Hot MBA Jobs: Venture Capital Associate
If you’ve ever used an app like Uber or Snapchat, odds are you’ve benefited from the work of a venture capital associate. Through skills like financial modeling, evaluations, and a little bit of luck, venture capital associates find ‘the next big thing’ and provide the money to make it happen. And though not all of these skills can be taught, top venture capital firms are looking to business programs to find the perfect candidate.
For students looking to join the venture capital industry, the path isn’t always an easy one. The level of experience required in the field means that very few students find venture capital associate positions straight out of their MBA programs. This doesn’t seem to deter those who are ready to work for it, however. Last year, private equity was ranked as the second-biggest employer for MBA graduates at the Harvard Business School.
Before you get started on the road to becoming a venture capital associate, let’s take a look at what the path to your dream job might look like.
The Venture Capitalist Job Role
Venture capital (VC) firms take on the risky but often lucrative job of searching the startup world for the next big thing. In exchange for providing capital infusions to startup companies in the early stages of their business, venture capitalists receive both oversight and ownership in the company.
For associates at venture capital firms, the job primarily involves sourcing new deals—setting up meetings with entrepreneurs and companies to find prospective investments—and supporting existing ones. As most roles in financial analysis go, VC associates are responsible for supporting all aspects of an investment, from the initial sourcing, modeling, and execution of a deal.
The exact type of work done by a VC associate may be determined by the type of for it is. For firms more focused on funding startups in their early stages, the associates work may be more concentrated on sourcing, while firms working more on late-stage financing will likely require more diligence and modeling from its associates.
Venture Capitalist Salary
While the exact roles of a venture capital associate may vary widely with the firm and its specialization, the general trend shows VC work to be an incredibly lucrative career. In 2016, graduates from top MBA programs like Stanford GSB and Harvard Business School joined VC firms at an average salary of $175,000.
According to Payscale, the average salary across all education levels for an associate at a venture capital firm is $92,067. The level of experience can make a big difference when it comes to the venture capital associate role, as well. Mid-career professionals in this role make on average 24 percent more than the national average, and experienced professionals up to 51 percent more.
Where Do Venture Capital Associates Work?
Venture capital firms can be found throughout the world in a variety of fields, leaving a wide range of opportunities open to up and coming VC associates. Certainly, studying and working near concentrated start up hubs like the Silicon Valley in California or the UK’s Silicon Fen can help boost an MBAs ability to get their foot in the door.
Still, a quick look at open venture capital associate positions open at the time of writing reveal diverse offerings spread throughout the country, from Palo Alto, CA to Philadelphia, PA to Durham, NC. MBAs looking to pursue a role in venture capitalism may also look for roles that allow them to pursue other areas of business they are passionate about, since VC firms are typically specialized in the type of startup they will invest in, be it fintech, health science, and other various fields.
Some of the world’s top corporations also have venture capital firms that will invest in companies related to their work. This includes companies like Google, Intel, Salesforce, Johnson & Johnson, and more.
The Venture Capital Associate Education
VC firms looking for associates are likely looking for MBAs who have had some previous experience on the workforce. While it’s not impossible for those without MBA degrees to begin as associates, opportunities for advancement to a partner level role are typically unusual without one. Typically, pre-MBA associates are expected to only work two to three years at a firm and then move on.
For post-MBA associates, it’s expected that these individuals will be working towards a partner level position. Firms will be looking for candidates with strong records in analysis who can demonstrate a deep understanding of markets and industries. Given that even MBA graduates will be expected to have a certain level of experience before joining a VC firm, these roles can be incredibly competitive. On-campus recruiting is uncommon for these firms, and typically only graduates from top level MBA programs are recruited to these positions. Basically, if you are determined to enter the venture capital industry, you will not only need an MBA education- you will need to prove you have the best MBA education.
The Top VC MBA Programs
To join the incredibly competitive field of Venture Capitalism, MBA graduates need a demonstrated record of financial analysis skills and a degree with the reputation to back it up. Some of the top schools for those looking to enter the VC or private equity fields overlap with some of the highest ranked MBA programs in the world. Schools that have strong relationships with investment banks and those with strong finance programs will likely offer the most opportunities for students looking for careers as VC associates. Some of the top schools for the field are listed below:
- Booth School of Business – University of Chicago: The full-time MBA program at University of Chicago’s Booth School of Business has a strong focus on venture capital and private equity through the Polsky Center for Entrepreneurship. The program provides strong networking opportunities for their MBAs through student organizations like the Entrepreneurship and Venture Capital (EVP) Group. The group offers career development, networking, activities, and speakers covering the most important topics in venture capital today.
