Your path into the world of private equity or venture capital investing can be as varied as your background. There’s a wide variety of positions within these firms, ranging from deal-making to research, fundraising, investor relations and operations.
While there’s no clear-cut path to starting a career in private equity and venture capital, many professionals migrate into the field after years working at an investment bank or with companies in a particular industry sector.
Some candidates start off as an associate at a private equity firm. An associate would likely have an MBA from a top business school. He or she would participate in various stages of deal making, and possibly in operations and fundraising.
There is some disagreement in the use of the terms “analyst” and “associate” to describe entry-level positions within private equity. Some experts have commented that an analyst would a pre-MBA position, a university graduate with perhaps 1-2 years of experience in the industry. Whereas an associate would have an MBA and several years of work experience.
Nevertheless, a good PE associate will need outstanding technical and analytical skills and the ability to understand the industries in which the PE firm operates. A large part of the associate’s job is developing a depth of expertise in specific industry sectors. The associate will need good interpersonal skills, both to work well with the people inside the firm and also to build a broad network of contacts that will serve him throughout his career.
Associates must be able to absorb a large amount of information, identify key trends and issues, and explain how these trends impact any potential deals the PE firm is considering. PE firms are increasingly looking for associates with operational skills, too, as associates are being moved into operating roles within companies the PE firm has invested in, both to strengthen their investment and to give associates valuable management training.
Entry level positions in the venture capital industry require strong analytical abilities, too, especially in terms of forecasting. There is a constant need for accountants and financial analysts in VC firms. In this role, you will thoroughly analyze the business proposals brought to the firm, and provide recommendations or rejections of investment prospects.
Researchers within VC firms conduct extensive analyses of the industries related to any individual business proposal. Researchers in VC firms are also are generally referred to as associates, with many of these positions considered entry level venture capital jobs.
VC associates are sometimes promoted to senior associates before eventually being named a Principal, which is the final stop on the path to becoming a Partner in the firm. Depending upon personal performance, an entry level venture capital job could lead to a long venture capital career and eventually a position as a general partner.
Next time, we’ll look at some examples of the day-to-day responsibilities of these entry-level jobs in private equity and venture capital.
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