Best IB groups for future move to VC
Of the following groups, what are the best for exit ops into VC?
From what I have heard, TMT is the best bet. Is this true? What are the other good groups that could prepare one well for VC?
Consumer Healthcare & Gaming
Financial Sponsors
Industrials
Middle Market Group - Debt Capital Markets
Technology Media & Telecom
If you could rank them from best to worst for VC exit ops, that would be much appreciated.
Thank you.
TMT...and utilities groups that cover cleantech....depends which industry you want to cover...growth equity is a more logical move from banking...regardless, IB will place you pre-MBA somewhere but you won't be on partner track; long run the trend is for GPs to have significant operating/entrepreneurial experience.
Technology
depends on what type of VC fund it is..... but for the most part technology or healthcare
The Usual Suspects
Which IB group best prepares for VC (Originally Posted: 11/13/2007)
Would you consider M&A to be the ideal product group to work in if one wants to go into VC? Would joining a restructuring or industry group also be a good option?
Join the group that allows you to work at a start-up and see it all the way through the venture funding process. Also, it's best if you go through that experience multiple times.
The Tech industry group is your best option, but either way you're odds are slim to none coming from banking.
I find that hard to believe...not all VCs can be slam dunk entrepreneurs. Somebody has to bring the financial knowledge to the table.
as apposed to what? besides a lucky former entrepenuer (sp)
Then who?
Besides the entrepreneurs, where do VC's typically come from, if not from banking/PE?
They come from industry. If they didn't start their own business they have a significant amount of operational / sales experience. Being in M&A has little to no value as a VC.
Hey guys, this entire discussion is blown way way way out of proportion. Firstly, it really doesn't matter what banking group (i.e. TMT, Tech, M&A, even Industrials) you are coming from. Obviously, some tech exposure is important but by no means critical. I think someone else mentioned this on WallStreetOasis already, but most posters on this forum put way too much emphasis on what bank, what industry group, what MD you work for, etc.
You'll see a mix of GS/MS/Leh/Lazard bankers alongside bankers from tech heavy banks such as Thomas Weisel/Jeffries/Hambrecht. The important thing is not what bank you came from or what industry group. Believe me, I'm going through recruiting now, and so far we've turned down 6 GS bankers because we didn't think they were friendly enough. This is a people business and chemistry is really important. I honestly think good dating/social skills is more important financial analysis. Unless of course you have very strong technical skills (i.e. CS, Mech Engg), but that's a different story.
The one offer we made was to a Bain consultant who was deciding between our fund and Bain Capital Partners. Several candidates with startup experience (e.g. not necessarily CEO, think financial analyst, assistant VP of BizDev, etc.) have also gone on to second rounds.
You guys are seriously overestimating the financial skills needed in the VC and growth equity PE industry. They hire ibankers because ibankers are hard workers who can be trusted to "get the job done well and triple check everything they do". NOT because they know how to build a DCF model. The financial skills in VC are very easy to learn (I learnt it in 2 weeks),
VCMonkey
anything really, industry group probably more than a product group like dcm or ecm
Experience counts - the best way to get into VC (Originally Posted: 10/20/2013)
This is the advice that I give prospective VC associates/principals or whenever anyone asks "how do I get into VC?" and wants to be in a fund doing Seed, Series A or even Series B deals:
If you have a bit of your own money, show that you can find interesting things. It doesn't have to be much, even $5K each in angel investments over 10 companies that are interesting shows you have good judgement in sourcing things and working with entrepreneurs. As a bonus, you'll gain a ton of experience in how the deal process works, how other angels behave, and how subsequent fundraising events work. You'll likely also see what happens when things go south and companies either do a down-round or if they outright go bust.
If you're in a location with a good entrepreneurial scene (Valley, LA, NYC, Singapore, London, Berlin, etc.), that's fantastic. Go out and talk to all the founders and find a way to wiggle a little bit of cash into their deals. All of this shows good initiative and ability to get into things, particularly if they are competitive or you invest alongside (or before) more prominent angels or seed-stage investors.
If you're geographically isolated, then use AngelList and find things you believe can be really successful, then reach out to them. It's never been easier to find deals this way. Don't be afraid to cold-email founders if you really like what their company is doing. Outside the Valley (and maybe NYC), this isn't as hard as it looks since things are less competitive in other regions.
If you don't have any money, the next best thing is find a patron whose money you can invest on their behalf. Find someone successful in your network without tech experience (bankers are great, as are non-tech, self-made entrepreneurs in other walks of life) and reach an agreement to show them deals in exchange for a bit of carry. Then do the above. It's harder this way because you'll have to re-sell the deal to your investor, but it's the next best thing if you don't have any money of your own.
After 1-3 years of doing this, if you can build a portfolio with some interesting stuff in it you'll be well off in many ways:
1) you might actually make some money from it 2) you can demonstrate deal judgement and walk a fund through your thinking and analysis around deals 3) you will have concrete stories about how you got into deals, wins, losses, tough situations, bad entrepreneur situations, good entreprenur situations, coinvestors, and so on. 4) you should have a decent reputation by then and have your own ability to source deals, which is a huge selling point for anyone looking to join a fund.
All the above are exactly what funds look for. When funds hire an associate/principal/partner, someone with their own reputation for doing deals and their own dealflow is HUGELY advantaged versus anyone with just a good background or a wannabe with a fresh MBA and no deal experience. Period.
Regardless of degree, tech skills or lack thereof, or other pedigree, this is the absolute most indicative thing you can do to land yourself a job at a fund. I've seen much more success in this method vs any top-tier MBA or corporate background.
-Popsicle Pete (founding partner at a microcap fund, former associate at another fund, angel investor)
Nice advice! How do VCs see students who have started their own business and have had a limited amount of success?
Starting a business is the next best thing, but I think firms would judge you more on the success of the business. Operating experience helps, but running one company is probably not as useful as investing in 10 in terms of experience gained in actual investing. Better to be a proper investor if you can be one.
I'm still a student, but I do have the privilege of not paying tuition and have a bit of money saved up. I'd like to start investing limited amounts, but do founders generally expect to get guidance from their investors? I have experience interning in VCs but obviously won't be able to tell an ex-Googler how to run a company, for example.
Usually the lead in a round takes the main role in guiding the company along since they have the biggest stake in the game. I assume you probably don't have THAT much money saved up so I wouldn't worry about it. Worry more about how you're going to convince smart founders to accept your money. Good entrepreneurs will do as much due diligence on you the investor as the investor might do on them. Entrepreneurs are wary of bad investors i.e the ones that hound them day in and out questioning what they're doing. So you have to be able to convince the good entrepreneurs that you will be a good partner.
Without having $1mm in assets or 200k income / year, how would someone go about investing? From my understanding, you need to be an accredited investor to be able to invest in a startup.
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