Follow passion in small VC or stick it out in LevFin
I'm about to graduate from a semi target (UMich, UCs, UT, etc.) and have a FT offer for a LevFin team at a BB in NYC. I interned there last summer and from my understanding, this was not an overall fulfilling experience (that is to say, the money and training was great, but I didn't find credit as fulfilling as equity). I can definitely stick it out for the analyst program, but I don't see myself in the credit space long term. My long term passions (likely) lie outside the banking space (I have strong gripes with the WLB), and I still drink the entrepreneurship Kool-Aid hard.
I've also recently networked into a very unconventional VC where I'm likely to get a venture analyst position if I continue recruiting with them. It's in a tier 2 city (Chicago, San Jose, Austin, etc.) and it likely doesn't pay well. It ONLY manages a post-exit founder's money, of which ~$25mm is invested yearly (FO makes this perpetual essentially). The team of ~30 is very new (est. 2018) and has no exits yet, but they have presence in NYC and Israel as well, which surprised me. I love their culture and would love what I do there.
Man, my dream has always been to go into VC. This opportunity raised my spirits a lot, but the inner pessimist in me knows how risky of a move this is. Has anyone been in a similar position and decided to pursue a small VC straight after college? Should I prioritize my happiness in exchange for better opportunities to network in NY? I also know VC skills are not very transferrable, but I don't mind moving upwards from VC to VC. For clarity, the only reason I'd stick it out in IB would be to join a growth equity firm (assuming I lateral out of DCM). Any advice strongly appreciated.
take the BB offer. VC isn't nearly as hard to break into as people seem to suggest. Especially right now it's incredibly saturated (which means it's both easier to break into and dumber to do so). If this unproven fund fails (it probably will), you are left with zero leverage to lateral to anything meaningful (other than to some biz ops role at startup who's founder you met -- and that is best case)... Not worth it. Unless it was a tier 1/2 VC, take BB. You can easily get into a VC of this tier with that background and probs better while also keeping all the other traditional doors open. there is no moving upwards from VC to VC from an unknown unproven fund. Also frankly 30 heads for a 25mm fund is insane (even if that is going up yearly as you say). Don't do it friend. ur exchanging short term fun for a long term L
Thank you for your advice, seriously. How would you rank a VC as Tier-1 / 2 ? Is it AUM? Successful exits? You’ve given me some hope but I doubt a LevFin background could be applied much in the VC space.
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I would choose BB for the following reasons:
1) You will get trained with strong corporate finance skills than you would otherwise. These skills transcend into future roles, including VC.
2) Getting a LevFin at BB is very respectable and you will likely work greatly with PE funds on acquisition financings. This will also open your eyes to other alternative investment players, besides VC.
3) It diversifies your options. Instead of hanging your hat on VC - which tbh is not an intellectually rigorous role compared to IB/PE - you will have the opportunity to exit into a VC role or even growth equity fund with solid LevFin experience.
4) More money. I feel you on the WLB front but get a grip on yourself (I say this respectfully). You’re young and straight out of college. Now is the time to work hard for two years and then move onto your passions (which will always be available; not quite sure of the inverse).
5) Two years of IB equates to 5 years at a tiny VC shop. I doubt someone is going to train you at the VC fund. I’ll argue that with an IB background, you will better be able to analyze a company than without it. Being in credit, doesn’t mean you won’t get exposed to learning how equity guys think.
Just my two cents.
agree with most of what you said but would pump the brakes on the notion of IB being an "intellectually rigorous" job next to... frankly anything. Sure VC isn't quant at HRT, but it certainly requires more critical (and fast) thinking / social skills than pumping out a bullshit DCF / pitchbook. That's a joke. Otherwise, sure.
also re point 5. not really relevant. the way late stage / buyout investors think vs early stage (which this fund clearly is being as small as it is) isn't the same nor transferable. Top line rev / "vibe" (on founding team or the vertical) vs ebitda / operational efficiency etc.
I couldn’t disagree more, respectfully.
I worked in Growth Equity shop for 2 years before going to BS. Yes, GE is not early seed A stage but IB trains you quite well.
It doesn’t really matter what I think, but my IB experience was for more meaningful than putting together BS PitchBooks and DCFs. I don’t want the OP to discount the value of IB based on your comments.
This is very insightful, thanks for the advice. One theme in your reply is that DCM roles do not necessarily pigeon-hole you in a credit role indefinitely (a big fear of mine). Is this true in your experience? Have you seen exits from LevFin to VC/GE/PE? My team is a big feeder to PC/Mezz funds.
In a related position of choosing between a larger, established but still unknown VC and MM IB in a really niche space, not a traditional IB group. Any ideas? The VC seems like a hell of a lot more fun working directly in the investor seat but the IB has better brand recognition.
if VC is comfortably in a low to mid or beyond 9 fig fund range, do the VC. MM IB in a niche space sounds confining. So if you are more passionate abt VC might as well take the niche you want since optionality will presumably be more limited regardless w the IB
Unknown to you and other young people? Or unknown to VCs? Some of the best early-stage / vc investors fly under the radar. If it is the former, don't worry about it.
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