Venture Capital 101

Venture capital firms raise capital from investors and use these funds to invest in young, high-growth companies, typically in industries like technology and healthcare. These firms provide the necessary capital to start-ups and small businesses that are believed to have long term growth potential but are too new or risky for more traditional forms of investment. In exchange for their investment, venture capital firms usually receive equity in the company. This allows them to significantly benefit if the start-up becomes successful and increases in value. Additionally, venture capitalists often provide strategic guidance and mentorship to the businesses they invest in. The goal of a venture capital firm is to exit their investments after a few years (once the start-up has grown substantially) via a sale or IPO, generating a significant return.

States with the most Venture Capital Firms

- CA - NY - MA - TX - FL - IL - CO - WA - CT - PA - VA - TN - DC - UT - OH - GA - MD - MI - MO -

Largest Venture Capital Firms in the United States

Top 100 VC Firms

Rank	VC Firm	Location	AUM ($ Billions)
1	Sequoia Capital Operations	Menlo Park, CA	$56.3B
2	Andreessen Horowitz	Menlo Park, CA	$56B
3	General Catalyst	Cambridge, MA	$28.9B
4	Encap Investments	Houston, TX	$28.1B
5	Lightspeed Venture Partners	Menlo Park, CA	$26B
6	New Enterprise Associates	Menlo Park, CA	$25.9B
7	Accel Management	Palo Alto, CA	$24.4B
8	Cobalt Investment Management	Santa Monica, CA	$23.9B
9	Founders Fund	San Francisco, CA	$22.3B
10	Index Ventures SA	Geneva,	$21.1B
11	Bessemer Venture Partners	Larchmont, NY	$18.3B
12	Thrive Capital	New York, NY	$15.6B
13	Impresa Management	Boston, MA	$14.9B
14	Khosla Ventures	Menlo Park, CA	$13.6B
15	Angellist Advisors	San Francisco, CA	$13.3B
16	Flagship Pioneering	Cambridge, MA	$13.2B
17	Banyan Capital Partners	George Town, Grand Cayman,	$13.2B
18	Spark Capital	Boston, MA	$12.8B
19	Ribbit Capital	Palo Alto, CA	$12.3B
20	Y Combinator	Mountain View, CA	$12.2B
21	RA Capital Management	Boston, MA	$11.2B
22	Sapphire Ventures	Austin, TX	$10.8B
23	Kleiner Perkins	Menlo Park, CA	$10.8B
24	Altimeter Capital Management	Boston, MA	$10.7B
25	Arch Venture Partners	Chicago, IL	$10.6B
26	IDG Capital Fund Management	Hong Kong,	$10.4B
27	Bain Capital Ventures	Boston, MA	$10B
28	Greenoaks Capital	Orinda, CA	$9.5B
29	Matrix Partners China Management	Singapore,	$9B
30	Greylock Partners	Burlington, MA	$8.5B
31	GGV Capital	Menlo Park, CA	$7.7B
32	Oak Hcft Management	Stamford, CT	$7.7B
33	FTV Capital	San Francisco, CA	$7.7B
34	Eight Partners VC	Austin, TX	$7.7B
35	Accel Partners Management	London,	$7B
36	Accel London Management Limited	St Peter Port,	$7B
37	Balderton Capital	London,	$6.9B
38	LUX Capital Management	New York, NY	$6.7B
39	Altos Ventures Management	Burlingame, CA	$6.6B
40	Bond	San Francisco, CA	$6.4B
41	Addition	New York, NY	$6.3B
42	Redpoint Ventures	Woodside, CA	$6.3B
43	B Capital Group	Manhattan Beach, CA	$6.3B
44	CRV	Palo Alto, CA	$6.2B
45	Columbia Capital	Alexandria, VA	$6B
46	Kaszek Management S.A.	Montevideo,	$5.6B
