Venture capitalist

Venture capitalists invest in young or small startup companies by providing private funding. They research potential markets and particular product opportunities to help business owners develop or expand a business. They provide business advice, technical expertise, and network contacts based on their experience and activities. They do not assume executive managerial positions within the company, but have a say in its strategic direction.

The following job titles also refer to venture capitalist:

seed capital investors
financiers
angel investors
investors
seed capital investor
financier
angel investor
investor

Bachelor’s degree is generally required to work as venture capitalist. However, this requirement may differ in some countries.

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

• the nature of the work performed in an occupation in relation to the characteristic tasks and duties
• the level of formal education required for competent performance of the tasks and duties involved and
• the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Venture capitalist is a Skill level 4 occupation.

These occupations, although different, require a lot of knowledge and skills similar to venture capitalist.

corporate investment banker
mergers and acquisitions analyst
investment analyst
insurance rating analyst
dividend analyst

These occupations require some skills and knowledge of venture capitalist. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of venture capitalist with a significant experience and/or extensive training.

This knowledge should be acquired through learning to fulfill the role of venture capitalist.

Funding methods: The financial possibilities for funding projects such as the traditional ones, namely loans, venture capital, public or private grants up to alternative methods such as crowdfunding.
Business valuation techniques: The processes to valuate the worth of the assets of the company and the value of the business following techniques such as asset-based approach, business comparison, and past earnings.
Business analysis: The research field which addresses the identification of business needs and problems and the determination of the solutions that would mitigate or prevent the smooth functioning of a business. Business analysis comprises IT solutions, market challenges, policy development and strategic matters.
Investment analysis: The methods and tools for analysis of an investment compared to its potential return. Identification and calculation of profitability ratio and financial indicators in relation to associated risks to guide decision on investment.

These skills are necessary for the role of venture capitalist.

Perform business analysis: Evaluate the condition of a business on its own and in relation to the competitive business domain, performing research, placing data in context of the business’ needs and determining areas of opportunity.
Create a financial plan: Develop a financial plan according to financial and client regulations, including an investor profile, financial advice, and negotiation and transaction plans.
Analyse business plans: Analyse the formal statements from businesses which outline their business goals and the strategies they set in place to meet them, in order to assess the feasibility of the plan and verify the business’ ability to meet external requirements such as the repayment of a loan or return of investments.
Analyse financial performance of a company: Based on accounts, records, financial statements and external information of the market, analyse the performance of the company in financial matters in order to identify improvement actions that could increase profit.
Decide on providing funds: Take into account the potential risks involved in providing an organisation or project with funding, and which benefits this may deliver the funder, in order to decide on whether to provide the necessary funds or not.
Apply technical communication skills: Explain technical details to non-technical customers, stakeholders, or any other interested parties in a clear and concise manner.
Build business relationships: Establish a positive, long-term relationship between organisations and interested third parties such as suppliers, distributors, shareholders and other stakeholders in order to inform them of the organisation and its objectives.
Assess financial viability: Revise and analyse financial information and requirements of projects such as their budget appraisal, expected turnover, and risk assessment for determining the benefits and costs of the project. Assess if the agreement or project will redeem its investment, and whether the potential profit is worth the financial risk.
Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
Make strategic business decisions: Analyse business information and consult directors for decision making purposes in a varied array of aspects affecting the prospect, productivity and sustainable operation of a company. Consider the options and alternatives to a challenge and make sound rational decisions based on analysis and experience.

This knowledge is sometimes, but not always, required for the role of venture capitalist. However, mastering this knowledge allows you to have more opportunities for career development.

Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
Debt systems: The processes needed to obtain goods or services before payment and when a sum of money is owed or overdue.
Modern portfolio theory: The theory of finance that attempts to either maximise the profit of an investment equivalent to the risk taken or to reduce the risk for the expected profit of an investment by judiciously choosing the right combination of financial products.
Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.
Holding company activities: The principles, legal actions and strategies of a holding company such as influencing the management of a firm through the acquirement of outstanding stock and other means, more specifically by influencing or electing the board of directors of a company.
Credit control processes: The various techniques and procedures applied to ensure that credit is given to the suitable customers and that they pay on time.
 

These skills and competences are sometimes, but not always, required for the role of venture capitalist. However, mastering these skills and competences allows you to have more opportunities for career development.

Apply credit risk policy: Implement company policies and procedures in the credit risk management process. Permanently keep company’s credit risk at a manageable level and take measures to avoid credit failure.
Make investment decisions: Determine whether to buy or sell financial products such as fonds, bonds or stocks in order to enhance profitability and to reach the best performance.
Analyse loans: Examine and analyse the loans provided to organisations and individuals through different forms of credit such as overdraft protection, export packing credit, term loan, and purchase of commercial bills.
Maintain client debt records: preserve a list with the debt records of clients and update it regularly
Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
Liaise with financiers: Liaise with people willing to finance the project. Negotiate deals and contracts.
Develop investment portfolio: Create an investment portfolio for a customer that includes an insurance policy or multiple policies to cover specific risks, such as financial risks, assistance, reinsurance, industrial risks or natural and technical disasters.
Review investment portfolios: Meet with clients to review or update an investment portfolio and provide financial advice on investments.
Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations, provided by credit rating agencies in order to determine the likelihood of default by the debtor.
Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals and needs of clients or companies.
Manage contracts: Negotiate the terms, conditions, costs and other specifications of a contract while making sure they comply with legal requirements and are legally enforceable. Oversee the execution of the contract, agree on and document any changes.
Perform debt investigation: Use research techniques and tracing strategies to identify overdue payment arrangements and address them
Establish investment funds: Set up a mutual fund in order to aggregate the funds of a larger number of investors and benefit from the advantages of working as part of a group.
Budget for financial needs: Observe the status and availability of funds for the smooth running of projects or operations in order to foresee and estimate the quantity of future financial resources.

2412 – Financial and investment advisers

 

 

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References

1. Venture capitalist – ESCO