Venture Capital investing sounds like a very glamourous and exciting career path. Like every career however, it has a number of upsides and downsides. Here is our list of what is great and what is bad in venture capital
The Good
- Helping companies grow into something big is very rewarding, both personally and financially! There is a sense of ongoing accomplishment that you cannot find in many careers.
- Getting to see the latest technologies can be a fantastic experience for those who love technology
- Meeting interesting, different people is a major plus as you'll get to meet people from all walk of life that are passionate about the business they are trying to build
- Not having to deal with the boring, day to day operational stuff. As a VC investor, you're only involved in the strategy and key decisions, which is the most intereting bit.
- The lifestyle is much better than what you would get at banks or consulting firm (although you need to spend a lot of time on the road trying to find the next Google), and gives you a lot of freedom
- If you make the right investments, you can earn astronomical amounts of money
The Bad
- You don't make much money as a junior employee, and getting to partner level can take a lot of time. Even when you make partner, you need to work very hard to find the right deals
- Its very cyclical - you tend to make a lot of money and good returns when the stock market is going well, because that means you'll be able to do great IPOs
- Not every deal is a success. You'll have lots of failures, lots of problems, and lots of disappointments. Failures are the norm, and big successes the exception.
- VC investing can be a nasty business - you need to invest at the cheapest valuation possible (means "pressuring" the owners), you will need to replace people through sometimes not so nice ways (see the movie "Social Network"), and you need to fight hard not only against other VCs to find and keep the most promising companies, but also against other partners/colleagues in your fund that may want to compete and appropriate themselves the deal.