- Kellogg School of Management – Northwestern University: MBA students at the Kellogg School of Management will find a huge focus on venture capitalism through the school’s Heizer Center for Private Equity and Venture Capital. Part of the center is the school’s Venture Lab, an experiential learning course that allows students hands-on experience with a quarter-long internship at venture funds, incubators or start-ups.
- Harvard Business School: The top-ranked Harvard Business School has one of the highest success rates in the world for students interested in venture capitalism. In 2015, roughly 14 percent of HBS graduates went into positions at private equity or venture capital firms. Organizations like the Venture Capital & Private Equity Club– which provides a speaker series, career treks, and an annual conference—allows students to get acquainted with the industry long before graduation.
Just How Much Are Stanford MBA Grads Getting Paid?
Wondering what kind of pay day you can expect if you are among the select 6 percent of applicants who gain admission to Stanford Graduate School of Business (GSB)? Are you sitting down? Perhaps you should be, because the school’s 2017 employment report—released today—reveals record-breaking salaries for the third year in a row.
On average, last year’s graduates, now in their first year of post-MBA work, are pulling down an annual base salary of $144,455—a $4,000 increase over last year’s all-time high (median base compensation was $140,000, also besting last year’s by about $4,000). But it doesn’t stop there. Average signing bonuses, reported by 51 percent of the class, are also up—setting a new record at $29,534. (Median salary bonuses remained unchanged at $25,000.) And as if that weren’t enough, another quarter of the class reported other guaranteed compensation (OGC) surpassing last year’s all-time highs by a whopping $10,000. Average OGC for 2017 grads was $83,065, and median OCG was $50,000. The range was $6,750 to $450,000.
The GSB, in announcing these most recent employment statistics, pointed out that OGC will no longer be tracked by the MBA Career Services and Employer Alliance (CSEA) and that it began last year capturing an “Expected Performance Bonus” metric in its place. This measure includes both guaranteed and non-guaranteed cash compensation based on performance. Though the average and median EPB for the Class of 2017, at $71,946 and $35,000, were each lower than OGC figures, a full 65 percent of the class expected to receive such performance-based compensation, up from 61 percent last year—and substantially higher than the quarter of grads who reported OGC. The reported range for EPB was $5,000 to $450,000.
Stanford MBAs claim higher pay days than graduates of any other school, in part thanks to higher base compensation. Stanford’s median base—$140,000—surpassed that of Harvard Business School (HBS) ($135,000), the University of Pennsylvania’s Wharton School ($130,000), and the University of Chicago Booth School of Business ($125,000). Grads from both Stanford and HBS reported the same median starting bonus of $25,000, but the $50,000 in other guaranteed compensation reported by Stanford grads was double what grads at the school’s top East Coast rival reported.
Tech Less of a Draw Than in Prior Years
Bucking the trend at many other business schools—where increasing percentages of students are clamoring to enter the technology industry—fewer Stanford MBA Class of 2017 grads headed into tech. In what the school deemed “a rebalancing of the scales among the three top industries,” interest in technology dropped 8 percentage points—to a mere 25 percent of the class. Almost a third of the class—32 percent—headed into finance, up a point over last year. Consulting, too, gained four percentage points to attract 20 percent of the most recent class.
“Our leading employers span a wide variety of industries,” Maeve Richard, assistant dean and director of the Career Management Center, said as part of a news story announcing the latest employment statistics on the Stanford GSB site. “They represent organizations in such areas as consulting, finance, technology, consumer products, healthcare, and nonprofits. What they do have in common is work environments that offer the ability to make an impact with a focus on agency, career development, diverse challenges, and responsibilities.”
Indeed, a record-setting 411 organizations hired Stanford MBA students and graduates for internships or full-time roles this past year—up 7 percent over last year and 34 percent from six years ago. A whopping 95 percent of employers hired just one or two students—an indication of the breadth both of GSB employers and student interest.
