November 24, 2013

BUSINESS NEWS: Venture Capital a Rewarding Industry, Alumnus Says

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Correction appended

Venture capitalists who have taken chances on budding startups have helped launch today’s most prominent companies, including Google, Apple Inc. and Microsoft. Despite such success stories, many people do not quite understand how the venture capital industry operates or why it exists, according to Andrew Schoen ’12, a former analyst at Blackstone’s Structured Mergers & Acquisitions group.

Schoen, who is an incoming associate at New Enterprise Associates, one of the largest venture capital firms in the world, said venture capitalists help nascent companies get off the ground by providing them capital, guidance and connections. Those who are interested in the high-risk, high-return game of venture capital believe that their money will pay off, giving them higher returns than they would have earned with typical investments, Schoen added.

“Debt investors, such as banks, are typically unwilling to lend to startups. That type of risk is not in their standard profile, and they don’t have the technical expertise or market knowledge necessary to properly manage that type of portfolio,” he said.

The various stages through which venture capital investors progress. (Manu Rathore / Sun Senior Editor)