Adrian
Table of Contents
- Introduction
- Early-Stage Investors vs. Late-Stage Investors
- The Advisory and Decision-Making Layers
- What Do VCs Actually Do All Day?
- 1. Portfolio Management
- 2. Deal Flow & Deal Making (Chasing New Investments)
- 3. Capitalization (Counting the Money)
- 4. Collaboration (Networking, Networking, Networking)
- The Takeaway
- Find Out More
Introduction
Venture Capital (VC) might seem like a world filled with exciting startup pitches, unicorn investments, and skyrocketing returns. But beneath the surface, the day-to-day work of a VC is far more nuanced and complex. So, what exactly do venture capitalists do all day? Let’s break it down in simple terms.
Early-Stage Investors vs. Late-Stage Investors
First off, not all investors are the same. In the VC world, you’ll hear a lot about early-stage and late-stage investors. But what does that mean?
Early-stage investors are often successful entrepreneurs themselves. They usually invest in startups that are just getting off the ground, focusing on businesses with great ideas but very little traction yet. The structure is lean and the team is small—think of it like a tight-knit group of visionaries betting on the future.
Late-stage investors on the other hand, are dealing with companies that are more mature. These companies have already shown some success and are looking for larger sums of money to scale. The structure here is much more complex, involving investment bankers, lawyers, and other professionals. Late-stage investing is often seen as “safer” because these companies already have a proven track record.
The Advisory and Decision-Making Layers
In between these two types of investors, there’s also a lot of oversight. VCs usually work under multiple boards and committees:
Advisory Board: They provide high-level guidance on strategy.
Investment Board: This is where the real decision-making happens—approving deals, deciding on strategy, etc
Conflict Committee: As the name suggests, when disagreements arise, this committee steps in to mediate.
These layers ensure that decisions aren’t made on a whim and that there’s some accountability built into the process.
What Do VCs Actually Do All Day?
You’d think VCs spend all their time hearing pitches and making it rain with investments, right? Not quite. In reality, a VC’s time is split across a range of activities—some exciting, some downright tedious. Here’s a breakdown of their typical day-to-day tasks.
1. Portfolio Management
A huge chunk of a VC’s day—60% of their time, in fact—is spent on portfolio management. What does that mean? In simple terms, it’s all about looking after the companies they’ve already invested in. This involves:
Reviewing existing portfolios: Checking in to see how investments are doing.
Visiting portfolio firms: Yes, this could mean actually flying out to meet founders and teams.
Attending board meetings: Sitting in on meetings to help guide the company.
Talking to experts: Sometimes, VCs need advice too, so they reach out to industry experts for strategic help.
VCs don’t just invest and walk away. They actively manage and support these companies to (hopefully) turn them into massive successes.
2. Deal Flow & Deal Making (Chasing New Investments)
Next up, you have deal flow—which is essentially the pipeline of new investment opportunities coming in. This part is definitely one of the more exciting elements of the job. Here’s what they do:
Review potential deals: Every week, VCs go through pitch decks and proposals.
Participate in pitch meetings: This is where the classic image of a startup founder pitching their heart out comes into play.
Go to events: They attend tech conferences and startup events to meet new companies.
Due diligence: Before they invest, they do deep dives into the financials, operations, and team behind a startup.
Negotiate terms: If they like what they see, it’s time to hash out the details and sign some term sheets.
3. Capitalization (Counting the Money)
VCs don’t just spend money—they have to raise it, too. This is called capitalization. It’s about keeping the funds flowing so they can continue investing in new and existing companies. Tasks include:
Reviewing fund performance: Keeping tabs on how well their current investments are doing.
Financing and capital calls: Making sure they have enough money to meet obligations.
Preparing LP reports: Limited Partners (LPs) are the investors behind the VCs. They need regular updates on how things are going.
Courting new LPs: Always on the lookout for new people to invest in their funds.
Designing new funds: Once a fund is fully invested, they have to raise another one!
4. Collaboration (Networking, Networking, Networking)
The VC world is all about who you know. Building relationships is crucial, and a lot of a VC’s time is spent on collaboration:
Reviewing syndication relations: Making sure they’re partnering with the right people on deals.
Meetings with bankers, strategic investors, and acquirers: This is where those connections come into play. If they want to take one of their companies public or sell it, they need these relationships.
Partner meetings: Whether it’s PR firms, marketing experts, or other consultants, there’s a lot of collaboration involved in making an investment successful.
The Takeaway
It’s not all glamor. Being a venture capitalist is more than just writing checks and showing up to fancy networking events. The job involves a lot of day-to-day management, endless meetings, and financial legwork. Whether it’s managing existing investments or hunting for the next unicorn, VCs wear many hats.
If you ever thought about becoming a VC, just know that 60% of your time is likely going to be spent on portfolio management. So if you love being hands-on with companies and working to help them grow, this could be the perfect gig for you. But if you’re just in it for the glitz, you might want to reconsider.
Find Out More
- After getting a behind-the-scenes look at VC life, check out how these firms actually raise the funds they invest in How Do Venture Capitalists Raise Funds? A Simple Guide.
- Want to dig deeper into how VCs handle their investors’ money? Read up in Fund Management in Venture Capital: A Beginner’s Guide.