Venture Capital

Venture capital consists of funds obtained from backers that are invested in young, innovative companies (often in the tech and health care sectors) in exchange for an equity stake that hopefully can be translated into a profit when the company goes public or is merged with or sold to another company. The National Venture Capital Association (NVCA) reports that “venture investing generates billions of dollars for investors [and] their institutions, and creates millions of jobs.” Some of America’s most well-known businesses were founded with the help of venture capital, including Facebook, Apple, Amazon, Whole Foods Market, Google, FedEx, Starbucks, Staples, Dropbox, and Intel. Forty-two percent of U.S.-produced drugs approved by the Food & Drug Administration between 2009 and 2018 originated with venture capital funding, according to research released by Silicon Valley Bank.

Associates, analysts, managing partners, general partners, and entrepreneurs in residence are the key players in this industry, but venture capital firms also need chief financial officers, controllers, accountants, lawyers, and marketing, public relations, computer security, information technology, and office workers.

Venture capital firms are located throughout the United States, although most are headquartered in major cities. There are also opportunities throughout the world—especially in Europe, Israel, China, and India. Africa, Latin America, and Southeast Asia also have burgeoning venture capital sectors. As of February 2024, the U.S. venture capital and principal trading industry employed nearly 52,000 people, according to the data analytics firm IBISWorld. Most VC firms have fewer than 15 employees. Many funds have only a few partners and support staff (e.g., secretaries, receptionists). As a result, VC firms need new hires to hit the ground running and begin producing immediately. This means that there are few opportunities (except in support positions) for those with just a bachelor’s degree and no industry experience. Most venture capital firms seek workers with a college degree, plus several years of experience at a management consulting firm, private equity firm, or investment bank. Others seek experienced professionals from the information technology, health services, engineering, or biotech sectors, or offer partnerships to successful entrepreneurs who are in their 30s and 40s.

Venture capital partners have excellent earnings. Managing general partners/chief executive officers at venture capital firms received base salaries of $325,725 and total cash compensation of $508,569 in 2021 (the latest year for which data is available), according to Compensation and Employment in the Private Capital Industry, from Preqin and Ferguson Partners.

In 2023, venture capital firms invested about $170.6 billion into 13,608 companies, according to the NVCA. The largest area of venture capital investment was in software, where companies received 39 percent of total funding. New commitments to venture capital funds in the United States increased to $66.9 billion, up significantly from $51 billion in 2019. Venture capital firms in California, Massachusetts, and New York comprise a large percent of total U.S. VC assets under management. In 2023, venture capital firms in California, Massachusetts, New York, Texas, and Florida comprised 60 percent of total U.S. VC deals. “By the end of 2023, the U.S. VC ecosystem had 3,417 VC firms, which closed a cumulative 13,608 VC deals worth $170.6 billion,” according to the NVCA. “Additionally, these firms raised $66.9 billion across 474 funds and ended the year with $311.6 billion in dry powder and a total of $1.21 trillion under management.”