What is a Venture Partner?

One of my students just asked me what a “Venture Partner” is in the context of a venture capital firm.  I quickly typed in “venture partner” into the Wikipedia query box.  No results.  Kind of surprised me.  So, then I typed “venture partner definition” into the Google search box.  Lousy results.  So, I had to wing it.

Here is my take to this not so uncommon question.

First, to make sure we are on the same playing field……many VC firms have hierarchies (particularly the large ones).  Examples:

1.  Managing Partner/General Partner (I have seen some with Managing Directors too like an investment bank):  top dogs that run the shop and own most of the carried interest.

2.  Principals:  next in line to the top.  Typically folks that have been at the firm for a good chunk of years and are learning all about the business (fund raising, investing, managing investments, managing investors, harvesting).

3.  Vice Presidents:  below Principals.

4.  Associates (sometime there are senior associates too):  below the VPs; the new folks on the block, typically young in age.

5.  Other staff like a controller or CFO; marketing coordinator; investor relations manager; and general counsel.  Again, all these roles are dependent on the size of the firm and amount of capital under management.

Critically, it is completely common for someone to be hired in as a principal or managing partner depending on the experience level.

Also, critically, some firms only have the tops dogs and a few principals.  There is no one right way to cut the biscuit when it comes to VC titles.

Then there are the ambiguous titles of Executive in Residence and Entrepreneur in Residence.  These typically are people paid by the VC firm to spend time at the firm and perhaps create a company while being incubated by the VC or be available to join a new portfolio company that the VC invests in.  These roles typically do not have any carried interest.

So, now to Venture Partner (I have also seen Venture Advisers).  It has lots of flexibility and ambiguity.  It might be a former General Partner who wants to step back from the day to day running of the firm and thereby avoid doing things that are not particularly pleasant  all the time (like fund raising or sitting on way too many boards or managing limited partners).  It might be a real tech wizard that the VC firm wants to keep around to help vet deals and companies.  It might be a real ops wizard that can parachute in and fix things.   So, it is a nice catch-all category.  It carries cache.  And it often carries carried interest too (though a lower share).

Hope that answers some questions!

 

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