my country, and it will help significantly if I can manage to get a hold of this information.

    Thanks a lot!

    1. Yes, valuation is valuation so the models are similar. They may also create 3-statement models with revenue/expense builds similar to what you see in banking.

  33. Hi, so I’m finishing up my 2 years of banking and recently received an offer to join a mid-sized VC that does late stage and early stage. The offer seems good of all fronts, except for comp, which seems a little low, given what your posting in this article cited. I know I’d be working less hours, but it seems like my 2 years of banking won’t add much in terms of comp… I’m wondering if this has to do with the markets right now, or the firm itself. Any comments/color you can provide would be appreciated. Thanks.

    1. It is probably a combination of both, but in general VC can pay quite a bit less than banking since there’s not as much money to go around. If you want to do PE or HF I wouldn’t go into VC, but if you’re just looking for something with better hours and you’re interested in tech then it could be a good idea.

  34. Avatar

    For someone looking to go into VC, how much do you think it would “hurt” to start off in a industry group like FIG or E&P as opposed to a Tech group?

    1. Don’t think it hurts too much as long as you can show a solid interest in tech.

  35. Can you describe the difference between VC firms specializing in early-stage versus those firms specializing in late-stage investment?

    1. Early stage firms are more about sourcing and finding the next Google / Twitter / Facebook / Zynga than modeling / due diligence work… so you spend a lot of time at conferences, meeting with companies, and going out on your own to find interesting startups. Late-stage is more like PE, so more of an emphasis on modeling, due diligence, figuring out the right deal terms, and so on.

  36. Slightly off topic — I recently heard that Corporate Bankers have as good exit opps to PE as Investment Bankers, because they deal a lot with debt, credit analysis, and financial projections (Rev, EBITDA, FCF). It kind of makes sense… is this true? Does this apply as much for VC? Thanks.

    1. I think that’s as a stretch as I’ve never heard of corporate bankers having equally good exit opportunities… PE headhunters recruit former investment bankers 99% of the time. PE firms very rarely hire someone who hasn’t done IB or PE before.

      It might be easier to get into VC from corporate banking vs. PE from corporate banking but that’s not saying much since VC is arguably easier than PE to begin with.

  37. Hey Brian,

    Great post. Would you be able to also put together a series on Corporate/Business Developement (in-house M&A)?


    1. I’m visiting a friend next month who might be able to volunteer for an interview on business development – if he can help out there will be a series on the topic in a month or so.

  38. Avatar

    I’m currently interning at a VC (rising undergrad junior; couldn’t get anything else lol) and based on my own experience (which is obviously minimal), this is very accurate and gives a great impression.

    One thing I’d like to add (again, I’m talking with the experience of a 20 year old who’s been interning at a VC for 3 weeks now) is that VCs appear to be more technical than PE.

    I’m working in a cleantech fund and the analyst/associate positions are pretty much divided up between Corp. Finance and Techies. The Techies kind of seem to be more “important” and more involved in the decision making and deal sourcing. All the Corp. FNCE people do is really work on exit strategies and evaluate potential portfolio companies (after the techies gave them an initial review).

    Two questions:
    1) How is the carry divided up? Evenly among employees or also kind of like bonuses, giving more to the better employees? I don’t think my fund ever got carry haha so I feel awkward asking the people :)

    2) What’s the best way to leverage a VC internship to get interviews/internship offers for my next summer? I’m hoping to work as a SA in IBD.

    1. Yeah I think for cleantech you have to be more technical to understand the companies – for tech and especially consumer Internet, you don’t need to be an engineer to understand the companies VCs invest in.

      1) Basically everything goes to Partners. I’m not sure how they determine the exact split, but I would imagine that the Partner responsible gets most of the return for which he was responsible. If they didn’t have a grand slam exit then it would be more evenly distributed.

      2) Write about the modeling / valuation work you did and any investments or portfolio companies you work with, that sounds more impressive than industry research. Also ask your co-workers for referrals to bankers, it shouldn’t be awkward to do that at a VC firm.

