What’s the role of a Venture Partner?
In an earlier post, we looked at the various roles & titles at a venture capital firm.
With more and more firms popping up, many VCs are starting to hire venture partners to give themselves an edge.
Although they are often unheard of, venture partners are vital employees of a VC firm. Larger venture capital firms or even angel funds have venture partners (also known as operating partners).
They differ from general partners as they have a more narrow focus. They’re seasoned investors or entrepreneurs who aren’t full partners of the company.
Although investment partners usually get all the attention in VC firms, venture partners play just as big of a role and offer prospective employees an invaluable entry point into the industry.
Venture partners are hired by a partnership to search for new investment opportunities and handle portfolio businesses. They can also serve as advisors to portfolio firms and sit on their boards of directors.
A venture partner can be either full-time or part-time.
Some other roles of a Venture Partner
Venture partners can also be people who invest money into the fund. The amount of equity ownership and the level of involvement in the company will vary depending on the deal negotiated between the venture partner and the fund management.
Venture partners have a good understanding of your company’s market and know how to put a deal together. They do not, however, possess the power to independently approve a transaction, which means they must rely on managing partners for support.
Although a venture partner isn’t permanently affiliated with the organization, they may stick with it for years. Ex-partners who still wish to do business from time to time are examples of venture partners.
A venture partner could be a former general partner who wants to focus on the business side of things. It might be a technical specialist that the firm wants to keep on board to examine agreements. A managing partner in training, for example, might be considered a venture partner.
What do they do?
A Venture Partner is an individual who a VC firm works with to help them invest and manage their portfolio, but is not a full-time member of the partnership. The “full-time” members of the partnership are often called General Partners, Managing Members, or Partners.
A Venture Partner is similar to a Senior Advisor, but with a more active role. They are often brought on for their industry expertise and knowledge or for their ability to generate deal flow.
They may also have a background in private equity, venture capital, or investment banking. Many times, they will have started and run their own businesses.
What is the difference between a Venture Partner and a Partner?
The main difference between a venture partner and a partner is that a venture partner is not a full-time member of the partnership.
Venture Partners are often brought on for a specific skill set or expertise that they can offer the firm.
A partner, on the other hand, is a full-time member of the partnership and shares in the profits or losses of the firm.
Both venture partners and partners are typically involved in all aspects of the firm’s investments and share in the profits and losses of the firm.
What are the benefits of having a Venture Partner?
There are many benefits to having a venture partner, including:
- Access to capital: Venture partners can provide the necessary financing to get a small business or startup company off the ground.
- Expertise and experience: Venture partners typically have a wealth of experience and knowledge that they can share with the company’s management team.
- Ongoing support: Venture partners typically have a long-term view of their investment and are willing to provide ongoing support to the company.
- Board representation: Venture partners may serve on the company’s board of directors, providing valuable insights and advice.
- Networking: Venture partners typically have a wide network of contacts that can be beneficial to the company.
Venture partner compensation
Some firms pay their venture partners a fee in cash. Others give carried interest (the portion of profits from an investment general partners get at a VC firm) for the deals on which they invest and manage.
A venture partner’s salary falls in the range of $50,000 to $200,000 a year and is paid from management fees.
The majority of venture partners don’t have carry in their own funds. Instead, they may have deal-specific carry for organizations with which they’re engaged.
In certain businesses, they are entitled to general fund carry. The amount of carry a venture partner is entitled to vary considerably.
Drawbacks to having a Venture Partner
There are also some drawbacks to having a venture partner, such as:
1. They may not be invested in the long-term success of the firm.
2. They may not have the same skin in the game as the full-time members of the partnership.
3. They may not be as committed to the success of the firm.
4. They may not have the same incentives as the full-time members of the partnership.
5. They may not be able to offer the same level of expertise or knowledge as a full-time member of the partnership.
Five types of venture partners
Before you commence your search for a venture partner job, it is beneficial to understand the five broad types of venture partner roles. Doing so will help ensure that your skills fit into these positions and improve the likelihood of success in your job hunt.
fit into one or more of the following categories, even if Most venture capitalists don’t have these exact titles. These buckets can help you better understand how VCs think.