Uptick in Women Headed into Private Equity and Venture Capital
“In addition, we observed that the number of women going to private equity and venture capital has nearly doubled since 2014,” Richard said as part of the Stanford GSB article. “While we do not disclose fine-grain gender detail and the numbers are still small, we see a definite widening of the cracks in the glass ceiling.”
It’s no wonder that Stanford GSB women would increasingly be looking to break into PE and VC, since those fields yield some of the very highest pay days. The highest reported base salary for the Class of 2017—$285,000—went to a graduate headed into venture capital. Median base salaries for both PE and VC were $175,000, $40,000 higher than for the class as a whole. And it was a graduate headed into a private equity analyst role who reported the mind-boggling $450,000 in other guaranteed compensation. The median signing bonus for PE—at $50,000—was also the highest in the class (on par with investment banking). Though it was a graduate headed into a marketing role who claimed the highest signing bonus of the class, $77,000.
Timing and Location of Offers
Stanford GSB reports full-time offer and acceptance rates at graduation and three months out from graduation—as mandated by CSEA standards. But in past years—as this year—the school has made a point of underscoring the fact that its graduates’ confidence in their ability to find the perfect job sometimes means they hold out longer in accepting their ultimate position than graduates from some other schools. That said, 92 percent of the Class of 2017 had offers three months out from graduation—up two points over last year—and 88 percent had accepted offers, a five-point increase year over year.
In terms of where geographically the most recent Stanford MBA grads wound up, the West was the winner—with 62 percent of grads choosing to remain in the region. This represents a 3 percent decline compared to last year. “Counter to assumptions, only 35 percent of these West region jobs relate to technology,” the school notes. “Finance represented 26 percent, and consulting represented 15 percent.” The Northeastern United States drew the second-most Stanford grads, 16 percent of the class. Another 11 percent took international jobs.
Also of note, 16 percent of the class launched their own startups upon graduation, up one percentage point over last year. Leading industries for these entrepreneurial students include software (15 percent), finance (11 percent), healthcare (9 percent), real estate (9 percent), and internet services (9 percent).
More Grads Seek Socially Responsible Roles
Another notable shift in these most recent employment statistics is the increasing number of Stanford MBA grads heading into careers in socially responsible roles or organizations. Thirteen percent of this year’s graduates answered yes to the question, “Have you chosen a socially responsible role in a private business?” That’s up from just 8 percent last year, when the question was first introduced.
Watch this space for an upcoming piece that will highlight several Stanford students who chose internships focused on social impact this past summer—a Clear Admit exclusive.
This article has been edited and republished with permissions from our sister site, Clear Admit.
Top MBA Programs for Producing Founders: 2017-2018 Report
Recently, PitchBook released its latest 2017-2018 Top 50 Universities Report. The ranking focused on those universities that produced the “ultimate building blocks of the venture industry: founders.”
This ranking is vastly different from rankings of top schools for entrepreneurship by U.S. News & World Report, Princeton Review, and Entrepreneur Magazine, all of which focus on factors like peer assessment surveys, curriculum, and entrepreneurial study options. Instead, PitchBook looked at a single criterion: founders of companies who received venture capital (VC) funding between January 1, 2006, and August 18, 2017, and where they went to school.
The report provides a fairly detailed breakdown of top undergraduate programs, companies (by capital raised), MBA programs, female founders, unicorns (companies that have attained the coveted $1 billion evaluation), and more. This article will focus solely on the results that relate to MBA programs, including information on female founders and unicorns.
Top MBA Programs
For the 2017-18 academic year, the top 10 MBA programs to produce founders who received VC funding were ranked as follows:
- Harvard Business School (HBS): 1,203 entrepreneurs, 1,086 companies, and $28,495 million raised
- Stanford Graduate School of Business (GSB): 802 entrepreneurs, 716 companies, and $18,259 million raised
- University of Pennsylvania’s Wharton School: 666 entrepreneurs, 585 companies, and $16,001 million raised
- INSEAD: 455 entrepreneurs, 406 companies, and $7,795 million raised
- Northwestern’s Kellogg School of Management: 445 entrepreneurs, 417 companies, and $5,680 million raised
- Columbia Business School: 441 entrepreneurs, 410 companies, and $5,465 million raised
- MIT Sloan School of Management: 437 entrepreneurs, 384 companies, and $7,797 million raised
- University of Chicago Booth School of Business: 405 entrepreneurs, 368 companies, and $5,470 million raised
- University of California – Berkeley Haas School of Business: 344 entrepreneurs, 314 companies, and $5,191 million raised
- UCLA Anderson School of Management: 247 entrepreneurs, 232 companies, and $3,957 million raised
HBS stands out immediately for producing founders who receive VC funding. Harvard produced twice as many founders as its next closest competitor, and those founders pulled in $10M more in funding for their 1,000+ companies.
