Why doesn’t everybody become a venture capitalist since you get paid well and don’t have to build anything or risk your own money? It sounds like the best job in the world.

Well, a few reasons:

  • There are very, very few partnership slots.
  • Venture capital is a tiny industry.
  • There is no point in adding a partner that isn’t accretive. So the odds of you making partner are very low. Possibly zero.
  • It is brutally competitive to get into hot deals.
  • At most firms, there is no clear promotion path and a non-GP slot usually lasts 2 years or so.
  • Firms are super-hierarchical, and patronizing. She or he with the hot hands rules it all.
  • Often, the partners can’t stand each other.
  • The skills you learn aren’t very portable to other jobs.
  • Yes, you do have to risk your own money, as a general partner at least. It varies, but often 2% of the fund comes from partners. That can be a lot.
  • In a big firm, often one person makes all the decisions. Forever.
  • You are just a number.
  • You will likely do nothing enduring, nor will you change the world in any way.
  • If you like to work on a team, it’s not a team sport.
  • Many non-GPs are pretty jaded.
  • At seed and very small firms, the salaries actually can be pretty terrible. A $20m fund might have $400,000 in fees per year to pay everyone — all the staff, rent, salaries, expenses, travel, etc.
  • Even if you do happen to be any good at it — and you probably won’t be — your boss likely will take credit for whatever great deals you do source.
  • The world does not need another venture capitalist.

So do it if you have true passion for it, and are willing to break through the odds — and can truly, somehow, hustle into the very best deals.

Otherwise maybe do something else.

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Published on January 12, 2018

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