Hey Monkeys,
A friend recently told me about a part-time role he had at a local VC firm - the market cap of the portfolio companies is upwards of $1,2B. He told me that in his role, his job was to raise capital from investors for the firm, and he earned commission (I don't know what %). It is important to note that said friend was a junior in college at this time.
He said that throughout his one year of working part-time at said firm, he earned ~$40K and paid his college tuition by himself. I find it incredibly hard to believe, because I don't think a VC firm would give fund raising responsibilities to a student. I also can't imagine a firm that would give a % of the raised capital as commission back to the fund raiser.
Is this normal at all?
He's probably bullshitting you about the amount.
But yes.....some VC firms do that. Compensation is typically pure commission at a rate of under 5%. If he was able to raise a couple hundred grand (easily doable to finding the right high net worth client or two) then I could see it. What you're talking about is also more common at small shops that don't have a structured process. You know how you get jobs there? By knowing the people who run them and those people will often let kids they like have some responsibility. The sales part takes 2-3 weeks of training but isn't hard after that. You could do it without a degree let alone as a junior.
It's very possible, just not that probable.
What I'm surprised is that I don't understand why a VC firm would put a student in charge of fundraising. It was my understanding that the most senior Managing Partners would probably be the ones to do it, because their ethos stands for themselves. If I was an institutional investor and a college student cold called me, I probably would laugh and hang up the phone on them...
They don't put the student "in charge of" fundraising. A lot of these small VC shops are almost boiler rooms where most of the work is cold calling.
And these guys aren't calling institutional investors.
This is bullshit. Paying commissions to a random college student to raise money is not only stupid, it's possibly a breach of fiduciary duty. Professional placement agencies (which specialize in placing money into a variety of funds) will generally take around 1% of funds raised, and they're able to raise 8- to 10-figure amounts. Even if this fund paid 1% to your friend (which it should never do), then that means your friend succeeded in raising $4 million working part time.
I highly doubt any HNWI, FoF, or any other type of asset manager/endowment would listen to a college kid.
the 40k number is bullshit, but what do professional placement agencies have to do with it? We're talking about boiler room companies that invest in penny stocks.
Remember that scene from Wolf where he sells some penny stocks to a guy on the phone? That's the kind of company we're talking about.
OP mentioned the work was done for a VC firm, not a penny stock broker. There's a big difference between the two when it comes to sales/raising capital.
Don't know about the college student thing BC have to be licensed but my buddy is a biz dev/capital raiser guy in VC world and he does this all the time for funds who you'd cream your pants if you so much as got an email from a partner. He wouldn't even bother w a deal netting him 40k on cash & carry payout.
Not everything is what it seems and there are markets for this type of work. VC is all about who you know so if you have a network, you can make cash and have stakes in some top startups.
So you're saying your friend raises money for VC firms and gets stakes in startups?
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