How To Become a Venture Capitalist
Written by
Nicole Spector
Edited by
Rebekah Evans
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Venture capitalists (VCs) help make the economy go round. They promote and fuel innovation, help guide new and emerging companies and can bring a wealth of new businesses front and center.
And VCs can make really good money. They can even strike gold. According to Mergers & Inquisitions, between salary, bonuses and carry, total compensation can land in the $500,000 to $2 million range. So how can you get in on this booming endeavor and become a successful VC?
Before we jump into how to become a venture capitalist, it’s essential to provide an understanding of what a venture capitalist actually is. Sarah Dusek, founder and managing partner of Enygma Ventures, enlightened us.
“A VC is an individual or firm that provides financial backing to early-stage or startup companies that are deemed to have high growth potential,” Dusek said. “These investments are typically made in exchange for equity in the company. VCs play a crucial role in the startup ecosystem by providing not just capital but also expertise, guidance and networks to help these companies grow and succeed.”
Dive Deep Into Understanding the VC Culture
Becoming a successful VC doesn’t happen on a whim or without ample insight. You need to get embedded in the culture and hone your education, always.
“Immerse yourself in the VC ecosystem,” said Staci LaToison, founder and CEO at Dream Big Ventures. “It’s the chessboard of innovation. If you’re going to play the game, you need to watch the games, know the rules and learn from the other players.”
Get a Mentor
LaToison points to the importance of connecting with a master VC to learn the ropes and help you find your footing.
“The path to VC is paved with lessons from those who’ve walked it,” LaToison said.
Train Yourself To Find Great Company Founders
Just as when picking stocks, selecting a company to back requires careful consideration. You must focus on selecting the best companies to back, and this entails looking for company founders who have a profitable long-term vision.
“You must learn how to spot great founders,” Dusek said. “Investing is all about investing in great people, with a great vision for the future. As an investor, you will do well if you make investments based on those who are actively doing good for others and the world. That is where everything starts.
Assess Growth Potential
“You also need to consider the scalability of the business or idea in which you are investing in,” Dusek said. “The best investments have a long runway, and should show potential for growth and expansion. What problem are they solving and how do they plan to address it?”
Leverage Your Network of Entrepreneurs
If you want to succeed as a venture capitalist, build and tap into a vast network within the entrepreneurial community.
“These connections facilitate collaboration, foster strategic partnerships and accelerate the growth of mission-driven ventures, amplifying their collective ability to effect meaningful change on a grand scale,” Dusek said.
Prepare for Challenges
We must emphasize the importance of preparing for challenges. Every startup encounters them. Be ready to tackle these hurdles.
“Successful venture capitalists possess the foresight to recognize and foresee the various challenges a startup might encounter,” Dusek said. “Launching a new venture inevitably comes with its set of hurdles, and it’s crucial for a VC to not only strategically prepare their team for these challenges but also to bolster their resilience and morale. By leveraging their experience and insights, a skilled VC can guide startups through rough waters, offering strategic advice, crisis management solutions and emotional support. They play a key role in helping the team stay focused and motivated, ensuring that the startup navigates through difficulties with agility and emerges stronger on the other side.”
Look for the Companies That Are Poised To Change the World
Venture capitalists are crucial to the economy because they fund businesses that are positioned for potentially world-altering success.
“By strategically investing in enterprises with a mission to do good and drive innovation, we can catalyze transformative shifts in industries, economies and the world,” Dusek said. “For me, satisfaction lies in partnering with visionary entrepreneurs who are committed to making a positive impact on the world.”
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