How To Become A Venture Capitalist?
The world is packed with intelligent brainsteeming with bright ideas, waiting to get materialized. Entrepreneurs usually think of exciting ideas, which require external funding. And, this funding is provided by the venture capitalists.
Who Are Venture Capitalists?
Before discussing on the topic how to become a venture capitalist, let’s take a closer look at whoa venture capitalist is? A venture capitalist isa well-to-do private investor who provides private equity to help you in your business growth or come out of a financial crisis. They are the individuals having enormous wealth as well as expertise to mentor companies and aid them by financing their growth plans. Many-a-times several venture capitalists come together to function as a group. Nevertheless, investing venture capital involves a great deal of risk that may lead to either great financial rewards or momentous losses.
Nowadays, numerous graduates are keen to become venture capitalists. Unfortunately, the dream of becoming a venture capitalist cannot easily concretize for all of them. To become a venture capitalist, one needs an extensive amount of experience,some charisma and most importantly good luck. This industry rests on venture capitalists networking. As a matter of fact, majority of venture capitalists are veteran executives who are in quest of a change. But lately, a good number of management graduates are also showing interest in becoming venture capitalists.
Understanding the Role of Venture Capitalists
To know how to become a venture capitalist, it is imperative to know about the various roles performed by them. A diverse spectrum of activities is performed by the venture capitalists. These activities include evaluating the investment opportunities, identifying the areas of opportunities as well as risks, financial analysis, interacting with the clients, advisers, management and bankers and lastly executing the deal and financial modelling. Venture capitalists have to meet the entrepreneurs, analyse the viability of the business proposal and respond to the voicemails and mails as well. The networking potency of the capitalists decides the success of the firm.
It may take a good amount of time for the venture capitalists to draw a list of pros and cons of a deal and then go ahead with a particular investment opportunity. These capitalists seek commerce that has competency to become a thriving business. Therefore, if you have decided to become a venture capitalist, gear up to rack your brains and perform all the roles prolifically in order to become a successful venture capitalist.
A Closer Look At How To Become A Venture Capitalist
Once you have acquired a fair understanding of who a venture capitalist is and what his prime role is, learn how to become a venture capitalist. As such there is no standard job description that can tell you how to become a venture capitalist. However, you can initiate the process of becoming venture capitalist in the following manner:
Step 1: Education is a Must
An understanding of the elementary business skills is a significant requisite. To become a good venture capitalist, you must be capable of selecting fruitful opportunities for the organization as well as guide the firms through their adolescence as well as infancy stages. However, you don’t need to obtain education from a top-notch school or a high class MBA program. You just need to make contacts throughout your education tenure that can be beneficent in catapulting your career. There are many universities that can be chosen for getting education to become a venture capitalist such as London Business School, Cranfield School of Management , Edinburgh University Management School, Manchester Business School , Ashridge Management Schooland alike. Education in engineering can twofold your chances of getting hired as a venture capitalist.
Step 2: Acquire Experience
Once you get qualified to become venture capitalist, you will require a favourable resume to get hired. There are numerous firms that hire candidates straightaway whereas many other prefer candidates having some real time experience in the domain first.
Smart networking in such cases is of great help. Also, a short stint with a successful public firm can be valuable as it can also help you know about the end product from this process. Your failures and successes in this field both will count and will help you become a good venture capitalist.
Step 3: Get Know How Of the Maths
It is essential to understand the method through which venture capitalists make money. Well, there are two ways in which they make money- from management fees (fund under management) and secondly from carry (return on investment). If there are partners for the business, then the management fees is used to pay the business expenses. And the left is what they keep as profit for themselves. If you are a non-partner, then you are essentially a cost centre. If the partners take out money from their pocket for you, then there are primarily two reasons- first, you have an impact over their lives, and second, you are helping them make more carry. Therefore understand the maths properly, before you think of becoming a venture capitalist.
Step 4: Smart Networking
Last step of paramount importance for you is smart networking. Conduct a recce onyour contacts associated with venture capitalists. It might take a long time for you to get in touch with them, but you need to exercise patience. If you start networking from your graduation days, the results are bound to be excellent.
Try getting up close and personal with the venture capitalist present in your area. While you are still in college, try and get a job in a reputable investment bank. Or, look for internship as it will help you get in touch with venture capitalists. You can also visit venture capital trade shows that impart wholesome and in-depth knowledge on the roles and responsibilities of a venture capitalist.
Initially it may appear like a herculean task to get a job as the venture capitalist, but if you possess the right traits and undying inclination, you are bound to succeed. With money in your pocket, determined mind and set focus, talent, skills, experience as well as passion, you can certainly become a notable venture capitalist in no time.