One of the questions I often receive as a venture capitalist is, “How do I become a venture capitalist?” New graduates and startup veterans alike want to get into the industry, and, I admit, it can be enticing.
There are many ways to break into the venture capital world, but they can generally be broken down into two categories: serial entrepreneurship and investment banking. I define a venture capitalist as someone who distributes third-party funds into new, early-stage ventures. An angel investor is someone who invests in companies with their own capital.
If you want to be a venture capitalist or enter in the industry, my advice is to start by building your experience in the greater financial industry as soon as possible. Ask an established VC if you can shadow them and ask as many questions as you can.
You’ll also need strong analytical skills with the ability to research markets and have a mix of foresight and business savvy to pick winning investments. From my experience, success in this area also directly correlates with an ability to keep up with changing industry trends.
Finding entrepreneurs or young businesses at the earliest stages in the process is another critical skill. One way to find these potential investment opportunities is to attend meetups for emerging technologies and identify attendees offering the most potential.
Once you’ve discovered and pinpointed a potential business to invest in and have completed the necessary analysis to suggest it will succeed, the next step is figuring out finances. How much money does this business require? This isn’t the final stage of the process, but shaping out a basic set of terms is fairly easy — and highly important.
Working as a venture capital can be highly stressful, yet at the same time lucrative. Be prepared to clock in a lot of very long hours with most of that time spent listening to pitches by potential companies. It’s also, in my opinion, extremely rewarding to watch a start-up you invested in succeed.