How to Become a Venture Capital Associate

Venture capital (VC) firms scour the world looking for the next hot startup like Meta or YouTube. They provide risky capital infusions to new or small companies with limited access to conventional capital sources like bank loans. In exchange, venture capitalists receive a stake in the company and significant managerial oversight.

In a VC firm, the associate is the most junior member. Nevertheless, these positions are competitive, involve a lot of responsibility and independent thinking, and command strong salaries. Keep reading to learn more on how to become a venture capital associate.

Key Takeaways

• Venture capital firms provide funding to startup companies and small businesses—namely, those with fewer options for raising money.
• Venture capital associates are responsible for sourcing new deals for their firm and for supporting those that are already in the works.
• VC associates can expect an annual salary of $61,000 to $154,000, though with bonuses this number can become significantly higher.

What Does a Venture Capital Associate Do?

VC associates have two main job functions: sourcing new deals and supporting existing deals.

Source New Deals

VC associates are on the front lines where they find and screen deals. They are expected to bring an ambitious, sales-like mentality to this task. They often source potential deals by cold-calling companies and entrepreneurs to set up meetings. The associate then presents prospective deals to the firm partners.

Support Existing Deals

Similar to other financial analysts, VC associates support all aspects of a deal from due diligence to modeling and execution. With due diligence, they produce initial analytics that leads a firm to pursue or reject a deal.

Similar to private equity investments, associates continue to work side-by-side with the partner when a deal moves onto later stages. The intensity of work and hours fluctuate based on how close the team is to closing deals. Like other financial analysts, VC associates can work extremely long hours near deal closings. Because of the high demands and pressure, they are often highly compensated.

The type of VC firm distinguishes some of the functions of the associates. VC firms that concentrate on early-stage financing do more sourcing and very limited due diligence and modeling. Firms that concentrate on late-stage financing do more of the traditional diligence, modeling, and execution, similar to a private equity firm.

Education and Training

Venture capital associates without a master of business administration (MBA) may get bachelor’s degrees in mathematics, statistics, finance, economics, or accounting. Firms tend to focus investments on a specific sector and sometimes pursue candidates with no finance or VC experience. For example, a venture capital firm focused on healthcare may hire a biochemist who successfully started a pharmaceutical company. 

Post-MBA associates are generally considered based on the school they attended. Depending on the type of VC firm (early versus late stage), their background can differ widely. For instance:

• Early-stage VC firms look for candidates who understand markets and industries and can perform analysis to determine market size and opportunity.
• Late-stage VC firms look for the more traditional skills of financial modeling and deal execution.

How Venture Capital Associates Advance

Most VC pre-MBA associates join a firm with a two- or three-year contract with some experience. This can range from a stint as an investment banking analyst to some kind of industry‑specific training. Firms expect pre-MBA associates to stay for the duration of their contracts and then exit to business school or another employer.

The post-MBA VC associate is on the partner track. If a partnership is the end goal (and it usually is for post-MBA associates), then the way to get there is to establish a strong track record of sourcing companies, closing deals, positively impacting the portfolio company, and exiting the investment to generate solid returns for the firm.

Note

Statistics show there were 3,417 venture capital firms in the United States by the end of 2023.

Characteristics of a Venture Capital Associate

Venture capital associates operate in a unique area of finance. Unlike investment banking and other financial analysts who focus on modeling and deal execution, VC associates have less structure.

Even entry-level associates are tasked with finding deals, meeting entrepreneurs, and evaluating business ideas. This can appeal to a candidate who is interested in being involved and partnering with businesses.

“To get a job in VC, it’s all about hustle,” says Angela Lee, a professor of professional practice at Columbia Business School. “You have to be out there networking and be top of mind when one of those highly coveted roles opens up. Once there is an opening, you need to demonstrate your ability to source, select, and support startups.”

Venture Capital Associate Salary

Annual salary and bonuses differ broadly in this field depending on the size of the VC firm and its specialization. VC associates can generally expect an annual salary of $61,000 to $154,000. The overall compensation can be much higher with a bonus, which is typically a percentage of the associate’s salary.

Firms also compensate their associates for sourcing or finding deals. At higher levels in a venture capital firm, bonuses involve multiples of salary tied to the portfolio and carry from investments.

What’s the Difference Between Venture Capital and Private Equity?

Venture capital firms are quite similar to private equity in terms of the deals they make and the sources of financing. They differ, however, in the types of companies they pursue.

Private equity firms generally gravitate to established companies (whether small or large) whereas venture capital firms seek to finance startups and smaller companies that do not have access to the capital markets. This distinction is important because it frames the roles of the associates at venture capital firms.

How Long Are the Work Weeks for Venture Capital Employees?

People who work for venture capital firms tend to put in long hours because the work tends to be very demanding. The average employee of a venture capital firm can expect to put in anywhere between 50 to 60 hours per week. That’s because it tends to be more laid back than other financial services positions like investment bankers. These professionals can clock in a minimum of 60 to 80 hours per week because of the high stress and intensity involved with their jobs.

How Much Has Been Invested Through the Venture Capital Industry?

In 2023, venture capital deployed in the U.S. reached $170.6 billion. This figure falls short of 2022 figures.

The Bottom Line

Venture capital is a type of funding that helps emerging and relatively new companies get off the ground. This type of funding generally comes from different sources like individual investors, and investment banks. Associates who work in this field are generally in high demand because they source and support existing deals. Although it can be demanding, VC associates are highly compensated for their work.