Portfolio companies hire operating partners to help them become more valuable. This is done by expertizing in an area, such as growth marketing or product design, and then aiding the company to achieve its objectives. It’s a role that asks those looking for a thrilling challenge to get their hands dirty.
Board partners, in contrast to operating partners who normally focus on areas like growth or hiring, work in the portfolio companies but instead focus on strategy and governance. You might also hear them referred to by their acronym ‘NED’ (non-executive director).
Board partners are brought in for two reasons.
Primarily, funds want to bring the best board members possible into their portfolio companies. When investment partners lack the time commitment, they often delegate authority to a board member they trust. Unfortunately, in some European countries, it’s against regulations for funds to send their own investment professionals to boards.
Secondly, they may have a strong network at their job position that investors do not have access to. This is especially relevant for companies that are further along in development. Almost always, these partners dedicate some of their time to working with one or a few portfolio companies part-time.
Fundraising partners join a VC on a limited contract to help the partnership raise additional funds while usually taking advantage of access to the partner’s network of investors. In other cases, they bring important expertise or are simply a great fit for future fundraising goals. These partners become full general partners as soon as the fundraising is successfully closed. They’re not brought on fully from the beginning because at that point, the fund can’t afford another partner—like in Albert Wegner and Union Square Ventures’ case.
Sourcing partners are those who bring new potential investments to a venture capital firm. These individuals typically have great connections in the business community and maybe angel investors or operators themselves. They usually receive some sort of monetary compensation for their efforts, either through equity or cash.
Many funds, such as Atomico and Sequoia, have set up scout and angel programs; however, scouts and angels typically don’t receive a salary.
Business development partners
Business development partners help funds grow their audience by introducing the fund to new people in different industries. For example, a business development partner for a Nordic-based investment fund would connect the general partners with key players in the local scene or educate the investment team about relevant happenings in that industry.
A few dos and don’ts for aspiring venture partners
You should not depend on a venture partner role for income because the earning potential rarely justifies the amount of work required.
You cannot under any circumstances enter into a venture partnership without first clarifying what your goals and expectations are for the duration of the partnership. If you do not make this clear from the start, you will likely end up working with partners who have different goals than yours, leading to frustration on both ends.
Choose which profile you present carefully. Attempting to cover five areas will most likely result in not being the best at any of them, so think about what your skills are and where they can be utilized most effectively. If you’re a former operator, maybe go for the operating partner role and work with portfolio companies. If you see a lot of interesting deals as a community leader at early stages,maybe look for some sort of sourcing partner role.
Do not worry about job titles. The venture partner role is informally defined and can have many different names. Out of all my venture partner positions, only one was actually titled as such.
Some VC firms hire venture partners to help with investments, so it can be beneficial to talk to people in your network who work at VC firms and get a sense of whether this is something that interests you. These roles are often not advertised, so it will be up to you to put yourself out there and show that you’re interested.
Being a venture partner is an excellent way to gain exposure to the VC industry and have the opportunity to work with some of the most talented founders out there. Furthermore, it allows for more flexibility than a traditional investment role would.
Here are some of our other posts on venture capital.
- How do VCs evaluate early stage startups?
- Difference between startup capital and working capital
- Why do startups need funding?
- How to get into angel investing & be an angel investor?
- How to become a VC startup scout and make money on the side?
- What is dry powder in venture capital & startup investments?
- The advantages of investing in startups through an angel syndicate
- What are the different kinds of financial instruments available to angel investors and VCs for investing in startups?
- How VCs are controlling the narrative of what constitutes as a good business?
- Startup term sheets: Everything you wanted to know
- How to choose & approach the right investors for your startup?