Venture Capitalist Salary

A venture capitalist is a person who undertakes the work of venture capital. Generally, for the position of venture capitalists, an annual salary between the ranges of $80,000 to $150,000, along with a bonus, is expected, according to the data available on the site of Wall Street oasis.

Venture capitalist jobs are in high demand and surprisingly, not many people take up the role as it is a high-risk job. On average, these jobs require 50-60 hours of work where they assist in finalizing deals, negotiating, managing existing deals, and assisting in Initial Public Offering (IPO) proceedings.

• A venture capitalist is someone who invests in new businesses. Typically, they earn an annual salary of between $80,000 and $150,000, plus a bonus, according to information on the Wall Street Oasis website.
• As a venture capitalist, income is earned through a base salary, an end-of-year bonus, and carry.
• Once the venture capitalist meets the minimum rate of return for investors, they distribute profits through Carried Interest, known as carrying. Once the venture capitalist meets the minimum rate of return for investors, they distribute gains through Carried Interest.

Venture capital firms primarily invest in start-up companies and profit by exiting, i.e., generally selling their investments. However, Venture capitalists expect that many of the companies they invest in will fail. But the hope is that at least one investment will generate huge returns and make the entire fund profitable. These significant gains in one investment can yield extremely high returns for the firm, fund managers, and analysts.

An average venture capitalist salary is generally higher than most Financial Analyst roles. This article looks at venture capital, its roles, and, more importantly, an in-depth analysis of venture capitalist salaries.

Now comes the main part: the remuneration or your compensation and, to be more precise, your salary as a venture capitalist associate. But, of course, we all like numbers, don’t we? Let us talk numbers…

Venture capitalist earns money in three ways:-

1. Basic salary
2. Year-end bonus and lastly,
3. Carry

We know what a salary and a bonus mean. However, the question arises here is, what is carry? Carry is the incentive fee charged on the profit earned. Think of this as the percentage of profit that goes to the fund managers. Normally, the concept of carrying comes into the picture once the venture capitalist has delivered the minimum hurdle rate of return to the investors. After that, the profits are normally shared via Carried Interest.

Striking deals and sourcing of a venture capital company finance are similar to that of private equity companies. However, they have a difference in the types of companies they fund. For example, a private equity firm's finance attracts companies that have established their businesses, whether small or large. In contrast, a venture capital company will only target a start-up organization. It was very important to give this difference here because this difference is the only one that defines the role of a venture capital associate.

A venture capital associate's two main job roles are: -

Sourcing Deals

• Your job will be finding and screed deals on the front line. It is like sales; you have to find the right deal by cold calling the organizations and entrepreneurs and fixing up meetings.
• After the agreement is understood and its screening is done, the prospect deal is presented to the firm's partners.

Existing Deal Support

• Like any other finance analyst, the position of a venture capital associate is to support the deal in every aspect, right from due diligence to modeling the deal and executing the same.
• Due diligence is a part where the analyst produces a report that may lead the firm to either accept or reject the proposal.
• The venture capital associate works very closely to monitor how close the venture capitalist firm is to closing the deal.
• Unlike other associates in the finance industry, a venture capitalist associate works for very long hours in closing the deal.
• However, with the added efforts comes very good compensation for a venture capitalist associate.

A venture capital associate can work under the following designations: -

An Analyst – A venture capitalist analyst looks for deals, prepares the financial model, conducts the financial analysis, or screens them before presenting them to the venture capitalist firm.

An Associate – An associate makes sure he closely monitors the deal from the start until the end and manages it by himself.

Where analysts and associates are juniors, they are followed by senior managers who are the principles and partners of the venture capitalist firm who execute the deals and give a green signal to funding the venture.

We have brought together the figures for the remuneration of venture capital associates in two locations in the United States of America and the other one in Asia, mainly India.

source: payscale.com

We have rough figures given below as the compensation of a venture capitalist as per their designations, starting right from an associate to the company's Managing Director. The compensation usually weighs more towards their carry bonus compensations. Your work hours are completely industry-specific. However, the work hours are much less than an investment banker. Usually, the venture capital firm’s senior management has a variable salary, for they carry a heavyweight age on their carry bonuses, which fluctuates with the company's performance. Take a look at the numbers below.

• An Analyst earns close to $80k to $150k
• An Associate earns close to $130k to $250k
• The Vice President gets a salary near $200k to $250k + a $0-1million carry bonus
• The Principal or the Junior Managing Director draws $500k to $700k + $1 to $2 million carry bonus
• The Managing Directors and the partners draw approximately $1 million + $3 to $9 million carry bonus

These numbers are rough as the remuneration varies from company to company and industry to industry. Depending on the size and the specialization of the venture capitalist firm, the salaries and the bonuses vary. A pre-MBA venture capitalist analyst or an associate can expect an annual salary of $80,000 – $150,000. If you include a bonus, you can add a certain fixed percentage which will sum your salary up to $86,000 to $250,000 and a medium of $170,000. The company also compensates the associate for sourcing a deal or finding a deal as your level increases your bonuses with the involvement of carrying in your portfolio.

The chart below provides some detailed insights: 

source: Payscale.com

Unfortunately, every location across the globe does not share a similar remuneration. For example, the venture capitalist associates in India do not have an income to envy. The lowest level of salaries can be too low to be a venture capitalist.

An Analyst

Thankfully, you need not be an MBA pass out from a very big or very expensive institute at this level. At campus interviews, many firms hire fresh MBA graduates for ₹10 to ₹15 lacs.

An Associate

Here, an associate's salary is almost double that of an analyst. Hence, he may draw anywhere between ₹20 lakhs to ₹30 lakhs. At this level in India or anywhere, the associate is not eligible for carrying, which is the most tempting part of a venture capitalist's job. And in case they are eligible, the numbers are not quite appealing.

There are very few companies that are the top brands filled with money and maybe generous with their junior staff.

The Vice President or Principal

There is a huge difference between juniors' and seniors' base salaries. As the grade increases, it increases the remuneration of the employees of the venture capitalist firm. It is mainly because it all depends on the size of the fund, the track record, the credentials of the Principal, and how much or how desperately the venture capitalist firm wants to retain him.

The average venture capitalist salary here is close to ₹30 lakhs to ₹50 lakhs. However, the base salary is easily overshadowed by a carrying bonus.

Junior MDs, MDs, and Partners

To go up to this level and take home a few crores might be a dream of every venture capitalist. However, the funds are the real performers at this level of a venture capitalist firm. All your performance and effort put into the ventures all these years will not let you regret a relatively slow start in your career.

Several people have been partners in venture capitalist firms and have decided to become independent investors and invest from their amount. At the same time, people who prefer sticking around with a huge brand name prefer raising bigger funds through their income, including huge carry.

Below is a list of notable venture capital firms:-

source: wikipedia.org

to Venture Capitalist Salary. We explain what is venture capital, roles, and salaries, and provide a list of top firms in the domain. You can learn more about Venture Capital from the following articles:

• How to get Venture Capital?
• Top 10 Venture Capital Books
• Angel Investment vs. Venture Capital
• Private Equity in Canada