  39. Avatar
    el bueno


    First off, great site. Second, great VC series you’re putting together here. It’s refreshing to read about more than IB and PE/HF on the internet.

    Now for the question: It seems to me that there are two different forms of “carry” discussed in this interview. One type was the parallel investment a firm employee (most likely Principal and above I imagine) is allowed to make in a company that the firm is investing in and the other was the return on investment that has been gaining media attention as of recent. Is this discrenpancy simply a misread/misunderstanding on my part or is this truly two different types of “carry”.

    Hopefully you/readers can see the relevance: If a principal who has “carry” invest $50,000 of his/her own money alongside a firm investment of $5 million and the firm exits at $50 million then we are looking at two different “carrys” correct?
    a: The carry from the $50k invested ($500k in a simple model).
    b: His/Her portion of the 20% carry that the firm “charges” (Assume 10% of carry goes into his/her pocket= $1million)

    Is the number received from carry in this example truly $1.5 million? Or is it just the $500,000? Should I just resign from commenting all together and just go back to watching World Cup games on my laptop?

    Thanks for your time.

    1. el bueno,
      You are right on – the carry discussed in the above Q&A is allowing firm professionals to co-invest on a deal (and it is a huge incentive). To be honest, I am not sure if this is even called carry — what you mention (20% of the profits being distributed among the firm members) is the traditional definition of carry.

      It would have been useful if you had mentioned a bit about the author’s background (perhaps w/o divulging personally identifiable information if the author requested anonymity).

      In general, there are a lot of misconceptions about VC career path. It’s made out to be extremely glamorous and larger than life but unfortunately, the truth is quite different.
      Quick background before I offer my 2 cents on VC: Stanford CS grad, 2 years product management at top tech company, 2 years tech entrepreneurship and now back to product management. After my first 2 years in product management, I got sucked into the VC hype and managed to get an analyst-level offer from an early-stage tech VC firm on Sand Hill Rd but instead decided to pursue entrepreneurship.

      In general, there are 4 entry points in VC:
      1. Analyst (pre-MBA)
      2. Associate (post-MBA)
      3. Prinicipal/VP
      4. Partner

      There are 3 aspects to the job: deal-sourcing, due-diligence, advising portfolio companies. The senior you are in the firm, the more time you spend on supporting the portfolio and less on sourcing.

      Analyst is pretty much a waste — you are focused mostly on sourcing and a bit of due-diligence. Unless all you want to do is get to b-school, there’s hardly any useful skill you learn.

      Associate: Partner-track position post-MBA. Not a bad position but extremely risky if you don’t make it to the next level. In that case, you essentially exit out and get an industry job — mostly, product mgr. There are more openings at associate than at Principal level.

      Principal: 3-5 years post-MBA or 7-10 years (if no MBA) of solid operating experience typically in product management and/or general management. Ideally, a good mix of startups plus top-tier tech companies. Openings are fewer but less riskier than coming in as associate.

      Partner: Best way to get into a VC firm. Either a solid industry track (operating experience) or successful exit as an entrepreneur.

      Unless you make a partner, all other levels in a VC firm are pretty useless and the experience you gain is not very valuable outside the VC industry (except perhaps corp dev).

      In general, aspiring VCs should VC as the last job in their careers and focus on gaining high-quality operating experience.

      1. Thanks for the input. I do agree that most people are better served doing VC as their last job rather than earlier in their careers.

        As for the author’s background, unfortunately it’s unique and he would be easy to identify if I listed any more information – he worked in banking before going into VC. If I said more than that it would be easy to tell who he is given his history and how small the VC industry is.

    2. That is a good point – the way it was mentioned here was somewhat confusing. “Carry” really refers to the 20% of any return on investment that the firm receives.

      The second kind, being allowed to invest along with the firm is sometimes also labeled “carry” but is really just an “option” to invest your own funds along with the firm.