47	Craft Ventures Management	San Francisco, CA	$5.5B
48	Canaan Partners	Stamford, CT	$5.5B
49	Matrix Partners	Cambridge, MA	$5.4B
50	Indigo Partners	Phoenix, AZ	$5.1B
51	Eclipse Ventures	Palo Alto, CA	$5.1B
52	Hedosophia Advisor Limited	St. Peter Port,	$5.1B
53	DFJ Growth	Menlo Park, CA	$5.1B
54	VR Management	Palo Alto, CA	$5.1B
55	Qiming Venture Partners	Hong Kong,	$4.9B
56	Zeev Ventures	Palo Alto, CA	$4.9B
57	Felicis Ventures	Menlo Park, CA	$4.8B
58	Menlo Ventures	Menlo Park, CA	$4.8B
59	Benchmark Capital	Woodside, CA	$4.8B
60	Greycroft	New York, NY	$4.5B
61	Momentum Capital Partners Alpha Advisor Limited	Beijing,	$4.5B
62	Polaris Growth Management	Boston, MA	$4.5B
63	K5 Global Advisor	,	$4.4B
64	Firstmark Capital	New York, NY	$4.4B
65	Atreides Management	Boston, MA	$4.4B
66	Madrona Venture Group	Seattle, WA	$4.3B
67	Fifth Wall Asset Management	Santa Monica, CA	$4.3B
68	Valar Ventures	New York, NY	$4.3B
69	Momentum Capital Partners Fund IV Advisor Limited	Beijing,	$4.3B
70	Elevation Capital Partners	Salt Lake City, UT	$4.2B
71	Column Group	San Francisco, CA	$4.2B
72	QED Investors	Alexandria, VA	$4.2B
73	Eight Roads GP	Pembroke, Hamilton,	$4.2B
74	Nexus Ventures Advisors Private Limited	Port Louis, Port Louis,	$4.2B
75	Foundation Capital	Palo Alto, CA	$4.1B
76	5Y Capital Management Limited	Hong Kong,	$4.1B
77	Meritech Capital	Palo Alto, CA	$4.1B
78	Versant Venture Management	San Francisco, CA	$4.1B
79	Golden Sand River Digital	Grand Cayman,	$4.1B
80	Qiming Global Management	Hong Kong,	$3.9B
81	Goodwater Capital	Burlingame, CA	$3.9B
82	Mayfield Fund L.L.C. A Delaware Limited Liability	Menlo Park, CA	$3.9B
83	BRV Lotus Holdings Limited	Hong Kong,	$3.9B
84	Breakthrough Energy Ventures	Boston, MA	$3.8B
85	Next Legacy Management	Palo Alto, CA	$3.8B
86	Union Square Ventures	New York, NY	$3.7B
87	IDG Vc Management	Hong Kong,	$3.6B
88	HV Capital Manager GMBH	Munich, Bavaria,	$3.5B
89	Highland Europe Geneva S.A.R.L.	Geneva,	$3.5B
90	Foresite Capital	Larkspur, CA	$3.5B
91	True Ventures	Palo Alto, CA	$3.4B
92	Foundry Group	Boulder, CO	$3.4B
93	Signalfire	San Francisco, CA	$3.3B
94	MPM Bioimpact	Boston, MA	$3.3B
95	83north 2017	Tel Aviv,	$3.3B
96	Emergence Equity Management	San Francisco, CA	$3.2B
97	DCM	Menlo Park, CA	$3.2B
98	Forerunner Ventures Management	San Francisco, CA	$3.2B
99	Georgian Partners Growth	Toronto, Ontario,	$3.1B
100	h Investment Management	Beijing,	$3B

Source: SEC Filings, Apr 2024
Top 101-200 VC Firms

Limited partners evaluate venture capital firms using various criteria:

1. Track Record: Limited partners examine the firm's past performance, the returns it has generated, and the success of its investment and exit strategies.

2. Team Experience and Expertise: The experience, skills, connections, and reputation of the firm's team are significant. Limited partners look at the team's track record in entrepreneurship, venture capital, and particular industries.

3. Investment Strategy: They scrutinize the firm's investment focus (stage, sector, geography), investment model, deal sourcing strategy, and how the firm creates value in its portfolio companies.

