What Is Venture Capital Law? And How to Become a Venture Capital Lawyer

Venture Capital Law involves the creation, implementation, and regulation of complex transactions and business deals made between startups and investors.

As such, understanding the complexities of Venture Capital Law first requires an understanding of its foundational component – which is Venture Capital.

When new startups seek funding to open, the money and resources that people and companies invest in these burgeoning businesses to support startup operations, maintenance, and growth are considered “Venture Capital”.

The set of rules and agreements that govern VC transactions between investors, shareholders, startups, and existing companies is called “Venture Capital Law.”

Key Stages of Venture Capital Law

#1. – Fund Formation

One of the most important roles of a Venture Capital Lawyer is setting up the legal structures for new investment funds.

This fund formation process requires VC lawyers to create legal documents that explain who can invest in the new fund, how the fund will work, and what the rules are for investing in the fund.

#2. – Deal Making

The deal-making phase is where clear rules for how ongoing business relationships will proceed between venture capitalists and startups are established.

Venture Capital Lawyers act as go-betweens for investors and startups as they iron out new terms for investment agreements.

In the deal-making stage, VC attorneys write and review the legal documents that show involved parties how much money is being invested in new funds, expected ROI, investor rights, and startup rights, and review potential investment risks.

#3. – Compliance

Following legal rules and regulations set forth by financial governing authorities like the Securities and Exchange Commission is another crucial phase of the investing process where Venture Capital Lawyers are needed.

Lawyers ensure compliance by all invested parties by filing required financial reports, updating investor agreements, and staying abreast of sudden changes in laws that can affect the formation of new funds or the completion of deals in progress.

#4. – Exit Strategies

Venture Capital Lawyers not only help form new funds but also act as liaisons between VC investors and startups.

They also help investors plan their exit strategies and how they will recoup their investment funds from startups in the final phase of the VC investment process.

Lawyers help to protect the financial interests of investors by drawing up legal documents for selling startup companies, merging with other companies, or taking companies public through an Initial Public Offering (IPO).

Venture Capital Teams

Venture Capital transactions are complex.

As such,  a team of Venture Capital Law experts works behind the scenes to ensure smooth transactions and to resolve issues that can occur at crucial points, which can make or break million-dollar (or even billion-dollar) deals.

Completing Venture Capital-related deals and transactions requires input and follow-up from a behind-the-scenes team of key players that includes the following:

• Compliance Officers and Risk Managers
• Corporate Development Teams
• Financial Portfolio Analysts
• Paralegals and Legal Assistants
• Startup Founders and Executive Support Teams
• Venture Banking Specialists
• Venture Capital Fund Managers and Administrators
• Venture Capitalist
• Venture Capital Lawyers

Each of the key players listed above carries out the necessary legal and regulatory compliance steps to ensure seamless transactions.

Now that you have a better understanding of what venture capital is, the foundations of venture capital transactions, and the roles that typically make up the backbone of venture capital teams, let’s look more closely at the role Venture Capital Lawyers play.

What Do Venture Capital Lawyers Do?

A day in the life of a Venture Capital Lawyer can include carrying out some of the following related job duties:

• Advising Venture Capital Firms and Startups on How to Structure New Deals
• Forming Legal Entities like LLCs or Limited Partnerships During Fund Formation
• Ensuring Legal Compliance with SEC Rules and Regulations
• Conducting Due Diligence on New Startups
• Negotiating Deal Terms Between Startups and Investors
• Protecting Intellectual Property Rights and Resolving Ownership Issues

How to Become a Venture Capital Lawyer

If having a hand in making million or billion-dollar deals as a behind-the-scenes legal advisor, consultant, and financial watchdog sounds like the ideal career for you, you may want to consider becoming a Venture Capital Lawyer.

Learn how Venture Capital Lawyers earn their stripes using the step-by-step guide below:

#1. Meet General Age and Education Requirements

Aspiring Venture Capital Attorneys must begin their careers by reaching age milestones and meeting foundational education requirements, which include holding a high school diploma or its equivalent.

These age and educational requirements need to be satisfied to complete the following steps.

#2. Earn a Bachelor’s Degree in a Related Field

Incoming VC Lawyers who meet basic general requirements can move on to the next step of finding and applying for Bachelor’s degree programs in related fields as they prepare to attend law school and complete the state Bar Exams in the following steps.

