Venture Capital
Learn what venture capital is, how funds invest in startups, what the work involves, and how students can prepare for internships and analyst roles.
Introduction
What is venture capital?
Venture capital is a form of investing in young, fast-growing companies that need money to grow. In return for that capital, the fund receives a share of the company. Because building a company is expensive, many venture-backed startups run at a loss for years before they turn a profit, so investors take real risk in the hope of a large return later.
The stage at which a fund invests changes what due diligence looks like. At seed, there is often no meaningful revenue yet, so investors are really underwriting the team and the size of the opportunity. By Series B and later, a startup usually has real customers and revenue, so the questions shift toward unit economics, retention and whether growth can scale without burning through cash.
What they do
What venture capital firms do
Funding stages
The stages of venture capital
What sets it apart
What makes venture capital different
Venture capital is a long game with high risk and high reward. Investments are illiquid: money can be tied up for around ten years, and there is no quick way to sell a stake in a private startup. Many companies in a portfolio fail, so the few that succeed have to pay for the rest.
Because these companies are private, their value is hard to pin down, and investors often work with limited information about a brand new market. Venture funds usually take a minority stake rather than full control, and spread their money across many companies so that one big winner can make the whole fund a success.
In the Netherlands and the rest of Europe, funds are usually smaller than the large American ones, but the ecosystem, especially around Amsterdam, has grown strongly. Most Dutch venture capital goes into early and growth-stage companies in technology, health and sustainability.
Valuing an early-stage company is not the same exercise as valuing a listed business. There is no earnings history to build a discounted cash flow model on, so investors and founders typically negotiate a valuation based on comparable recent rounds, the size of the market and how much dilution the founders are willing to accept. Each new round issues new shares, so every investor's ownership percentage shrinks unless they use their right to invest again, known as a pro rata right, to keep their stake roughly stable.
Types
Types of venture capital firms
These categories are not just about check size. A pre-seed or seed investor typically aims to own a meaningful stake, and will use pro rata rights to defend that ownership as the company raises more money. A growth-stage fund is optimizing for a different thing: it wants evidence the business model already works, and is often willing to pay a higher price for a lower-risk bet. Generalist funds cover many sectors and rely on a broad network for deal flow, while sector specialists build deep expertise in one field, which can mean faster, more informed decisions but a narrower set of companies they will consider.
Roles
Venture capital roles
Analyst
Sources deals, maps markets and prepares research.
Associate
Filters startups and prepares them for the partners.
Senior Associate
Runs parts of deals and owns relationships with founders.
Principal
Leads deals but does not make the final call alone.
Partner
Makes investment decisions and shapes the fund.
Platform / Operating
Helps portfolio companies with hiring, growth and network.
Career timeline
How long each step takes
Venture capital has no single fixed ladder, and many people enter later from a startup, consulting or banking. As a rough guide, though, the path tends to look like this, and progress often depends on the fund raising a new fund.
Analysts and associates spend their first years sourcing and screening. From senior associate and principal onward, you start to own deals and relationships, and carried interest begins to matter. Reaching partner, where you make the investment decisions, usually takes many years and a strong track record.
Unlike investment banking, venture capital rarely runs on a strict up-or-out timeline. Teams are small, funds usually raise a new vehicle every few years, and a firm's headcount grows only if it grows its assets under management, so movement between levels depends as much on the fund's own fundraising success as on individual performance.
| Level | Typical time in the role |
|---|---|
| Analyst | around 2 years |
| Associate | 2 to 3 years |
| Senior Associate | 2 to 4 years |
| Principal | several years |
| Partner | top level, 10+ years total |
The business
How venture capital funds make money
A venture capital firm raises a fund from investors called limited partners, such as pension funds, insurers, university endowments and wealthy individuals. These investors are passive: they put in the money, while the firm, the general partner, chooses the investments and works with the companies.
Like private equity, most funds use a two and twenty model. The firm charges an annual management fee of up to about two percent of the capital, and keeps roughly twenty percent of the profit, the carried interest, once investors have been paid back. The other eighty percent of the profit goes to the limited partners.
The real money is made at the exit. When a portfolio company is acquired by another firm or goes public through an IPO, the fund sells its stake, ideally for far more than it paid. A single big success can return the whole fund.
A fund also has a lifecycle of its own. In the first few years it is mostly making new investments, and later it shifts to supporting existing portfolio companies and eventually returning capital. Funds usually hold back part of their committed capital as reserves for follow-on rounds in their strongest companies, rather than spreading every dollar at the first check, since staying involved in a winner is often more valuable than backing one more unproven company.
Compensation
Venture capital compensation
Venture capital pays well, though at junior levels the base salary is often a little below investment banking or private equity. What changes the picture is carried interest: a share of the fund's profit that becomes the biggest part of pay for senior investors and, at a successful fund, can be worth a great deal.
At the junior end, pay is mostly cash: a base salary plus a bonus. Carry usually starts to matter from senior associate or principal level. The figures below are a rough guide for larger firms in the United States, where pay is highest. In Europe, including the Netherlands, it is typically lower. Treat them as an illustration, not a promise.
| Level | Total cash compensation |
|---|---|
| Analyst | $85,000 to $150,000 |
| Associate | $130,000 to $250,000 |
| Principal | $250,000 to $500,000 |
| Partner | $400,000 and up |
Figures are illustrative, in US dollars, for larger US firms. Carried interest is not included and becomes a major part of pay from senior levels upward.
