This is what to read if you don’t know anything about Venture Capital
Traditionally, venture-capitalists have been viewed as the sidekicks to the superheros who are the entrepreneurs and innovators. However, labeling venture-capitalists as side-kicks would be an injustice to their role in innovation, especially in today’s day and age. Venture-capitalists not only play an important role in jump-starting new projects, but also play an important role in the second stage of these projects, nurturing them till they’re practical and profitable.
Perhaps one would wonder what makes Venture-capital different from capital markets, well, the answer is what makes VCs so critical especially in today’s day and age. Start-ups are considered high risk projects, hence bankers will charge high interest rates to finance them. In order to hedge their risk they would look for ‘hard assets’ in a start-up, things like real estate, commodities or raw materials. In today’s technology age, few start-ups possess these assets which is exactly why VCs are so essential.
The key challenge that VC funds embrace is ensuring a superiorly high return on investments that are risky. Venture capitalists will largely have investors who are happy to use a small part of their portfolio in high-risk investments. VC funds carefully consider which opportunities to invest in by taking into account the industry of the business, the people running it, the idea itself and a myriad of other metrics. All of this with a goal of delivering sufficient returns at adequate risk to it’s investors.
UK Venture capital funds have always been very strong in terms of attracting investments in and around Europe but also in consistently delivering outstanding returns to its investors. In fact, according to the ‘BVCA (British Private Equity and Venture Capital Association) Annual Performance Measurement Survey’, UK private equity and venture-capital funds delivered a 10 year annualized return of 14.2% which was far in excess of what was generated by public markets. In comparison the FTSE 100, which is an index of the 100 shares listed on the London Stock Exchange with the highest market capitalisation, had a 10 year annualized return of 7.4%. This is just one way of seeing how exciting and rewarding the Venture Capital scene in the UK really is, there is a lot of opportunity to get involved in path breaking work!
Working in VC is a thoroughly rewarding experience, especially at an earlier stage of one’s career, there is just so much to learn and absorb. First and foremost, working in VC would mean meeting some of the smartest and most interesting people out there, whether that be budding, motivated entrepreneurs or experienced investors. Furthermore, there is the potential to do something really useful for the world around you when working in venture capital. You would be directly involved in funding companies or ideas that could transform people’s lives for the better. These benefits along with many others, monetary or otherwise, make venture capital a really good field to try and break into at any stage of one’s career.
Breaking into Venture Capital for a summer internship or as a graduate may not be as straightforward as it is for banks or consultancies, however it certainly is possible. The best way to break into this industry is to get in touch with people who already work in it, one of these ways is to get involved with student societies (like ours!) that look to work with VCs or people closely involved with VCs. You may also try to find internships or work experience opportunities with start-ups who are a part of the portfolio of a particular Venture Capital firm. These companies may then be able to introduce you to key people in the industry and maybe even vouch for you when it comes to securing a place at a VC firm. Some VC firms also post opportunities on Linkedin or other job posting so it’s useful to maintain a strong online presence while checking up on these portals regularly as well.
Here are a list of some active VC funds in London that are worth keeping an eye on:
- IQ Capital Fund (https://iqcapital.vc) which is pushing the frontiers of deeptech and science by helping early stage companies develop their product, scale and reach business success
- Barclays UK Ventures (https://www.linkedin.com/company/barclays-uk-ventures/) which aims to accelerate the future of banking by finding and supporting emerging tech companies that could improve Barclays Bank customer experience
- Index Ventures (https://www.indexventures.com) has been founded in 1996 and has worked with many London unicorns such as Deliveroo, Farfetch, Transferwise
Regarding jobs, keep an eye on their websites. Another very powerful tool to find internships and jobs in the industry is LinkedIn, whether it is on the job section or on your feed!