In an earlier post, we covered how VCs evaluate early-stage startups. In this post, we’ll look at the different roles in a VC firm.

A venture capital firm is a company that provides money and advice to startup companies in the hopes of profiting from their success. The key role of a VC firm is to invest early into promising startups and give good returns to their investors who are called LPs or Limited Partners. VCs raise money from LPs to invest in great startups.

The people who work at a venture capital firm can be broken down into three different roles: investors, partners, and employees.

Venture capital firms usually have a team of people working in each of these roles. The size of the team depends on the size of the firm. The team works together to find and invest in the best startups and then help these startups grow and eventually exit at a premium valuation.

Investors are the people who provide money to the venture capital firm. Partners are the people who make the decisions about which companies to invest in. Employees are the people who do the research on potential investments and help with due diligence. Employees help with the day-to-day operations of the firm and can be further categorized into analysts, associates, principals, etc.

The different roles in a VC firm

The most important people at a venture capital firm are the investors. They are the ones who provide the money that a venture capital firm uses to invest in startups. The investors also have a lot of say in how the firm is run.

Partners are the people who make the decisions about which companies to invest in. They work closely with the investors to make sure that the firm is investing in the right companies. Associates are the people who do the research on potential investments and help with due diligence. They also help with the day-to-day operations of the firm.

Venture capital firms usually have a team of people working in each of these roles. The size of the team depends on the size of the firm. The team works together to find and invest in the best startups.

There are different roles in a venture capital firm, each with its own focus and responsibilities.

The most common roles are:

1) Managing Partner

2) General Partner (GP)

3) Principal

4) Venture Partner (VP)

5) Associate

6) Analyst

7) Investor Relations

8) Entrepreneur-in-residence

9) Marketing & social media

10) Interns

11) VC Scout

The Managing Partner

The Managing Partner is responsible for the firm’s day-to-day operations and sets the investment strategy. The managing partner is also the key person responsible for fundraising.

Managing partners are positioned at the top of the firm’s hierarchy and typically have ownership stake in the managing company. As a result, they have control over the venture firm.

The main point of contact with the limited partners and responsible for most strategic and executive decisions, they vote on investment opportunities as well as take board seats in portfolio companies. Their primary role is to map out the fund’s long-term strategy.

The Managing Partner in a large fund is usually someone who has been with the company for a long time or was one of the founding members. These partners typically take more backseat roles and may have other businesses they are focusing on as well.

In newer and smaller funds, the Managing Partners are usually the partners who created the venture firm, closed the first fund, and have a much more all-inclusive set of duties. They’re also generally in charge of how the fund operates.

Partners/General Partners

In hierarchical funds, terms such as junior and senior partners are used to distinguish levels of experience within the partnership. This affects how much of a percentage each partner gets from the profitability of the fund. If the distribution isn’t equal, then generally speaking, junior members will get less of a share.

A firm can have a flattened partnership where all partners have the same status and carry.

The General Partner or GP the day-to-day strategic tasks within a firm or for a particular fund. They often spend time managing the portfolio for either the entire organization or just the individual fund they’ve been assigned to. Additionally, they offer years of experience and knowledge in various fields.

The most important thing to remember is that the partners are the ones who can sponsor a deal. In other words, they can suggest that the firm invest in a company and recommend that the firm take a vote (usually at a ‘partner meeting’) on whether or not to go through with the investment.

They can both source deals and also evaluate deals brought in by others in the firm. They have the power to write checks and execute deals.

Principals

The principals of an investment team are its senior members. They not only help the firm identify and connect with the most promising entrepreneurs in a given industry but also maintain relationships with those companies after investment.

A Principal will typically have at least 6-8 years of experience in the investment space.

Though they are not part of the investment committee, at times they may get a stake in the profits–called carried interest–from deals that they bring to the firm.

The partners at the firm work closely with their training counterparts on deals and other aspects of running the business. Principals often have different titles such as Investment Managers, VPs, etc.

Principals have the ability and influence to set up meetings and introductions that can be extremely helpful for your business. In addition, Principals are often highly networked individuals who can offer assistance in a variety of other ways.

Venture Partners

Larger venture capital firms have venture partners (also known as operating partners). They’re seasoned investors or entrepreneurs who aren’t full partners of the company.

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.

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.

Associates

Members of the investment team who are slightly less experienced are called associates. They’re typically in their role for two to three years before possibly being promoted to Principal or leaving for another opportunity.

Associates working at typical investment funds are in charge of researching industries, market trends, and companies.

Although Associates don’t lead investments, they’re often visible at events and workshops. Their role is outward-facing more often than not and includes meeting with many different types of companies. They act as a first filter, bringing the most relevant cases to the attention of those who are higher up in investment teams.

Since they play such an important role in managing information, it’s crucial that you try to meet and get along with them well. If you do, they’ll be more likely to introduce you to other senior members of their team.

Analysts

Analysts are the most junior members of an investment team and is an entry-level position in the fund. They typically have two or three years of experience, often in banking, consulting, or at a startup.

The analyst role is a pre-MBA role and many analysts work in this role for around 2 years after which they go to pursue an MBA.

They typically report to an Associate who helps with inbound deal flow, early due diligence, and research into possible investments.

Investor relations manager

The role of an investor relations manager in a VC firm is to manage and monitor the communication between the firm and its limited partners.

An investor relations manager is responsible for creating and maintaining a positive relationship with the investors. They will often organize events, such as conferences and webinars, to keep investors updated on the latest news.

The investor relations manager will also work with the marketing team to produce materials, such as pitch decks and impact reports.

Entrepreneur in residence

The role of an entrepreneur in residence in a VC firm varies. The primary role of an EIR is to work with portfolio companies and help them grow.

An entrepreneur in residence is typically a successful entrepreneur who has experience in growing a startup. They will offer their expertise and guidance to portfolio companies, and help them with things such as fundraising and hiring.

Often, an EIR can use the firm’s resources to build their own startup and eventually get funded by the firm.

Marketing & Social Media

The role of a marketing & social media executive in a VC firm is to raise awareness of the brand and generate leads.

A marketing & social media executive is responsible for creating and executing marketing campaigns. They will often use digital channels, such as email and social media, to reach a wide audience.

The marketing & social media executive will also work with the investor relations team to produce materials, such as pitch decks and impact reports.

Interns

The role of interns in a VC firm is to support the team with various tasks.

Interns will often be responsible for conducting research, preparing materials, and attending events. They will also get the opportunity to shadow the different team members and learn about the various roles in venture capital.

Internships could be paid or unpaid, but they can lead to full-time roles at the firm.

VC scout

The role of a VC scout is to identify and assess deal flow for the firm.

A VC scout is responsible for finding new investment opportunities and conducting initial research on them. They will often attend startup events and meetups to network with founders.

The VC scout will then present their findings to the investment team, who will decide whether to pursue the investment.

The scout is an unpaid role and is more of an intern role where you get the opportunity to work with a VC firm to get some exposure to the industry and could act as a gateway to venture capital.

There are many different roles and job titles in venture capital, each with its own unique set of responsibilities. In this article, we’ve outlined the most common ones so you can get a sense for what they do. If you want to know more about a specific role or have any questions about working in venture capital, feel free to reach out to us. We’re happy to help!

If you enjoyed reading this article, check out some of our other posts on venture capital.

• Difference between startup capital and working capital
• Why do startups need funding?
• How to get into angel investing & be an angel investor?
• What is dry powder in venture capital & startup investments?
• What’s the role of a Venture Partner?
• 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?