Many industry experts describe the job of venture capital analyst as an “in-and-out position” because it is not a partner-track position and analysts must leave the firm after a few years of employment to earn their MBAs, launch a start-up, or otherwise obtain operational and entrepreneurial experience to become qualified for an upper-level position at a VC firm.
The primary duties of analysts are to help associates, principals, and partners conduct due diligence and deal sourcing. They also have administrative and support duties.
During due diligence, the analyst might be asked to screen 20 business plans, selecting the most promising one or two to send up the pipeline to partners. To make this decision, they review financial data, talk with the founders of start-ups, investigate competitors, try out prototypes of start-ups’ products or services (if available), talk with their network of friends in the business world, and read industry publications, blogs, and Web sites.
Analysts also source deals, which means that they identify investment opportunities. They attend trade shows and investment conferences, read business journals, talk with business experts and entrepreneurs, and use other sources to identify promising companies. When they discover a good target, they prepare a report on their findings and pass this information along to their manager for review and consideration by the firm’s partners.
Lastly, analysts perform administrative and support duties. These range from serving as a “gofer” (fetching coffee or lunch and making photocopies) for partners, to organizing and reviewing basic financial data for associates or principals.