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After the MBA: Venture Capital

Posted in Test Prep on January 19, 2011 by

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Venture Capital

What It Is:

Venture capital funds provide money to start-ups in exchange for equity in the company. VCs essentially work as middlemen, using funds from “limited partner” investors to finance their chosen companies. VCs are notoriously choosy about the companies in which they invest, and because VCs have a vested interest in the success of the startups they back, they often sit on the board or act as advisers of the companies. Ideally, after a VC-backed company is acquired or goes public, the VCs cash in on their investment, keeping a portion of the money for themselves and distributing the rest to the original investors.

Venture capital is a notoriously difficult field to enter. Networking is key, as is visibility to people in the industry. At some firms, MBAs will be hired as vice presidents or associates. Job responsibilities include screening business plans for prospective companies, doing research on potential investments, keeping tabs on current investments, and more.

Salary Range:

The average salary range for MBAs working in venture capital varies depending on a variety of factors. According to Kellogg’s statistics for the Class of 2010, the mean base salary for graduates working in venture capital was $115,000. The median salary for 2010 graduates from Tuck working in venture capital was $125,000. Note that these figures do not include bonuses and some other benefits.

How To Get A Job In Venture Capital:

Since venture capital is such a difficult industry to break into, VC hopefuls should expect to exert a great deal of effort to find a job in the industry. Networking and communication skills are key to success. According to one VC, other helpful career moves include going to a top-10 business school, working for a start-up, starting your own company, working for a bank or consulting firm, and “putting yourself out there” by creating an Internet presence for yourself. Potential VCs should have strong financial knowledge, business acumen, and communication skills.

Pros and Cons of Venture Capital:

Pros
High salary
Less burnout than entrepreneurship

Cons

Difficult to break into industry
Don’t get same hands-on experience of running a business
Some believe VCs push businesses to grow too fast
Not all investments will be successful