When the words “Venture Capitalism” are heard, people inevitably think of Silicon Valley. Companies like Uber come to mind which started with a young entrepreneur coming to a group of wealthy investors with a great idea, and soon, after many rounds of funding, becoming one of the largest companies in the world worth billions of dollars. But, what exactly is a venture capitalist if that is someone’s job description, and how does one become a venture capitalist in the first place?
What Is A Venture Capitalist?
The term ‘venture capitalist’ is often confused with what an investor might do. An investor is someone who uses their own money to help grow a company. A venture capitalist, on the other hand, is someone who uses the vast fortunes of a venture capital firm to wisely invest in a startup company with the hopes that that company grow and make firm money.
There are a variety of ways venture capitalists get paid as well. Some are paid a simple base salary with bonuses and incentives like any other job. Others work on a profit sharing technique. For example, if a company that a venture capital firm has invested in greatly expands and begins to make millions, the venture capitalist who put that money to work will receive a predetermined portion of those profits as repayment.
How Can I Become One?
The majority of venture capitalists are individuals who have a history of starting and selling businesses. Some people often refer to them as “serial entrepreneurs”. These entrepreneurs have vast experience in what it takes to get a company off the ground. Thus, they are some of the best at spotting great ideas and understanding just what it takes to grow a business into a profitable success.
Another way to become a venture capitalist is to have a strong background in technology development and sales. Because so much of the venture capital world surrounds technology, this is yet another space where those wishing to land this type of job must be highly knowledgeable. Becoming a venture capitalist is not easy, and in many cases, requires an extremely high tolerance of risk. The reason many startups come to venture capital firms in the first place is because banks deem their businesses too risky for a loan, making someone in this position highly sought after in the business world.