The Wall Street Journal reports that the financial crisis is forcing many VC funds to focus on their best investments, and turn off the taps on their less-promising start-ups. Some VC firms, such as Claremont Creek Ventures in California, are giving “A, B or C” grades to their companies’ performance to help them decide whether certain start-ups get additional capital or are left to sink or swim.
According to data from the National Venture Capital Association, there were 741 venture capital firms in 2007, and many industry experts expect that number to shrink throughout 2009. With IPOs scarce and few sources of credit, VC firms have to save their cash for the most promising investments. And now, many of the companies in these VC firms’ portfolios must compete against each other for funding. It’s “survival of the fittest” according to one expert.
Now you can practically calculate the ROI for that advanced degree. MBAs in private equity on average were earning $16,000 more than non-MBA’s, according to the 2008 Job Search Digest Private Equity Compensation Survey.
Although an MBA is not always required in private equity and VC careers, over half of the respondents have an MBA and our private equity jobs database indicates that many open positions still request (and sometimes require) an MBA. Perhaps the most important finding on the MBA front is that over 70 percent of Partners have an MBA.
As for compensation, the annual take-home for MBAs in private equity averaged $262,838, including bonus versus $246,793 for non-MBAs. This was slightly higher than the annual compensation for MBAs in hedge funds, which averaged $255,303 including bonus.
Visit JobSearchDigest.com to read the Executive Summary of the 2008 Private Equity Jobs Digest Compensation Survey.
Venture capital remains a critical ingredient for the growth of new businesses, according to a recent survey by the Monitor Group, one of the world’s leading advisory and consulting firms. The firm just released its “Path to Prosperity: Promoting Entrepreneurship in the 21st Century” report that surveyed entrepreneurs in 22 countries to determine attitudes required for start-ups around the world.
Venture capital financing strategies such as IPOs, spin-offs and buy-outs showed a high correlation with actual levels of entrepreneurship in a particular region. And not only did VC activity provide a direct source of funding, but the possibility of funding – such as a public offering – inspired future entrepreneurs by highlighting the big rewards possible from risk taking and launching businesses, the report says.
Other key drivers of entrepreneurial activity included lowering taxes, providing the right incentives for the commercialization of research and development, and the teaching of entrepreneurial skills at all education levels – from elementary school through university.
