They make money on 1 out of 10 companies they invest in. If a company they invested in goes bust they make the money somewhere else. EDIT: Sorry for this lame

They make money on 1 out of 10 companies they invest in. If a company they invested in goes bust they make the money somewhere else. EDIT: Sorry for this lame answer, I wasn't reading the question right. The real answer is that the people working with VC are managing someone else's money (the limited partners' money). They themselves get a salary which is a percentage of the amount of money the manage, only sometimes with a bonus correlating to how well they are doing their job.