      In the scenario you mentioned, if the VC firm exits at $50 million they would get 20% of the return, or $9 million ($45 * 20%). This would not go to anyone specific until it is actually distributed, in which case it would go mostly to the Partners responsible for the investment decision.

      If the VC has also invested $50K of his/her own money, then he would get 20% of the return on that, or $90K ($450K * 20%).

      The difference here is that in case #2, that $90K goes directly to the person who invested whereas the $9 million that the firm itself receives would have to be divided up later on.

      1. Hi M&I,

        Firstly, since this is my first post on your website, let me just say that I find it very useful and, having been in the game, often extremely entertaining. Thanks for all your effort, especially that which is available for free!

        Secondly, I don’t understand your maths in the example above… If the VC has invested $50K of his own money, won’t his return on this portion be 80% * the $450K profit at exit, since for this portion of his return he is the investor, parting with the 20% carry charged? No issues with his return as a member of the pool within the firm who divvy up the carry.

        Am I smoking or are you? :)

        Thanks again for all the info on the site!

        1. The $50K of his own money would just be part of the $5 million the firm initially invested in the beginning

          1. Sure, meaning that his return on that $50K would be $450K * 80% not $450K * 20% as in your previous post – correct?

            Or is there typically some clause that says the co-investment is treated differently from 3rd party funds invested?

            Not meaning to be nit-picky (to be honest I missed it at first pass as well), just trying to make sure I understand the risk profile of co-investing your own money as a VC correctly.

            Thanks again!

          2. No, because any money he contributes would be counted as money the firm contributes. The firm only gets 20% of the returns. Therefore, he only gets 20% of the returns on the money he invested.

          3. Aha, ok, thanks for the explanation below, that’s a completely different (and far less attractive!) equation in that case – the exit value would need to be at ~6x the upfront investment for him to just double his money. Given the risk… hmmmm.

            Thanks for all the responses!

          4. Thank you, M&I, for creating these pieces on careers in Venture Capital. I appreciate the insight into the world of VC that these articles have yielded.

            I am confused as to the return to the individual VC exercising his option to invest personal money alongside the VC firm money. Essentially, I would like to know where the rest of the money goes. Please help me clarify this. (for simplification, ignore the annual 2% and time consideration)

            1)Individual invests I along with VC Fund investment of X.
            2)Firm exits with gross amount Y, (Y>X). Firm earns .2Y, Fund gets .8Y (Principal + Capital Gain).
            3)Individual gets .2(Y/X*I-I) according to the line taken above.

            What happens to individuals P+CG [I+.8(Y/X*I-I)]? Does it get absorbed by the VC fund (as it appears from this line)?

            It doesn’t stand to reason that the individual would lose 100% when the fund exits at break-even, yet that is precisely what happens according to this line; the only return to the individual VC is 20% cut of the Capital Gain from his contributed Principal.

            I would have thought (and still think) that the Individual would receive his Principal + 80% of CG, with the 20%GC going to the Firm.

            When you mention that (in the above scenario) the VCs 50k goes into the 5M, do you mean he is essentially giving that money to the fund’s stakeholders and simply hoping for an exit at better than 5x (his B/E point)?
            This investment doesn’t seem attractive at any level given its (ridiculous) risk profile.

            Also, if I’m not mistaken, I believe the logicical statement in the argument in the most recent explanation is flawed; the “because A is X, therefore B is X” statement relies on the assumption that A and B are in the same class relative to the statement. In fact, the firm is acting as the manager earning a fee and the VC investor holds equity in the investment and should be returned his principal plus capital gains (less management fees).

            Please clarity this issue for us, the (at least 2) confused readers.

          5. Please email us separately or ask on Breaking Into Wall Street – too hard to properly explain here.

  40. Hey Brian,

    Can you give me an explanation of the following? I don’t quite get it and I have seen scenarios of it it in multiple books…

    Person A:”Hi, my name is Marie.”
    IB Guy: “I know.”
    IB Guy: “I work on the BUY side”.

    1. Not sure I understand your question – the person is just bragging about working in PE or at a hedge fund if they say something like that.

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