Currently in my first year at a well-known and highly-regarded PE firm in NYC, and I'm generally hating it so far. The firm is sweaty in a bad way (tons of menial PortCo reporting work and painfully detailed analyses requested by VPs for deals we know we won't even bid on), but worse, the culture is awful - the majority of people are extremely introverted, unfriendly, and uninterested in forming relationships, and a few people are genuinely cruel / abusive. Turnover has been high at the junior levels lately as a result, and I'm pretty eager to get out. I like the idea of joining a smaller team, and I want to work in a close-knit environment where I feel like a valued contributor and true team member, not just an email address to send work requests to and chase after 3 hours. I also have a pretty high tolerance for career risk since I don't plan on staying in PE forever (more interested in the search fund / ETA path longer-term). Putting those two facts together makes me wonder if it makes sense to take the risk and join a first time fund since 1. if the fund tanks, I'll just leave after a few years. If not, the upside should be great from early carry allocations and clear path to VP, and 2. Assuming it's 2-6 people, I could pretty easily diligence the team before joining, and then play a role in shaping culture from the start. Similar idea goes for a LMM firm on a second or third fund but with a <12 person team.Am I crazy and is this career suicide if I try to lateral somewhere like this for my second year? Has anyone here made a similar switch? I'd love to connect with anyone who has gone through something similar to learn more about how you went about recruiting (just headhunters or any cold outreach / networking?), what you looked for when assessing first time funds (fundraising status, founder track record, etc.), and of course, always curious for more data points on comp (I know to expect a cash discount but a higher likelihood of some modest carry)
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There are a ton of variables in what you’re asking, so it’s impossible to give a neat answer. But here are a few random thoughts I was in a similar spot not too long ago (MF associate) and considered joining a first-time fund
First off, as an associate with two years of PE experience, you’re still basically a COG. Doesn’t matter if the fund is brand new. You really think the two partners who came from XYZ MF and are now starting Black Mountain & Co care that you have two years of PE experience? Hell no. At the end of the day, you’re just a process monkey. Sure, your promotion timeline might be slightly better, and you might get a bit of outsized carry, but for every associate spot there are probably 2–3 other guys with your background thinking the exact same thing.
but, you’re right that you should vet the team nobody wants to work for a managing partner with a terrible culture. That said, at most first-time funds, WLB is going to suck simply because of lack of internal support with a focus of marketing while doing your day job
Lastly, on comp: this really varies by partner and fund size, but from what I’ve seen take the market rate and cut it by 10–20%, then boost the carry allocation by 25–35%, and hope for ~1 year fast track promotions per level which is probably what you’re prioritizing
Note the above is all related to first time funds and not necessarily to LMM. For what its worth I considered a first time fund but honestly whether its economics or WLB it didn’t make too much sense to me so ended up going to a second quartile (per preqin) MM/UMM fund and have enjoyed my experience much more
I was in a very similar situation and moved to new fund. Has been great so far and I plan to stick around. I don’t post a lot on WSO so not sure how it works exactly but if you want to reach out I’m happy to chat. I would have appreciated the same when I was looking to benchmark things last year.
Diligence on the founder and believing in the strategy for the new fund was critical for me to take the cash pay cut (~50%) for now and accept the carry upside. WLB is great, founder plays a big part in that.
I would love to connect and learn more.
Im a VP at a LMM fund (closely tied to the ETA community) that closely tracks your description. Feel free to send me a PM and I can share more details on what the switch was like, experience so far, etc.
Mind sharing publicly so (a) others can benefit and (b) you don’t get flooded by PMs?
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