Venture Capital Uppers and Downers

by Derek Loosvelt | March 10, 2009

You may think you want to work in VC, but make sure you know both the good and bad of it. Vault takes a look at VC uppers and downers.

Venture Capital uppers

  1. You often get to be the one making decisions because you have money. .
  2. Over the long term, you will certainly become rich because the job is well paying and you should eventually get "carry" or equity in the firm. .
  3. Being "in the middle of it all" in some of the most interesting industries. .
  4. You have access to the best minds -the people you work with are typically very smart and interesting.
  5. Your job is to absorb and enjoy the positive creative energy of entrepreneurs and direct it toward successful execution. .
  6. You could suddenly become rich if one of your companies does extremely well and you were able to co-invest or you have carry. .
  7. You have access to the best information systems.

Venture Capital downersHere is a list of some of the negatives we hear from people who have worked in the industry for a while.

  1. You don't have pride of ownership in anything. You're just an investor, not a builder.
  2. VC is a slow path to wealth compared with the immediate cash income you get in investment banking, hedge funds or even management consulting. .
  3. You are a jack-of-all-trades, not an expert. After a few years, you can't do anything other than VC because you grow spoiled by making decisions without much compromise. .
  4. Venture capital is fundamentally a negative process. Because you reject 99 of every 100 plans, year after year, over time you focus on figuring out what is wrong with a company so you can reject it and get onto the next deal. What is wrong with the management? The technology? The deal terms? The strategy? After just a few years, that mentality may bleed into your life. What is wrong with my partners? What is wrong with my spouse? What is wrong with me? Oh, the angst! .
  5. Because you reject 99 of every 100 entrepreneurs, you make a lot of enemies, no matter how nice and helpful you try to be. No one likes rejection, and passionate entrepreneurs have long memories.

Filed Under: Finance


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