PS#071: What role is right for you?
Last week, we discussed why choosing the right investment stage matters.
This week we are going to discuss the second aspect of this decision – the different roles and responsibilities.
Just like the stage, the role at a venture firm will dictate your responsibilities, and therefore, the skills that you’ll learn and develop. Depending on your skills and level of experience, different roles will make more sense for you. It’s important to be aware of what is required in these roles so that you can come in with your eyes wide open.
Let’s dive in.
Roles for aspiring investors.
For the purposes of this exercise, we’re going to break the roles into three main categories…
Analyst / Associate
Associate / Senior Associate
Principal / Vice President
With the influx of capital over the last decade, the venture capital industry has gone through some much needed institutionalization. During this time, these roles have become more formalized and defined, creating clearer roles and responsibilities.
While not every firm follows this structure, for the sake of simplicity, we are going to use the roles outlined above. This is the most common structure and makes it easier to understand your role within a VC firm.
We’ll walk through the following for each…
Responsibilities
Skills and learnings
Years of experience required
Let’s get started.
1. Analyst / Associate
Responsibilities
As an analyst or (junior) associate, your responsibilities are going to largely revolve around sourcing. This means that you will be in charge of developing investment theses, performing market research, and finding high-quality startups for the firm’s deal funnel. In most cases, your responsibilities will also include making the initial evaluation of these startups and deciding whether it’s one that the firm should review further.
Depending on the firm, there may be other areas where you’re asked to support more senior investment professionals, but the tasks above will be the majority of your role.
Skills & Learnings
As an analyst or (junior) associate, you’ll be learning the foundations of venture capital.
This will include two main skills…
Sourcing
Evaluating
Sourcing and performing the initial evaluation of a startup are fundamental skills for a venture capitalist. No matter your level or stage or area of investment, these skills are critical. It’s the key to your deal flow and the ability to stay in this game over the long term. The analyst role will allow aspiring investors to get a ton of reps in these areas. You will have ample opportunity to build your sourcing capabilities, speak with entrepreneurs, and sharpen your evaluation skill set alongside more senior investment professionals.
Experience: Entry-level position requiring 1-3 years of professional experience
2. Associate / Senior Associate
Responsibilities
The associate and senior associate roles include the sourcing components mentioned above, while also diving a bit deeper into evaluation and diligence.
At this level, you’ll have more of an opportunity to sit shotgun on the diligence process. For those in more of a senior associate role, they may even be asked to lead the diligence process. This means, alongside similar sourcing responsibilities, your role will be working through specific investment theses, competitive landscapes, market sizings, product/technical diligence, revenue/customer analysis, financial analysis, and even modeling out the return profile for an investment.
Skills & Learnings
This level is where your journey into deeper diligence really begins. You’ll learn more about the following skills…
Sourcing
Evaluating
Diligencing
Again, the sourcing and evaluating skills are a part of the foundational skill set and something you’ll continue to work on at this level (and really all levels). However, when a deal presents itself, you’ll have an opportunity to support and learn more about the diligence process. You’ll learn how to (1) design a diligence process, (2) prioritize the key risks, (3) gather or request the right information, (4) perform analyses, and (5) manage the key stakeholders. While the majority of the job will still be sourcing and evaluating, the diligence component will be the steeper part of the learning curve.
Experience: 3-8 years of professional experience with typically some investing experience
3. Principal / Vice President
Responsibilities
At the Principal or Vice President level, you’re in charge of leading the deal process end-to-end. You’ll continue to play a large role in sourcing and evaluating opportunities, but will start taking lead roles when it comes to the diligence process, investing conversations (i.e., negotiating, structuring, closing, etc.), and supporting the portfolio.
This is really a testing ground to see if you’re Partner or General Partner material. Your performance as an investor will have a broader stage not only within your firm, but also to the general venture market.
Skills & Learnings
As I mentioned, this is about owning the deal process end-to-end and supporting your portfolio companies. This level will include…
Sourcing
Evaluating
Diligencing
Investing
Supporting
In this position, you’ll run the diligence process and get a lot of experience (with more senior support) for negotiating, structuring, and closing transactions (i.e., the investing skill set). Once you and your firm are aligned on pursuing a deal, it will be your responsibility to get it closed. This will dive deeper into negotiating and structuring investments, building relationships with entrepreneurs pre- and post- investment, and thinking about your investments in terms of long-term portfolio construction.
Experience: 8+ years of experience with a significant amount of time in venture
A piece of advice.
First a disclaimer, there are always exceptions to these guidelines. You may find yourself in a great situation and get exposure to more than I am outlining here. This is simply the norm.
With that being said, I encourage you to think about the right role for you.
If you’re taking the “bird’s eye view” approach, roles focused on daily sourcing and evaluation may make more sense. However, the more senior roles (i.e., Principal / Vice President) may offer a better path to taking a more senior operating role in those companies.
If you are in this for the long haul, play the long game. Build your skill set, so that when the time is right, you’re prepared for the opportunity to take a more senior role at your firm. I’ve seen individuals rise up quickly in this industry, only to be poorly prepared for the moment when it arrives.
There’s a lot to learn in this industry. It’s complicated. But, at the same time, if you build the right skill set, you can position yourself for a long, exciting career.
Next week, we’re going to talk about specializing. Does it matter? Is it helpful? We’ll cover this in more detail in the following issue.
