Best way to start a PE firm

I'm currently a high school student in Canada and my ultimate goal is to start my own multi-billion dollar PE firm.

I understand that the PE industry is hyper-competitive, over-saturated even, nevertheless, having my own PE firm is one of my main goals in life, so I'm willing to do whatever it takes to reach that point.

Here are 2 potential pathways I've mapped out in my mind. I'd appreciate any feedback on these pathways, any suggestions on how to improve them, which one is the best pathway and any alternative pathways you'd recommend.

Pathway #1:

Ivey Business School -> Summer Internship in NYC IB -> 1-2 years as IB Analyst -> 2-3 years as PE Associate -> 2-3 years as PE Senior Associate -> 2-3 years as PE VP -> 3-4 years as PE Director -> 3-4 years as MD -> Start PE firm

I'll probably be in my late 30's by the time I become an MD. A few more years of working as an MD and I'll have built a solid network, as well as a few million dollars in savings. I'd then be able to leverage my network and track record to raise $100m in funds. From there, I'd be able to start making profits and expand my fund, raising more and more money as time goes on, until I hit the billion dollar mark.

Pathway #2:

Ivey Business School & Start a digital marketing & e-commerce business simultaneously. Study the shit out of value investing and invest every dollar I earn from my business into the capital markets or real estate if the time is right -> Summer Internship in NYC IB -> 1-2 years as IB Analyst -> HBS -> Raise money and start HF -> Raise even more money after profits start rolling in -> Expand into PE and start a firm

By the time I finish HBS I'll have a good investing track record that I have established using all the profits I'd have accumulated from the two businesses which I expect to be significant. Because of going to HBS, I'll be having access to a very strong network of HNWIs, which I'd then be able to convince to invest, in total, at least $5M in my HF. This process would be aided by my strong track record and educational background. If I succeed in the HF business and keep raising more money, I'll have access to an even wider network and more capital which should facilitate expansion into the PE business.

 

I’ll bite. Do option 2 as I think starting an online business will give you an interesting experience / perspective if you don’t like finance, and after that the decision trees both arrive at NYC IB.

If you are successful in going from Canada to NYC, survive your internship and then come back to this thread and ask people. You will know if you like finance, are willing to work hard, and have the stomach for the rest of the decision tree.

I respect the ambition, but until you are at that desk and it is 3AM, you’re exhausted, and are doing work that requires a high level of accuracy you won’t be able to decide if this is really for you. And the kicker? It only gets harder.

I don’t say this to dissuade you, more to be honest as to why the percentages of getting your pathways are low. And that is before you account for the macro trends in PE that you correctly identified.

Nonetheless, good luck. It’s a fun business and I wouldn’t trade it for any other industry in the world.

 

I’d hold your horses. Focus on getting some good internships, get a full time role at a reputable bank/consulting firm, advance and build a strong reputation in the industry. The key isn’t to make all the money yourself it’s to have a strong enough reputation to raise funds from prominent investors and institutions. You don’t necessarily need to go PE and make MD, you could advance through the ranks on sell side or consulting so long as you increase your network and know how to pitch an idea/deal. You’ll learn the technicals, how to conduct due diligence and conduct transactions from your work experience, and you most likely won’t start your fund alone. Take things one step at a time, there isn’t a set path to founding a PE firm but more so a set of skills common to most successful founders.

 

Pathway 2 makes no sense. 

- You can't get into HBS with just 1-2 years of IB. Need 2+2 IB+PE

- You can't raise a HF with just an HBS degree. No one will give you money with no track record running client money

- Why would you raise a HF with the goal of expanding into PE? HF's rarely "expand into PE" because they are kind of orthogonal skillsets. Why not just do a search fund or something out of HBS?

- What's this e-commerce/digital marketing business got to do with anything? Sounds like a time-consuming distraction unless you find entrepreneurship/operating interesting and want to do it long term. If you're doing this to build capital for your HF, do the math. You won't even be close to enough even if you have 90th percentile outcomes.

My advice: if you want to be a 99th percentile PE guy you have to take some big risks. Path of least resistance imo is to do 2 years of IB then choose a high-performing MM fund with a lot of headroom. If you're lucky and you work your ass off, you can ride the elevator up as the fund grows, then you can leverage that reputation to start your own fund. If your first few funds do consistently well then you can raise a $B fund eventually. But you will take huge career risks that may not pan out and you will work like a dog.

You're young and don't fully understand what you're asking for, but once you do I would do a lot of deep reflecting before going down this path.

 
Most Helpful

If its saturated and competitive in 2024, what does that tell you about what it will be like in 2045?

I’d focus on getting experience where you’re getting solid early career branding (best school, best firm) and working with the smartest people. Pair that with working impossibly hard so you learn 2x what everyone else does and reading a lot so you learn 5x that.

If all of that lines up, and you still have the focus and energy and drive, then you’ll figure it out. But I would focus more on raw materials and less on a specific end destination.

I would also tune out the losers like the above posters telling you to chill out so that you can be a low grade nothing like them.

 

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