Our highly effective Crystal Ball tells us that you’d like to earn a venture capitalist salary and retire early. Correct? If the answer is No, just wait till you finish reading this post. Before you go and talk to the venture capital firms in India or USA or anywhere else, it’s important that you do your homework.
We started the journey with an overview of venture capital. Here’s the post (What is venture capital?). In this post, we get into a typical venture capital firm and try to understand the pecking order i.e. the various designations, who does what and how much they can earn.
There are roughly 4 distinct venture capital roles within most Venture Capital funds in India & abroad:
1. Analyst: This is the starting point for most undergrads. Analysts are responsible for a whole lot of mundane (research and administrative) work that goes on within venture capital firms.
The skills needed to be successful in this role are related to – analytical ability, keeping an ear to the ground (reading the breaking news as it appears on relevant publications like VC Circle, Medianama), quantitative skills (number crunching, data collation and analysis) and the ability to grasp the essentials of various niche industries (more often than not in technology).
2. Associate: Folks with a little experience in the field or those who come in from prestigious masters programs (including the MBA) would join as Associates. The work profile would be similar to what an Analyst would do, expect maybe a little more front-ending involved.
Apart from the regular office work, they may reach out to entrepreneurs and other partners within the entrepreneurship ecosystem to facilitate the networking for their bosses.
3. Principal: This is where things start getting a little more interesting. Principals can be considered for the Partner track.
So they would be expected to pretty much what regular partners at Venture capital firms do – including managing the ‘deal flow’ (ensuring that the pipeline of investment opportunities keeps flowing), managing the investment process (negotiations, term sheets, legal work, board seat on portfolio companies)
4. Partner: The real heroes of the venture capital work, these guys are the rainmakers. They are expected to be the brands that draw in the initial investments from Limited partners (investors) & entrepreneurs (who are impressed by what the Partner has done for other startups).
They are also responsible for building the brand of the venture capital firm, to ensure that the subsequent fund raising, investments & the exits can be bigger, faster and more efficient.
Despite the reputation, not all Venture Capitalists at all levels (especially those in india) have envious bank balances. In fact, at the bottom of the hierarchy the pay can be quite modest.
Analysts working in Venture Capital firms in India may get a compensation package of INR 10 lakh – 15 lakh. The good news is that you don’t need an expensive international MBA to start at this level, though many Indian Venture Capital firms may hire fresh 2-year MBA grads.
For Associates, the salary can jump up a notch compared to what Analyst’s make. They can be between 20L to 30lakhs. Most of them are not eligible for ‘carry’ (the profit sharing scheme that makes Venture capitalist jobs so tempting). In cases, where they are eligible for carry, the amounts are not exactly mind-blowing.
The big, top brands in the venture capital industry that are flush with funds may be more generous with their junior staff.
For Principals, the base salary can be several lakhs more than at junior level. But that is hardly the main draw. The ‘carry’ that comes in after the fund has made a few successful exits can overshadow the primary salaries. As a Principal, you can expect to get between 30 lakhs – Rs. 50 lakhs.
As you can see, the min-max salary range becomes wider as you grow through the ranks. This is mainly because a lot depends on the size of the fund, the credentials & track record of the Principal and how badly the venture capital fund wants to retain him.
Partners of venture capital funds are the superstars of the show. Those who do well can take home several crores, justifying the relatively slow & modest start to their careers.
A few of those who make a killing after being part of other venture capital firms, may decide to become independent investors and invest from their own corpus. Others who prefer relying upon the brand power of their parent venture capital firms may go on to raise bigger funds and be happy with the bigger ‘carry’.
If you get into one of the best Venture Capital firms in USA, the compensation in US dollars gets more interesting, right from the junior levels. Here’s a summary of venture capital salaries for various designations.
• Analyst: Base Salary of US$ 80,000 – US$ 150,000
• Associate: Base Salary of US$ 130,000 – US$ 250,000
• Principal: Base Salary of US$ 200,000 – US$ 700,000 + Bonus (carry) of US$ 0-2 million
• Partner: Base Salary of US$ 1 million + Bonus (carry) of US$ 3-9 million
So bottomline is that a venture capitalist salary won’t embarass you too much, IF you have the potential for the industry.
Now that your interest about venture capital salaries has been satiated, in the next post we’ll cover what it takes to break into the venture capital industry.
Source: Quora, Wall Street Oasis, Payscale, other references