Prospective lawyers should consider earning a bachelor’s degree in criminal justice, business, finance, political science, or corporate law as they continue to lay the framework for becoming legal venture capital experts.

#3. Complete Law School

Bachelor’s degree holders are now ready to move on to the next step of researching top law schools and gaining law school acceptance in pursuit of a Juris Doctor (JD) degree.

The JD is the standard professional degree required for all legally practicing attorneys in the United States.

Earning a JD typically takes most enrollees about three years to earn.

3a. Specialize in Venture Capital Law – Optional Step

Although not typically required by most employment bodies, Venture Capital Lawyers seeking to make lifelong careers in the field and reach top salary endpoints can add to their existing Bachelor’s degree and JD credentials by earning a specialization or certification issued by top certifying authorities.

Career-focused VC attorneys should consider related credentials and continuing legal education programs administered by the following agencies and organizations.

National Venture Capital Law Credentialing and Certification Organizations:

• American Bar Association – Business Law CLE
• National Venture Capital Association – CLE
• Alliance of Mergers and Acquisitions Advisors Certified Mergers and Acquisitions Professional – Credential

#4. Get Venture Capital Law Experience

One of the most important steps to take on the road to becoming a Venture Capital Lawyer is gaining hands-on experience in the field.

Many incoming attorneys take advantage of entry-level work opportunities or immersive internships offered through Bachelor-level and JD-level programs to gain the experience required to work as practicing attorneys in their state upon passing the Bar Exam.

#5. Pass the Bar Exam

All US-based lawyers are required to pass a Bar Exam in their state.

The Bar Exam is a professional licensing test that allows them to provide legal advice, draft legal documents, and represent clients in court.

#6. Begin Working as a Venture Capital Lawyer

Successful candidates who have completed all of the required steps above and individual state and regional requirements are officially eligible to begin working as legal and licensed Venture Capital Lawyers in their states.

Most VC Lawyers typically work for large venture capital firms or law firms.

It is important for incoming VC Lawyers to note that there may be a higher concentration of employment opportunities in larger cities across the US like San Francisco, CA, Silicon Valley,  CA, New York City, Austin, TX, and Boston, MA.

Gaining employment through networking opportunities is highly recommended, as the field can be difficult to break into without guidance and support.

#7. Complete Continuing Legal Education Courses for Licensure

Licensed Venture Capital Attorneys are required to take mandatory Continuing Legal Education coursework that meets specific standards and requirements of their state to maintain their legal licenses.

Consider taking refresher courses and CLE courses for Venture Capital Lawyers through some of the following highly respected legal education sources.

• Lexus Nexis CLE
• Practicing Law Institute
• West Legal Education Center

Venture Capital Lawyer Salary

America’s Venture Capital Lawyers make high-paying salaries that can top over $250,000 a year for Senior Counselors.

Online salary reports from the Bureau of Labor Statistics and other reputable salary data providers show that entry-level Venture Capital Lawyers earn an average of between $68,000 and $180,000 per year.

Mid-level lawyers with around eight to ten years of experience typically fall within the annual salary range of $81,000 to $200,000 per year. 

Senior-level VC Lawyers can earn between $120,000 and over $250,000 per year.

These Venture Capital Lawyer salary averages represent the norms based on years of experience in the field, selected employer type, and industry specializations or certifications.

Should You Become a Venture Capital Lawyer?

Now that you know what the role of a Venture Capital Lawyer could look like, is this the career for you? Consider the following pros and cons when deciding whether to become a Venture Capital Attorney.

Pros

• Venture Capital Attorneys Make High Salaries Even at the Entry-Level
• Practicing Attorneys Have Access to Exciting Startups and Emerging Technologies
• Fast-Paced Work Environments Keep Practicing VC Lawyers Busy with Steady Work

Cons

• Working Long and Unstructured Hours Can Be a Regular Part of the Job
• The Responsibility for Brokering High-Pressure Deals Can Lead to Increased Stress
• Becoming a Venture Capital Lawyer and Breaking Into the Field is Not Easy without Strong Networking Support

About Michael Morales Michael is the Webmaster and Editor in Chief for Legalcareerpath.com. With a strong background in Web Publishing and Internet Marketing, he currently works as an independent consultant. A former paramedic and EMS educator, he enjoys punishing himself doing triathlons and endurance sports. Michael currently lives in sunny Northern California, home of the highest tax rates in the United States.