As for the reason behind Harvard’s success, there are multiple elements that contribute to its production of entrepreneurs. The school is home to the Arthur Rock Center for Entrepreneurship, which offers programs for budding entrepreneurs including curricular offerings (over a dozen courses), a New Venture Competition (which offers $300,000 in cash prizes), the Rock Accelerator, the Harvard Innovation Lab, and even a Loan Reduction program that supports graduating entrepreneurs with a one-time, need-based award of $10,000 to $20,000. HBS’s extensive alumni network also provides students with connections with managing directors, partners, and founders of top VC firms including Bain Capital Ventures, Apax Partners, and Accel Partners.
Another standout for the 2017-2018 year was INSEAD. The only non-U.S. MBA program to appear in the top 10, it also moved up a spot this year over last. INSEAD grew from 393 entrepreneurs, 348 companies, and $6,131 million in capital raised to 455, 406, and $7,794 million respectively.
INSEAD’s students are supported by the INSEAD Centre for Entrepreneurship (ICE), which was founded in 2003. The center offers MBA students a chance to participate in the INSEAD Venture Competition (IVC), Entrepreneurship Bootcamps, and the Entrepreneurship Teaching Innovation (ETI) Fund, which supports the development of the “Your First Hundred Days” elective for budding entrepreneurs.
Another MBA program of note is MIT Sloan School of Management, which was fourth in capital raised on this year’s PitchBook ranking. This could indicate more successful companies coming out of MIT or a higher percentage of VC funding available to Massachusetts’ graduates.
Some of the unique entrepreneurship opportunities available from other top programs include Stanford GSB’s Startup Garage, an intensive, hands-on project course for MBA students, as well as MIT Sloan’s Martin Trust Center for MIT Entrepreneurship, which includes an accelerator, coaching, and various events. Finally, the Penn Wharton Entrepreneurship Center offers resources, events, and courses for MBAs looking to explore, develop, launch, and scale a startup.
Top Female Founders & Unicorns
PitchBook also reviewed the top MBA programs for female founders. Once again, HBS and Stanford GSB ranked first and second, respectively, with 202 and 119 female founders. Columbia Business School ranked third with 77, Wharton ranked fourth with 71, and MIT came in at fifth with 60 female founders.
As for the unicorns, the top five MBA programs are similar to the previous lists.
- HBS: 22 entrepreneurs, 17 companies
- Stanford GSB: 14 entrepreneurs, 11 companies
- Wharton: 11 entrepreneurs, 8 companies
- INSEAD: 8 entrepreneurs, 7 companies
- MIT Sloan: 6 entrepreneurs, 6 companies
This article has been edited and republished with permissions from Clear Admit.
Do Women Entrepreneurs Get Less VC Funding? Wharton and Columbia Researchers Find a Large Gender Gap
Over the last few years, there has been a lot of talk about more women in business. From the promotion of organizations like the Forté Foundation—which seeks to enhance women in business—to CNBC claiming “the Golden Age for women entrepreneurs has finally begun,” enterprising women seem to be everywhere. Unfortunately, this doesn’t mean that the deck is stacked in their favor. In fact, researchers from Columbia Business School and The Wharton School found the opposite was true.
The Gender Gap in Startup Funding
In a paper published in the Academy of Management Journal titled, “We Ask Men to Win & Women Not to Lose: Closing the Gender Gap in Startup Funding,” researchers looked at how women fared compared to men when they were trying to get funding for their startups.
After reviewing footage from the TechCrunch Disrupt startup competition, the researchers found that women were asked entirely different types of questions about their companies compared to their male counterparts. Men received more questions about their project’s potential for growth, while women received questions on the opposite end, about their potential risks and losses. This difference in questioning had a measurable impact on the funding each startup received.
