Career in PE after giving entrepreneurship a shot?
For context: I currently work at an European office of an US EB.
Over the last 1-2 years, I have been increasingly considering the idea of taking a break from the corporate world to start my own business and try building different MVPs. Having quite a lot entrepreneur friends, I see the massive upside from starting a business as well as the associated risk up close.
Additionally, more recently, I have grown less and less interested in a long-term career in banking (even though I have a quite good standing within my team). If I was to not pursuit entrepreneurship, I would very likely pursuit a career in private equity instead, as I feel it matches my personality, skillset and interests significantly better than IB. I have received quite a lot of private equity headhunter inbounds and currently feel pretty confident about my chances.
I would like to hand in my notice post bonus and dive right into entrepreneurship but am still held back by the potential downside which leads me to my question: how difficult would it be for me to start at an MM PE firm after 1-2 years in entrepreneurship (assuming it fails)? Is there a number of months after which firms would largely stop considering me?
One thing I have seen suggested a lot on this site was to lock-in a PE offer with quite a lot of months to go and quit at the IB right after but I would like to dedicate 100% to entrepreneurship without thinking about a specific deadline. I believe an attempt will take way more time than a few months to have a chance of success.
I am looking forward to reading your responses and thank you in advance!
Based on the most helpful WSO content, transitioning back into private equity (PE) after a stint in entrepreneurship is absolutely possible, but there are key considerations to keep in mind:
Timing and Perception:
MM PE Firms and Flexibility:
Networking and Relationships:
Locking in a PE Offer Beforehand:
Downside Protection:
Entrepreneurship and PE Synergy:
In summary, a 1-2 year entrepreneurial stint is unlikely to derail your chances of entering MM PE, provided you maintain relationships, articulate your story well, and re-enter the market within a reasonable timeframe. If you’re confident in your entrepreneurial aspirations, it’s worth pursuing, as the skills and experiences gained can be highly valuable in PE.
Sources: The PE career path, Any PE people considered leaving to pursue search fund/entrepreneurship paths?, Any career regrets after moving from PE to public markets?, From PE >> Startup >> Back to PE, What is the point of doing private equity if you will be pushed out after two years to get an MBA?
You are thinking too much about protecting your downside, which is completely fair given this is the type of personality our industry attracts.
If you want to start your own business, you have to go all in, and not be already thinking about what happens in 1-2 years if you fail. That mentality alone is going to result in failure.
Ultimately, you should follow your passion, and based on your post, you seem to have made up your mind already. If you get a PE offer, will you look back in 2 years time and say I should've taken the risk and started my business? Similarly, when you are pursuing your own ventures, will you regret leaving high finance?
Very few people I meet who started their own business regretted it (both successful and non-successful). You are backing yourself as opposed to being at the beck and call of someone else, and whether or not it succeeds, you still gain tremendously valuable experience
Couldn’t agree more.
I think it’s really deciding what you want to do long term. I see this choice really as a blend of what work you’d most enjoy, but almost the larger part of consideration should be given to who you want to be/ how you want to spend your life.
The grind is present on both paths, but the lifestyle you adopt and thus the people you are around are so very different. Risk/reward is different too, you might start one company and enjoy working on it for 30+ years, perhaps incrementally money off the table, but no real payout until the end. You might start one co and have it sold for 4/5mil within 3-4 years, and have a few other smaller things bubbling on the side. This part I’d particularly mull over. In PE we all know the path to wealth is long term, golden handcuffs, to convey the message ‘office work’ (not as boring as I’ve made it sound here, I love the idea of it). At a contrast, entrepreneurship is much more free/creative with respect to the life you live. Some people love the structure, others choose a different life.
I know a guy who did 3 years at MF and broke away with a chap from an LMM to do a startup. He said he did PE for the experience but always wanted to be an entrepreneur, I ship this, but feel it’s significantly tougher to do the other way around. Also ‘a stint in PE for experience’, compared to ‘failed entrepreneur’…. You get the point.
I personally think this should be to be spoken about more, I feel a lot of strong PE investors have the versatility to be great entrepreneurs. I’m not in any way denoting either one could easily do the other’s role, but particularly I see a lot of people in this same position of divide between PE and entrepreneurship post IB.
If you choose entrepreneurship, come back to this thread and do a Ytube channel on it, nothing cringe or fake like Iman Gadzhi or these poncey affiliate marketing influencers who believe that being a ceo at 17 is alpha, but some content from someone who’s clearly switched on, that actually discusses the technical struggles of starting a business would be cool.
Jay Hoovey on Ytube is a half decent example of this, although he’s become increasingly west coast. Some of his older vids show brief models, and talk about some of the difficult technicals when starting a business (imo the gold, as opposed to founders just talking about how tough everything is and their emotions). He was GS IBD, but then did growth at Norwest.
Thank you for your perspective - very helpful!
I like the idea of having freedom in deciding what I work on and how I go about solving problems a lot. I appreciate the structure and clarity of the “high finance” career paths but dislike the lack of freedom and creativity in the day-to-day execution.
I will be sure to keep you posted on how I get on in this thread (and will consider your other suggestions)!
PM
Jay Hoovy* is a bit too much West Coast, 100% agree. Guy is still amazing to follow and am rooting for his success. One of his investors are also on the board of a super interesting startup that I'm in talks with for potential work.
His take on content as an entrepreneur is very helpful for those considering that path eventually.
Thank you very much! Very interesting insights. I am definitely determined to 100% focus on entrepreneurship once I hand in my notice.
What I find interesting is that even the unsuccessful people making the decision never ended up regretting it. Is it because they appreciate the learnings the experience brought? Where did they end up?
Edit: Also, I will likely regret not trying the riskier path more than letting go off the golden handcuffs in high finance. I guess it’s just last minute jitters coming up as I am approaching what may be my last bonus in the corporate world.
Jeff Bezos was once in a similar position. Use his “regret minimization framework”. I work with tons of entrepreneurs. I’d say you go for it man. If you’re a great founder you can always join as an operating partner way down the road or at the very least have opportunities in PE value add or ops.
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