Venture capital 101

Want to hear about VC from a student perspective? Learn more here.

What is venture capital?

Venture capital is a form of investment provided to early-stage startups and high-growth companies with strong potential for success. Venture capitalists (VCs) invest money in exchange for equity, often taking an active role in guiding the company’s strategy to achieve growth and profitability.

The goal of VCs is to invest in billion-dollar companies like Meta (previously Facebook), Airbnb, Coinbase, and more. If the company does well, VCs can make a lot more money than they originally invested. That money is then returned to the people who gave the VCs money to invest in the first place, called Limited Partners (LPs).

What types of VCs are there?

  1. Venture Capital Firms

    • Professional firms that manage funds from limited partners (LPs) and invest in startups.

      • Examples: Sequoia Capital, Andreessen Horowitz, Bessemer Venture Partners.

  2. Corporate Venture Capital

    • Investments by large corporations to gain strategic insights or partnerships.

      • Examples: Google Ventures, Intel Capital, DataDog (invested in many AI / LLM observability startups).

  3. Angel Investors

    • High-net-worth individuals who invest personal capital in startups.

    • Often are strategic advisors for startups

    • Examples: Guillermo Rauch, Naval Ravikant, Peter Thiel, etc.

How Does the investment Process Work?

  1. Sourcing:

    • Startups present their idea, traction, and vision to VCs.

  2. Due Diligence:

    • VCs assess the business model, market, team, and financials.

  3. Term Sheet:

    • VCs propose investment terms, including valuation and equity percentage.

  4. Investment:

    • Funds are disbursed, and the startup can agree to providing a board seat to a VC (not many board seats exist so not all investors get board seats)

  5. Exit Strategy:

    • VCs aim to realize returns through IPOs, acquisitions, or secondary sales.

What Are the Stages of Venture Funding?

Typically VC is split into two categories: early stage and growth. Early stage VC includes pre-seed to Series A while growth investing is Series B+.

  1. Pre-Seed:

    • Initial funding from friends, family, or angel investors.

    • Purpose: Develop the idea and build a prototype.

  2. Seed:

    • Early-stage funding to validate the product-market fit and scale initial operations.

  3. Series A:

    • Investment for scaling the business, building the team, and expanding the market.

  4. Series B and Beyond:

    • Larger rounds for further growth, market expansion, and global scaling.

  5. Exit:

    • Companies go public or are acquired, providing returns to investors.

What Are the Typical Responsibilities of a VC Analyst?

Entry-level VC analyst roles are junior positions in venture capital firms where individuals support investment teams in sourcing deals, evaluating startups, and conducting market research. Analysts typically gain exposure to the startup ecosystem and develop skills in sourcing, market analysis, and venture deal execution.

  1. Deal Sourcing:

    • Identify promising startups through networking, conferences, and platforms like LinkedIn, X, AngelList, PitchBook.

  2. Market Research:

    • Analyze industry trends, emerging technologies, and market dynamics.

  3. Startup Evaluation:

    • Assess business models, product-market fit, and competitive positioning.

    • Conduct financial analysis and due diligence.

    • Prepare investment memos on the startups in the pipeline

  4. Portfolio Support:

    • Assist portfolio companies with research, operational tasks, or strategic initiatives.

How to Prepare for VC Analyst Recruitment?

  1. Build Experiences that Add Value:

    • Highlight your internships or experiences in startups, engineering, investment banking, etc.

  2. Develop Venture Knowledge:

    • Follow industry blogs, podcasts, and newsletters (e.g., TechCrunch, StrictlyVC, Invest Like the Best, Acquired – check out our resource list).

    • Understand the mechanics of venture capital like what a SAFE is, the math behind venture outcomes, etc.

  3. Network Strategically:

    • Reach out to VCs so that you’re top of mind when internships or full time positions open

    • Build a network of founders that is unique to your interests (either by a sector, student founders, etc.)

  4. Prepare for Interviews:

    • Expect behavioral questions and market-sizing exercises.

    • Be ready to analyze a startup and create an investment thesis.

So I’m a UCLA student, how do I get involved in VC?

  1. Student venture funds / venture fellowships (non-exhaustive list)

  2. VC internships - these are hard to get and very few firms have formal processes

    • Formal processes (non-exhaustive)

      • Insight Partners (full time and summer analyst) - early stage and growth

      • General Atlantic (full time and summer analyst) - growth

      • Bessemer(full time and summer analyst) - early stage typically

      • Summit Partners - growth

      • Other firms hire interns sporadically which you can learn about on LinkedIn and X! (Sequoia had interns in 2024 summer which they announced in spring, Two Sigma Ventures announced 2025 interns in March for the 2025 summer, etc.)

    • Informal processes

      • Cold email firms that you are excited by and show your value

  3. Relevant clubs on campus:

  4. Attend UBS events related to VC and startups! Sign up for our newsletter to stay up to date!

Contributor: Angelina Lue