The research paper, written by Dana Kanze (a Columbia Business School Ph.D. student), Laura Huang (a Wharton School Professor), Mark A. Conley (a Columbia Psychology Ph.D.), and E. Tory Higgins (a Columbia Psychology Professor), sought to delve into the enormous gender gap revealed in venture capital funding. According to the paper, only 2 percent of VC funding goes to women entrepreneurs in spite of the fact that women own 38 percent of U.S. businesses and represent 7 percent of venture capital firms.
One of the keys to this drastic difference in funding was how VCs—both male and female—framed funding questions for women-created businesses. Kanze explained the thought process in a Forbes article.
“According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals,” Kanze said. “Conversely, when questioning female entrepreneurs, they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.”
Inside the Research
To study how this difference in questioning impacted women and men entrepreneurs, the research team reviewed the Q&A sessions of 189 startup entrepreneurs—12 percent of whom were women—held by 140 prominent venture capitalists—40 percent of whom were women. Using software to analyze each session, researchers discovered that 67 percent of questions posted to men were promotion-oriented while 66 percent of questions posted to women were prevention-oriented.
In the end, the study found that this difference in questioning led to a huge difference in VC funding. Among comparable companies, the research team found that businesses that were asked prevention-oriented questions raised (on average) $2.3 million in funds in 2017, while their promotion-focused counterparts raised $16.8 million—nearly seven times more.
“In fact, for every additional prevention question asked of an entrepreneur, the startup raised a staggering $3.8 million less, on average,” Kanze told Forbes. She continued, saying, “Controlling for factors that may influence funding outcomes—like measures of startups’ capital needs, quality, and age, as well as entrepreneurs’ past experience—we discovered that the prevalence of prevention questions completely explained the relationship between entrepreneur gender and startup funding.”
However, there was some good news. For female entrepreneurs who received prevention-focused questions but responded with promotion-type answers, they were able to raise $7.9 million, versus $563,000. This suggests that regardless of how VCs phrase their questions, entrepreneurs can recover much of their funding potential if they answer in the positive.
To test their findings, the research team conducted an experiment that recreated the TechCrunch Disrupt conditions with 194 VCs—30 percent of whom were women—and 106 entrepreneurs—47 percent of whom were women. After removing startup specific details, the team asked the VCs to allocate $400,000 to their chosen entrepreneur.
According to the Kanze in a Harvard Business Review article, the team found that: “Angel investors allocated an average of $81,113 to startups in the prevention question, promotion answer condition—1.6 times larger than the $52,369 average allocated to those in the prevention question, prevention answer condition. Similarly, ordinary investors gave an average of $96,321 to the prevention question, promotion answer condition—1.7 times larger than the $55,377 average given to the prevention question, prevention answer condition.”
Speaking with Professor Laura Huang
To gain additional insight into the results of the research paper, we spoke with Professor Laura Huang at the Wharton School. Here’s what she has to say.
- What was the most surprising result that came out of your study?
“It was surprising that both men and women investors were equally as likely to ask prevention-focused questions to women, as opposed to promotion-focused. It wasn’t that men were the only ones biased, but that both genders were equally as likely to be biased.”
- Do you have any advice for female entrepreneurs looking to raise venture capital?
“Stop it in its tracks. When you see something like this happening, stop it immediately and redirect the response so that you’re making yourself on equal footing. Don’t allow that train of thought to go through where you’re getting asked prevention-focused questions and investors are focused on the risk. Answer the question that’s asked but redirect your response toward possibilities and success.”
- How do you think VC funding can change for the future to close the gender gap?
“Part of it is an awareness on the investors’ side. It’s also up to the entrepreneurs to redirect each question toward the right focus. A lot of this gap is implicit. Investors don’t realize they’re asking prevention-focused questions of women; they just automatically ask certain questions to each gender. Awareness around the tendency toward prevention-focused questions for women entrepreneurs and a focus on redirection toward promotion is key.”
Startup Lessons: Campus Doorman
The path for startups can be treacherous. In the series “Startup Lessons,” we examine new MBA startups at the ground level to understand how they succeed.
Industry Spotlight: Venture Capitalism in Boston
Why Are There So Many Startups in Boston?
Alongside the usual Silicon Valley and San Francisco suspects, Boston has long been a major hub for startups—and with good reason. According to a recent article in Inc. Magazine, “Having multiple universities in close proximity with each other”—namely the MIT Media Lab and the Harvard Innovation Lab—“has fostered a culture of turning cutting-edge research and technology into startup ventures.”
