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Working in Finance: Why I Want to Work in Venture Capital

Everyone wants to do it. However, insiders say that there are very few spots available. Generally, venture capital firms aren’t looking for undergraduates with little or no experience. They are looking for MBA’s with years of experience in a specific industry or executives with extensive experience. However, recently, MBA’s have gotten the chance to jump straight to venture capital firms. However, according to some insider sources, most of these are from the Harvard Business School and Stanford. Venture capital jobs are acquired almost exclusively through inside contacts and networking. The Kaufman fellowship is also a sure shot way to break into venture capital. The Kaufman fellowship sponsors 12 MBA’s to work in venture capital.

Major Venture Capital Firms are:
• ARCH Venture Partners
• Accel Partners
• Battery Ventures
• Bessemer Venture Partners
• Hummer Winblad Venture Partners
• Institutional Venture Partners
• J.P. Morgan Partners
• Kleiner Perkins Caufield amp; Byers
• The Mayfield Fund
• Menlo Ventures
• New Enterprise Associates
• Sequoia Capital
• Sutter Hill Ventures
from Wetfeet.com

Compensation

Venture capitals are generally structured as a limited partnership. The limited partners are the investors that put the bulk of the money into the fund. The people who manage the fund are called the general partners. They can put a small amount of money towards the fund. General partners (venture capital employees) are paid a management fee usually a sum of 3% of the fund. If a fund is $100 million dollars, the management fee is $3 million. With 3 general partners, that is $1 million each. Then the limited and general partners split the upside of the investment. This is usually split 80% to the limited partners and 20% to the general partners. With fund sizes reaching in the billions of dollars, careers in venture capital can be very lucrative.

Bottom Line

So it appears that venture capitals do not recruit from undergraduate schools. So this looks like a job that we can look forward to after we gain experience excelling in other things that we decide to do. It appears to be a very fulfilling job in which you help fund, make decisions and basically help shape the future Microsoft’s and great companies. Of course, you’ll also see many companies fail but that is all part of the risk one must take.

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