Because most of the potential upside sits in carried interest that only pays out years later, and because early-stage bets fail more often than they succeed, venture compensation is more back-loaded and less certain than in fields such as banking, where bonuses are cash and paid annually. Someone comparing offers should weigh the base salary and near-term cash on its own merits rather than assuming carry will ever be worth anything.
Carried interest
Carried interest, the real upside
Carried interest is the share of a fund's profit that goes to the investment team, usually around twenty percent. In venture capital it is especially important, because a single company that becomes very large can generate most of a fund's returns, and the team shares in that.
Carry is earned slowly and paid out years later, only after the fund has returned investors their money. Because venture funds run for around ten years, it can take a long time before carry turns into cash, but for partners at a strong fund it can be worth many times their salary.
Carry is usually only paid after investors have received their capital back plus a minimum return, called a hurdle rate, and the exact split can vary between funds. In a fund's early years, none of this shows up as cash: it exists only as a claim on future proceeds that depends entirely on how the portfolio eventually performs.
Exits
How venture capital firms exit
A fund only makes its return when it sells its stake, which is called an exit. The most talked-about route is an IPO, where the company lists on a stock exchange and the fund can sell its shares, usually after a lock-up period. More common is an acquisition, where a larger company buys the startup for its growth, technology or team.
A fund can also sell its stake earlier to another investor on the private secondary market, before the company goes public. When and how to exit is a big decision, because timing has a large effect on the final return.
Because a small number of investments generate most of a fund's return, a pattern known as the power law, most exits are modest and some companies fail outright, returning little or nothing. Not every outcome is a clean sale or IPO either: a struggling company sometimes raises a later round at a lower valuation than before, called a down round, which dilutes earlier investors and can wipe out much of their paper gain even before any exit happens.
Juniors
What analysts and associates do
Junior investors do much of the sourcing and research that a fund runs on.
- Sourcing startups
- Market mapping
- Building target lists
- First founder calls
- Writing investment memos
- Light financial analysis
- Supporting due diligence
- Portfolio support
Skills
Skills you need
Financial modeling matters less here than in banking or private equity, since there are far fewer historical financials to model. What tends to separate strong junior investors is pattern recognition built from seeing many pitches, and the discipline to say no to most of them, since a fund typically only has capacity to back a small fraction of the companies it reviews.
Routes
Best routes into venture capital
Compare
Venture capital versus other paths
Venture capital vs private equity
Venture capital backs young, risky startups with minority stakes. Private equity buys mature, profitable companies, often in full and with debt. That debt, used in a leveraged buyout, is repaid using the target company's own cash flow, which only works if the business generates stable, predictable earnings, something an early-stage startup rarely has. Private equity funds also typically take board control and can replace management, while venture investors usually hold one board seat alongside the founders who stay in charge.
Venture capital vs growth equity
Growth equity invests in companies that already grow and earn money, with less risk. Venture capital comes in earlier, when much is still unproven. Growth investors typically buy a minority stake without board control and rarely use debt, closer in structure to venture capital than to a buyout, but the underwriting question is different: instead of betting on whether a market and product will work at all, they are betting on whether a working business can keep growing at a similar pace.
Venture capital vs angel investing
Angels invest their own money in very early companies. Venture funds invest other people's money, in larger amounts and with a formal process.
Venture capital vs corporate VC
Corporate venture funds invest on behalf of a large company, often for strategic reasons. Independent funds invest purely for financial return.
Venture capital vs investment banking
Banking advises companies on deals and raising money. Venture capital invests its own fund and works with founders over many years.
Employers
Venture capital firms in the Netherlands
A selection of well-known venture capital firms active in the Netherlands, grouped by focus. We only list firms we have verified, and we add more over time.
Growth and later-stage funds
Early-stage funds
Sector specialists
Impact and climate funds
Corporate venture capital
Accelerators and micro funds
Vacancies
Venture capital vacancies
We only show real, current openings with a link to the employer. Internships, working student roles and analyst roles will appear here. In the meantime, browse all current vacancies.
View all vacanciesPreparation
How to prepare as a student
Resources
Recommended resources
FAQ
Frequently asked questions
What is venture capital?
Venture capital is investing in young, high-growth companies in exchange for a minority stake. The fund hopes the company grows a lot and is later sold or listed for a large return.
How do venture capital firms make money?
Through a management fee of around two percent and roughly twenty percent of the profit, the carried interest, when investments are sold. Most of the return comes from a few big successes.
How is venture capital different from private equity?
Venture capital backs young, risky startups and takes a minority stake. Private equity buys mature, profitable companies, often in full and using debt.
Can students get into venture capital?
Yes, though roles are few. Analyst positions, internships and scout programs exist, especially at smaller funds. Startup or product experience helps a lot.
Do you need a startup background?
Not strictly, but it is highly valued. Consulting, banking, product and growth roles are other common routes into venture capital.
What is a Series A?
A Series A is an early funding round, after pre-seed and seed, that helps a startup set up real operations, a product and first sales.
What skills matter most in venture capital?
Judging teams and markets, networking, clear communication and writing, and enough financial analysis to read a startup's numbers.
Which internships help most?
Internships at a venture fund, a startup, or in consulting, growth or product give the most relevant experience.
Related
Related finance paths
Start your venture capital journey
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