Ask tech and healthcare bankers and many entrepreneurs what they really want, and they’ll often cite venture capital as their long-term goal.
Or, more specifically, they want to become Venture Capital Partners.
The VC Partner is arguably the best “senior job” in finance: you sit on a private island atop a pile of cash, altcoins, and NFTs…
…you drink piña coladas served to you by mermaids and unicorns…
…and you summon Founders and CEOs who desperately need your money to grow their companies.
Just one problem: this might represent the VC Partner role in the metaverse, but it’s not quite an accurate description of the job in real life.
Not only is it challenging to find mermaids and unicorns, but the VC market has also changed over time.
When capital is plentiful and good deals are scarce, VC firms often find themselves chasing after entrepreneurs to win deals.
Before delving into tropical islands, imaginary creatures, and scams NFTs, though, let’s start with the basic job description:
The Venture Capital Partner Job Description
This article assumes that you already know what venture capital is, the basic outline of venture capital careers, and how to get into venture capital.
If not, start with those linked articles to get a sense of the industry.
In fields such as investment banking and private equity, “Partners” or “Managing Directors” are typically at the top of the hierarchy.
In VC, this is a bit more complicated because there are “Junior Partners” and “General Partners” and sometimes other levels (Managing Partners, Managing Directors, etc.).
Since Junior Partners are in between Principals and General Partners, and since we’ve already covered VC Principals, we will focus on General Partners here.
The main difference between General Partners and Principals, VPs, and Associates is that the Partners are far less involved in day-to-day deals and portfolio company operations.
Instead, they spend most of their time on:
- Fundraising – They raise funds, wine and dine the Limited Partners, and convince them to invest in bigger and newer funds.
- Public Relations – Partners act as firm representatives by speaking with news sources, attending conferences, and marketing the firm to the public.
- Final Investment Decisions – GPs have the final say on all investments. They do not get into the weeds of due diligence, but they do perform the final “gut check.”
The job involves sourcing (finding companies to invest in) as well, but GPs do not cold-call or cold-email entrepreneurs like VC Associates do.
Instead, they get introduced to companies via their existing networks and professional referrals (e.g., a lawyer who just helped a new startup incorporate or raise a seed round).
General Partners also take Board seats at portfolio companies, but they tend to be less involved than Junior Partners or Principals.
And they also have the final say on hiring/firing decisions and internal promotions, but this part of the job takes up less time than the others.
The main differences between Junior Partners and General Partners are:
- Work Tasks – Junior Partners tend to be more active with portfolio companies and deals and less involved with fundraising and PR.
- Decision-Making Power – This one varies by firm, but Junior Partners are less likely to have “final approval” over deals – though they can reject deals they don’t like.
- Contributed Capital and Carry – While both types of Partners contribute some of their net worth into their funds, GPs contribute much higher percentages and earn the majority of the carry (assuming the fund performs well enough to generate carried interest).
Some VC firms, such as Lightspeed and a16z, call everyone a “partner” on their public websites.
But that’s now how it works internally; there are still General Partners and everyone else, and “everyone else” has much less power.
Venture Capital Partner Lifestyle and Hours
I’ll go with the standard 50-60 hours per week here, just like VC Associates and Principals – but this could vary in either direction.
The travel component (much less than in IB, but still there) could extend these hours, or at least make them feel longer.
And in the other direction, some Senior or Managing Partners might work less because they’re in “semi-retired” territory (but they get the title and benefits because they founded or co-founded the firm).
Overall, if you’re at a fund that does well enough to generate carried interest, you will get a very nice $ / hour rate, but far from the absolute highest compensation in the finance industry.
Venture Capital Partner Salary, Bonus, and Carried Interest Levels
On average, VC Partners earn less than MDs in investment banking, Partners in private equity, and hedge fund portfolio managers.
This reduced compensation is driven by:
- Smaller Funds – The fee potential is much lower when the median fund size in the industry is $100 million rather than $1-2 billion.
- Longer Realization Times – It might take some VC-backed companies a decade or more to exit; the time frame is much shorter in private equity and hedge funds.
- Highly Skewed Performance – Remember that 65% of VC deals lose money, and only 4% of deals return more than 10x.
Compensation levels vary by firm size, carried interest, and title, so I’m going to estimate a very wide range of $500K – $2 million USD.
In practical terms, this range means:
- Base salaries are probably in the low 6-figure-range at many firms ($200-$400K), at least for the GPs (Junior Partners may be lower).
- Bonuses may be about 1-2x base salaries, depending on firm performance and the Partner’s seniority.
- And carried interest varies widely but could potentially add $0 or increase total compensation by 2x, 4x, or even more.
- Junior Partners are likely to earn around the $500K level (or less), with General Partners in the $500K – $1 million range in terms of salary + year-end bonus.
- And it’s possible to earn less than $500K or more than $2 million; these are more like the 25th and 75th percentile markers, not absolute min/max numbers.
The bottom line: Quite a few VC Partners earn less than $1 million per year, and sometimes they earn much less than that – especially if their fund is new, small, or hasn’t performed well.
