There are many roles and titles within a Venture Capital firm that encompass a large set of functions and duties. Though each venture firm structures itself in a slightly different way, new fund managers should familiarize themselves with these titles.
Some venture firms have a flattened / equal partnership model while others have some sort of hierarchy. The hierarchically structured firms and the roles within them can be more opaque.
Below is a complete list of all the investment side roles and their functions.
Before we dive into the specific partner titles we should note that Partner titles are at times interchangeable and their specific roles can differ from firm to firm. However, all partners have some sort of stake and investment in the fund and are the key decision-makers. The partners’ seniority in the firm can also dictate how much carry they get and their influence throughout the firm.
Partners also hold the most power internally in a venture firm and can sponsor / fast-track deals to the investment committee, where they have voting rights. Though LPs front most of the capital, they cannot qualify as policymakers, if they wish to keep their limited liability.
Partners sit on boards of the companies in the portfolio and most source their own deals as well as evaluate the deals coming down the investment funnel. Partners have legal liability and fiduciary responsibility for the actions of the firm.
Below are some of the partner titles you might see in a venture firm.
Managing Partners sit at the top of the firm hierarchy and usually are owners in the managing company; consequently, they control the venture firm.
They sit on the investment committee and vote on investment opportunities as well as take board seats in portfolio companies. They are the main point of contact with limited partners and make most of the strategical and executive decisions, such as mapping out the funds long term strategy.
In larger funds, the Managing Partner may have risen through the ranks of the firm or may also be a founding member of the firm. These partners can choose to take backseat roles and may have other endeavours.
In newer / smaller funds, Managing Partners are typically the partners who created the venture firm and closed the first fund and have a much more encompassing set of duties and are in charge of the operation of the fund.
This can mean any particular partner role. It can also mean that the firm has a flattened partnership and all partners have the same status and carry.
In hierarchical funds, you will typically find adjectives such as; junior, general and senior accompanying the term partner. These terms are a way of distinguishing seniority in the partnership. Seniority has an impact on the carry a partner gets, and the junior members get less carry if the partnership is not equally distributed.
Though Junior partners also commit capital into the fund, they may not always sit on the IC, depending on the fund. They can however sponsor deals to the committee.
Partners are in charge of the daily strategic activities within the firm or a specific fund and tend to focus on the portfolio management of the firm or the individual fund they manage. They offer operations, domain and administrative expertise both in the venture firm and the company boards they sit on.
They will both source their own deals and evaluate inbound deals brought in by Venture Partners and the rest of the fund. They can write checks and execute deals.
They’re senior members of the investment team who source deals and work with the entrepreneurs in the portfolio.
Though they are not on the investment committee, they have their own deals and at times may get a share of the carried interest from the deals they bring in, depending on the venture firm.
As partners in training, they work closely with the partners on deals and other important functions of the firm. Principals sometimes have other designations such as Investment Managers, VPs …etc
Most established funds have associates who conduct in-depth research into industries, market trends, companies and bring in deal flow. They’re less senior members of the investment team but they do a lot of the heavy lifting in the early stages of the investment process.
They own the early due diligence process and conduct many of the vital operations tasks in the firm. Though they cannot write checks they can champion a deal and run it up the chain of command via deal memos. Most firms hold Monday meetings, where investment opportunities from the previous week are reviewed by the partners and the week’s agenda is set.
You may see differentiators in seniority in their titles such as junior and senior.
These individuals occupy the most entry-level position in the fund. Typically they work under an Associate to help with screening inbound deal-flow and conduct early due diligence as well as to conduct research into potential investments.
Venture Partners are very different from the aforementioned partner titles. They’re strategic allies of the fund who help with things such as deal-flow, fundraising and operations, typically in exchange for a commission in the form of carried interest or in rare cases a salary. Their responsibilities and compensation are outlined in a Venture Partner Agreement.
Though they have an official title, they typically don’t reside within the firm and may not always be involved in its day companies.to day activities. For new fund managers, they can be a great asset as they are usually well networked and experienced in a particular domain.
Like other partners, they can also advise and sit on the board of directors for portfolio companies.
See below for more resources on venture capital firm titles and hierarchy.