Leaving UMM fund to join new fund
Wanted to pick this group's brain about a potential switch from UMM to a more nascent fund.
For context, I'm currently a generalist senior associate at an UMM fund ($10+ bn). I did not get the nod for VP, so going to leave the firm in the summer. I'm thinking about next steps and want to balance 1) High Comp and 2) Similar or better work life balance. I'm currently running at probably like 1/3 of the time at 60 hours; 1/3 at 70 hours; 1/3 at 80-90 hours. So not terrible compared to the consistent 80 hour grind. Lastly, on comp, I'm making 225k base and 1x bonus - on track for ~100k DAW in carry.
I get a number of emails about brand new 1 bn funds started by ex MF folks or high growth MM funds (2-3x fund size in a short period). I have heard the junior folks at these funds get paid well. Cash comp can be in line with UMM funds and the carry often supersedes what you can get elsewhere at the VP level. And of course, if the fund grows nicely then you're in a good position to work your way into a senior role.
Any thoughts on if any of the above holds true? If not, may just try to lateral into a MF / UMM fund.
You're going to get a cash comp paycut. Potentially very large as you make more than some VPs at 1B funds. That delta in cash comp will stick for probably most/all of your time on the new fund just given the management fee math. The main positive trade off is more visibility into promotion (and hopefully, but actually not always, faster timelines) and ability to make an impact. Carry and culture are where you also need to do diligence...it is not a strict rule that smaller fund = better culture. On the carry side, you can have higher performing returns, but you're also usually going to get offered lower DAW than your current fund size, so you need to believe that the team can really outperform. The other approach is to decide you're gunning for lifestyle more than great comp, and prioritize solving for culture instead. There are good lifestyle funds that are "chill" and their performance reflects that (lower returns). There are also hardcore smaller shops and their performance reflects that (industry leading returns), but they can also have tough lifestyles and/or culture. Not sure if there's a unicorn that has it all; have to diligence carefully and get to know the primary manager very well and be honest with yourself about what you're looking for.
Alright well thanks for the overview - doesn't sound very appealing if I'm being honest.
Will try to lateral to a similar fund or may a bigger jump for much better lifestyle (e.g. SWF)
It all just depends on what you're looking for. I wouldn't rule it out per se. Just have to do the soul searching to decide what you want to prioritize for.
ignore title - i have progressed in the industry and moved around across funds. have many friends in the industry at other leading funds.
Pros & Cons of start-up funds (speaking from first hand exp)
+ more responsibility
+ you can climb up the ranks really really fast
+ more pay
+ wear many hats, useful exp if you want to start your own fund someday
- more work
- usually not structured at all (no HR, no research team, limited budget, etc... it's a big PAIN that people underestimate!)
Everything else you know about fund due diligence, other MFs/MMs etc... nothing else I can add there. But please be very very careful with start-up funds because they may promise you the moon but in reality it's likely to be super tough
EDIT: if I were you, i'd just join another reputable shop with good returns and strong platform...
whatever you dont go work at sycamore partners. That place is very bad.
I have nothing to add except that 1) that comp package is stellar as a junior member of the investment team & more than many VP roles you'll see in the MM and below; and 2) As someone also looking for roles after a completely dead 2023, are you really seeing a heavy amount of VP level opps now? It seems pretty quiet on my front still...
was gonna comment to say the same thing. not sure if OP is referencing inbounds from early 2023 but been looking for a while and 2H'23 into 2024 so far has been v quiet with many searches ultimately being put on pause
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