4. Market Reputation: The venture capital firm's reputation among entrepreneurs, co-investors, and others in the venture community can be crucial.

5. Portfolio: Limited partners evaluate the quality of the firm's portfolio, looking at its diversity, health of the companies, their growth potential, and how much the portfolio is concentrated in high-performing companies.

6. Deal Flow: The quality and quantity of deals the VC firm gets access to can indicate the potential of future investments.

7. Governance and Transparency: Limited partners prefer firms with strong corporate governance, clear communication, and transparency in the deal-making and fund management process.

8. Alignment of Interests: Limited partners look for VC firms where the general partners commit a significant amount of personal capital (skin in the game), aligning interests between the limited and general partners.

9. Risk Management: Limited partners assess how the firm manages risk, its approach to portfolio diversification, follow-on investment strategy, and capacity to support companies in difficult times.

10. Fees and Terms: They review the fee structure, carried interest, terms of the fund, and other economic considerations.

These areas together form a comprehensive picture of the potential merits of investing in a particular venture capital firm.

Venture capital firms evaluate potential investments through several stages:

1. Deal Sourcing: Venture capital firms firstly need to identify exciting start-ups or early-stage businesses which align with their investment strategy.

2. Initial Review: Once a potential investment is identified, an initial review is conducted. During this phase, the firm will evaluate the business's concept, the problem it’s solving, size of the market, product-market fit, and the competition.

3. Due Diligence: If the firm decides to progress, it conducts detailed due diligence. This includes evaluating the business's financials, technology, legal status, market and product potential, and more.

4. Team Evaluation: This is a critical aspect for evaluating potential investments. The management team's experience, skills, passion, and vision can be significant factors in the firm's decision-making process.

5. Valuation: VC firms assess the company's value to determine how much equity they will receive for their investment. This process often involves complex financial models and negotiations.

6. Term Sheet and Deal Structuring: Once the valuation is agreed upon, the VC firm presents a term sheet detailing the terms and conditions of the investment. This document outlines the investment amount, equity percentage, voting rights, and exit strategy, among other details.

7. Investment: After negotiations are complete and both parties agree to the terms, the VC firm will go ahead with the investment.

8. Post-Investment Management: After investment, many VC firms take an active role in the company's decision-making process. They may aid in strategic guidance, mentoring, providing industry connections, and preparing for subsequent funding rounds or the exit strategy.

Successful venture capital investing requires a detailed and thorough evaluation process given the high-risk, high-reward nature of investing early in companies with unproven business models.

Venture capital firms evaluate job applicants based on several factors, including:

1. Educational Background: A strong academic background, particularly in fields related to business, finance, economics, or the industry of focus, can be advantageous.

2. Relevant Experience: Experience in investment banking, private equity, strategy consulting, or operational roles within startups / tech companies is highly valued. Prior VC experience, or experience in entrepreneurial roles (founders or early employees), can also be a strong plus.

3. Network: Connections within the industry can be very beneficial in a venture capital role, as well-networked candidates will often have a head-start in sourcing deals.

4. Industry Knowledge: Deep understanding of the industries the VC firm focuses on is key. Firms want to hire people who understand the trends, risks, opportunities, and key players in their target markets.

5. Analytical Skills: Strong analytical skills are important for assessing potential investments. Applicants will often need to show they have the ability to evaluate business models, assess market trends, and understand financials.

6. Interpersonal Skills: Venture capital work involves nurturing relationships with entrepreneurs and co-investors, so strong communication and relationship-building skills are essential.

7. Entrepreneurial Mindset: Having an entrepreneurial mindset is advantageous in the VC world given the nature of startups and the risk involved in these investments.

8. Drive and Resilience: The ability to stay motivated, remain persistent, and bounce back from setbacks is critical in the competitive, high-pressure VC industry.

9. Evaluating Cultural Fit: Venture capital firms often have unique cultures, and they usually seek candidates who are likely to thrive in their particular environment.

An interview process at a venture capital firm would usually involve a mix of behavioral interviews, case studies involving investment evaluation, and potentially a pitch of a potential investment.