How Do You Become a Venture Capital Partner?
Unlike senior roles in the other industries, it’s less common to “work your way up” to a VC Partner role.
The most common path is to join after a moderately successful startup exit or reaching a fairly senior level at a tech or biotech company.
To quantify this with a quick sample, here’s what I found by looking at the Seed/Early Team pages of Sequoia Capital and Kleiner Perkins:
- 24 total “Partners” across both firms.
- 16 appear to have mostly startup/operational experience (~66%).
- 7 appear to have mostly VC or other finance experience (~29%).
- And 1 is in the “other/random” category (Mike Moritz, a former journalist).
If you want to get promoted internally, you need a track record of successful deals.
That’s difficult to demonstrate in 3-5 years if you focus on early-stage investments, but you can point to increased valuations in subsequent funding rounds, successful product launches, or progress through phases of clinical trials in biotech.
It’s also much easier to move up when the firm is expanding or moving into new markets/geographies.
A Day in the Life of a Venture Capital Partner
An average day at a mid-sized, early-stage, tech-focused firm might look like this:
8 AM – 9 AM: You arrive at the office, check your emails, scan the news, and respond to a request from a reporter about the crypto market.
9 AM – 10 AM: You meet with the other Partners to discuss your strategy for the larger fund you’re planning to raise and a few recent deals.
Consensus rather than a majority vote is required to approve deals at your firm, so only about half of these investments are approved today.
10 AM – 11 AM: You do a few media appearances on Bloomberg and CNBC to discuss recent trends in the crypto and NFT markets.
The Bloomberg interviewer is quite skeptical of your firm’s bullishness, while the CNBC person seems inclined to sell his kidney to buy more crypto.
11 AM – 12 PM: You join a Board meeting for a troubled e-commerce company at the Junior Partner’s request.
This company’s transaction volume keeps falling despite rising website and mobile app traffic, so you offer to make a few introductions to conversion-rate specialists.
This company also has a terribly messy capitalization table because they raised capital via SAFE Notes early on, which you hate; even something like venture debt is less annoying.
12 PM – 1 PM: You go to lunch with one of the Principals. You can tell that he’s fishing for clues about his chances of getting promoted, so you drop a few vague hints without committing to anything.
1 PM – 3 PM: You hold a few meetings with current Limited Partners to discuss your firm’s upcoming “crypto infrastructure” fund.
The LPs seem skeptical of that market and your plans to target mid-to-late stage deals, as your firm has limited experience there.
You meet with the other Partners afterward and agree that you might need to target new LPs rather than relying on your existing base.
3 PM – 5 PM: You interview two Junior Partner-level candidates, both of whom have founded and sold tech startups.
The rest of the team is split, but you’re strongly in favor of the first candidate, so you cast your vote.
5 PM – 6 PM: You join a virtual conference sponsored by The Wall Street Journal to discuss recent trends in e-commerce and SaaS.
These industries have been around for decades, so they’re not the most exciting topics for you, and you’re quite tired of discussing SaaS accounting, annual recurring revenue, and average revenue per user by now.
But it’s important to market your firm as broadly as possible, so you put on your happy face and do it.
6 PM – 8 PM: You go to a dinner/networking event for your firm’s portfolio companies. This one is part business, part social, and part sourcing because you chat with the executives and founders about other promising startups they’ve heard about.
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Compared with the Principal, the Partner does more media appearances, LP relations, and fundraising, but less with portfolio companies and current deals.
*Can* You Get Promoted Beyond the Partner Level?
You can get promoted to more senior Partner roles at the firm.
But if you want to be at the very top of the hierarchy, you’ll probably have to leave and start your own VC firm, which we haven’t covered before (maybe a good future topic?).
Many people are launching VC funds these days, and while it is easier to raise capital than in previous periods, earning returns is a different story.
You’ll be facing an uphill battle because there’s too much capital chasing too few good deals, and talent – not capital – is the major constraint.
Is the Venture Capital Partner the Right Job for You?
The main problem with venture capital is that the returns are highly skewed to the top few firms.
So, if you’re at one of the 10-20% of VC firms that generate a 2-3x+ return on capital, the job can be quite lucrative – especially if you’re credited for some of the better deals.
But if you’re not, you could easily end up earning less than you would as an executive at a large company or in a senior role in another area of finance.
Also, it tends to be more difficult to “find a niche” in VC and attract the best companies because the most-promising companies will always gravitate toward the top few firms.
With the huge proliferation of “funds” and everyone pretending to be a VC, the returns will likely become even more skewed in the coming years.
The bottom line: In my opinion, it makes less sense to “work your way up” to the VC Partner level than to do the same in IB, PE, or even Big Law.
The job makes the most sense if:
- You’ve already done well with your own startup or as a seasoned industry executive (10-15+ years);
- You don’t “need” more money, but you want to keep working in some capacity; and
- You want to change careers while still leveraging your existing skills and network.
You might only become King of the metaverse, but at least you’ll be surrounded by NFT-powered mermaids and unicorns.
