Starting my career - small startup HF (under 300 mil AUM) vs. MM IB?

Networked my way into a small startup HF (2-300 mil AUM) '25 summer position that will very likely lead to a FT role. Also have an offer to join a decent but not top (not HL, Jeffries etc) MM IB bank for '25 as well.


HF's strat sits within l/s equity in a sector i'm really interested in and I like and get along very well with the 3 other IP (2 partners, 1 senior analyst/associate level). Won't go too deep on the partners' background for anon reasons but one came from a larger HF while other comes from the industry we cover, with a stint in growth/VC covering the same sector.


I frankly love the idea of being a smaller shop like this for the summer but have some concerns and would like to hear some opinions about what you would do in my case. I don't come from a public markets background (MM PE intern this summer) but would be genuinely excited to cover this sector from pub markets perspective FT. IB is just 'meh' for me, I don't love the idea of it and did a small stint in freshman year summer at small boutique and it was just okay. I would eventually want to exit to the buyside in some capacity as I genuinely have a passion for investing in the sector the HF covers, both on the private and public side.


Not sure about what comp structure would be as a FT analyst @ HF that small, also have some concerns re: the stability of my career starting out at a small startup fund with only one seasoned professional but, again, love the idea. IB obviously is what it is, and not sure if I could exit to a situation like this from a decent but not great MM down the line.


Would love to hear some opinions! 

Where to start career?

Startup HF (2-300m AUM)
55% (37 votes)
MM IB
45% (30 votes)
Total votes: 67
 

What’s your risk tolerance?

HF offers higher utility with a more skewed payoff function. Ie if you and the fund do well you could make more $$$ faster.

IB offers less utility, but safer job and exit ops.

Hf -> higher risk, higher potential return, more utility

IB -> lower risk, lower return, lower utility.

Seems like a risk tolerance question no? Up to you to decide where you sit on the risk curve. If you don’t know the answer to this question I would take the banking offer.

 

For me it's more me gauging what people have been able to exit to and what the direction of their career has been if they've been in a similar situation (a very junior employee or someone with no previous exp that ends up at a fund that blows up). I more so just want to know how I might be perceived as an applicant to positions on both sell and buyside if things go tits up in 2 years and i'm now a guy who's only FT experience is at a 'flunked startup HF'

I have some time to decide but if I had to today I feel like passing up on the HF opportunity is silly based on my goals but just moreso want to know how 'low' my career can go if things do go awry - then I can make a more accurate risk assessment of the decision. Which is an increasingly challenging thing to identify it seems because it's not every day a direct hire out of UG has a chance to join a startup fund like this (at least thats what it seems)

 
Most Helpful

I joined an HF out of school. I echo what others have said. Where do you see yourself in the next 5-10 years? Do you see yourself working at an HF / is your end goal eventually an HF? Pick HF. Do you want to maintain optionality to do corp dev, PE, etc. pick IB. The pros and cons will be similar whether you join a startup fund or a larger fund. 

Pros:

  • amazing experience - I wanted to learn to invest, and I learned more than I would have had I taken the longer IB route. I have been involved in complex situations and have driven processes I wouldn't have until later in my career had I gone down the IB route
  • potential for $$$ faster - first few years out of school, I made well more than what my friends in IB did
  • built a network in the industry early - good relationships with sales/traders/legal and financial advisors, etc.

Cons:

  • volatile $$$ - I made more the first few years, but in a down year got 0 bonus whereas my friends in IB had relatively stable comp throughout 
  • exit ops - mine are limited to HFs and have maybe gotten a handful of PE looks over the past few years, no corp dev etc. either
  • no structured training - was just thrown on the floor and had to figure out most stuff on my own. I would have preferred a structured training 
  • less stable job than IB - one wrong situation/blowup and you could be on your way out 
 

Its an internship. Go with the HF offer.

You will not have a structured training experience so you need to hustle to teach yourself. You'll be learning a  skillset that is generally more valued and better compensated over the long term - at a young age, you are more closely tied to P/L and learning skills that translate to direct revenue generation which you can eventually leverage to provide for yourself (though you will not immediately be given risk to manage).

The initial IB paycheck may be greater than no name HF, but you can take solace in the fact that being an execution monkey (decks, excel) has diminishing returns as you progress in your career, after which you'll need to pivot your skillset to winning new clients (sales). The individual who is excellent at PPT and excel, but does not have client skills, will die at VP. If you like sales and can withstand the gauntlet of analyst/associate years, then do IB.

Assuming you convert IB internship, your exit opps from "decent but not top MM bank" will be mehh. Even if the HF flames out, you are junior so another shop would be willing to pick you up. I've worked at a shop that went belly up and its now just an interesting talking point on my CV. 

All that said, if you take the HF internship and hate it, you can recruit for FT IB in a few months, albeit at a slight disadvantage but the option will still be there.

 

Literally every finance exit opp you could have from the MM IB will be better than a HF of this size and that’s assuming you don’t get a better bank FT

 

MM IB will offer more options = plain and simple, avoiding the strong possibility that you would pigeonhole yourself at a HF, which, in reality, isn't as glamorous for most people. I agree with the other comments. As you begin working full-time, you'll appreciate having a range of exit opportunities, allowing you to move laterally to HF/VC/PE; Corp Dev; and so on.

Anecdote -- for instance, I have experience in both IB and ER in a specific niche industry. This has given me the option to remain in IB/ER or transition to VC/PE/HF/Corp Dev. With that said, I've interviewed for various types of roles in each of those categories listed, reached the final rounds, and always had great conversations. 

Long story short - give yourself options

 

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