You can install VC and the license server inside a VM.
There's a paper from VMware about this (http://www.vmware.com/vmtn/resources/798)

Hello,

Even though you can run it from a VM you may wish to consider if you should. VC is not much of an issue from a VM but I think the License manager is more troublesome. I ran both from a VM and had quite a few issues that I moved the license server to a physical box. I even use a laptop as my ultimate backup.
I had so many issues that this works out. The main issue was keeping the license server and VC server running. Many times I came in and did not realize the license server was down and after 14 days of this VMs would not start. So had to restart the license server a few times until I built a physical box to host it, VC, and its db.

The license server is a catch 22, if it is not reachable you can not start a VM, yet if the license server resides on a VM it will not be reachable.

Best regards,
Edward

Hello,

My VC/License Manager is a physical machine. It also happens to be my HPSIM server. It is an older box with lots of memory that is not very useful as an ESX server but I can still eeak out some usage. I have a backup VM, just in case I loose the machine and a backup license manager in case I loose that. Just enough license on it to start the required VM.

My concern is that you need a license to even start the License Manager VM. An external source needs to be that license server in this rare case. Hence why I just use a laptop configured and waiting to go. No real power to the device but it works when this need arises.

Consider your setup with HA. Which I like, but if for some reason you did not know the target ESX server lost its license connection to the License manager and it is now 14 days later. YOur License manager/VC VM can not be started without that license. Granted, this I hope is a very rare occurrence, but when it occurred on my HA setup twice.... I moved things around.

Best regards,
Edward

To circumvent failures like this I have an additional host based license file "at hand" - though I never had to use it.

Hello,

Host only licenses are great that way. But having a laptop in the closet with licenses already installed gets me the same thing without needing to pay for more licenses. (I already had the laptop and it is way underpowered in today's world). I think either method works and depends on the costs, benefits, and what you have laying around in hardware that could fit the need. So far I have had to use it twice.

At a DR site, it would be a very inexpensive tool to have for bootstrapping an environment. Or even a VM running in vmplayer could fulfill the same need.

Just pointing out alternatives and what works for me.

Best regards,
Edward