Let's say you are a junior and you're choosing between two PE funds. One has a 4bn latest fund raise and another has a 8bn latest fund raise. How much does fund size matter for your long-term compensation potential as you move up the ranks (VP, Principal, MD)?
Is it generally safe to assume that bigger fund size almost always means more upside?
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From a cash perspective, yes generally. May want to look at factors such as # of IPs, # of ops professionals, aggregate AUM (even if fund sizes are equivalent now, an older firm would have more AUM to support the GP).
From a carry perspective it gets far more idiosyncratic: number of junior vs senior partners, is founder involved still, has the firm been sold to outside capital, etc.
Agree, bigger fund usually means higher cash comp (given more fee income to spread around, albeit usually also more bodies). On the other hand, carry is indeed more variable.
In addition to the factors mentioned above, it's usually harder to generate outsized returns on bigger funds. Carry is quoted assuming a fund reaches a 2x MOIC. This is generally easier and more common for small funds (e.g., some small funds could have wild like 3x, 4x, etc. outcomes from a few bluebirds) versus megafunds frequently struggle to hit 2x given the scale/maturity of businesses that they're buying (i.e., 1.5-2x outcomes more common). All to say, larger fund carry is generally more predictable but could be less than what's quoted, while smaller fund carry can have wilder outcomes.
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