Banking/Finance --> Startup/Biz Dev/Strategy

Just thought I would write a post on this potential move, one that is probably being considered more and more as wall street becomes a less stable place to work, but still is overshadowed by the typical PE/HF exit opportunities. Here are "popular" notions regarding startups that I have personally heard:

1) Do not pay well
2) Unstable
3) More suited for ex-consultants
4) Good thing to do "later on down the line", after established doing banking/pe/etc

Here are the realities, at least as I have found them over the past year or so:

1) Startups do not pay bonuses the way banks do, this is true; that said, salaries in biz dev at many established, VC-backed startups can easily be $70k-$80k+ (developers can def make more); also, there is an equity component to most compensation packages, that draws from an allocated option pool that the company issues, typically along with their first seed financing. The upside here can obviously be tremendous.

2) As www.leavewallstreetjoinastartup.com mentions, wall street is clearly not stable, compared to the startup world right now. Especially in working with a strong VC-backed startup, you do not have the fear of disappearing overnight from being over-levered. What you do have a fear of is not putting out the best product/service/etc out there; at a startup however, this is something you have a direct impact on at any level. As a junior analyst at a bank, you have no real such comparable impact. I'd rather have/feel safer with the former than the latter.

3) Ex-bankers/pe analysts/associates have great modeling skills, which helps with everything from putting together business model, to being more realistic on valuation assumptions (helps especially when pitching to VCs), etc.; there is a ton of value-add in having a high level of comfort with finance and accounting. Also, in looking at term sheets, it helps to have seen these types of general deal structuring agreements in the past (on any level; it has def helped me).

4) Joining a startup and getting operational experience is always better the earlier you do it; you're also more in tune with trends in the space, which is helpful the earlier you get into that space. It is tough to just jump into digital media, for instance, when you've already spent 4-5 years looking at plastics and rubber companies at xyz PE shop (again, not to say that it can't be done; just tougher). The thought process and concept of what works is just totally different; better to get acquainted earlier.

additionally:
5) The connections you can make and the responsibility you get at a startup is on a completely different order of magnitude, compared to any kind of analyst/associate experience you could have in banking/pe/hf/etc. This I can say confidently, even from my own experience. For instance, just last week I personally (just me) met with the VP of Fox Digital Media Strategy; this simply just does not happen in banking, where your MD is the one taking this type of a meeting. The connections/responsibility aspect makes working at a startup a) a ton of fun (I LOVE my job), and b) far more rewarding professionally/career-wise. It's an issue of where you want to be 5-10 years from now, as opposed to simply making $400k/yr at Blackstone today, which is simply a different type of career path.

6) Building something real from scratch (virtually) is extremely satisfying; it is amazing to see your company go from one room and $250k of funding, to an established office space, and 000ks of users/customers, all directly correlated to your efforts. Getting your hands dirty and actually creating something that establishes value (as opposed to just managing value) gets almost addictive, and positively so. I would say this is one of the most attractive points about getting into a startup.

Please PM with any questions, and visit our site if you are thinking of making this transition; I will have more thoughts on this going forward, which I will post to our site (still being built out).
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