MM PE to Top VC Decision
I’m currently a 2nd Year ASO in MM Buyout PE at a great firm that’s growing with opportunity for me to move to Sr. ASO (was given early nod). So, in terms of staying in PE, it would present a great opportunity.
I still decided to quietly test the market to see what else is out there and have been given an opportunity at a top VC firm (think Kleiner, Sequoia, Accel, NEA, etc.) with a focus on growth stage businesses vs seed investing. Comp is on par with my current firm, if not slightly better given additional incentives offered.
So, my question is, would I be crazy to stay in PE and pass on the VC offer. I know these roles don’t open up often, but I also know “the grass isn’t always greener”. In a situation already with great comp, upside, culture, and I like my direct team. Just don’t know if I’ll continue to enjoy looking at less high growth businesses, dealing with typical PE transaction minutia and million row data cubes. I also worry about the general outlook for growth and VC investing. Has anyone made a similar decision that can opine?
All depends on your risk tolerance. Is it true VC or growth equity?
VC is a tough market with tons of crap VCs but if it’s brand name should be fine. Could also make the argument MM PE is crowded and returns will diminish.
Would need to know more about comp but think it all comes down to - what is most interesting and intellectually compelling to you long term? VC tends to be less diligence and writing lots of checks (with less assistance to portcos) than PE. Some people love that, others like the operational complexity of PE.
The role would be later stage growth focused but the firm as a whole does both. Cash comp is slightly higher in PE (largely due to bonus) but not enough to where I’d feel underpaid if I left to the new firm. You made a lot of great points though
Curious how you came across the opportunity esp from PE to VC
HHs. I’ve gotten decent inbounds, although certainly slower than the last two years. I don’t really see many opportunities in the HF world, but have seen a steady flow of MM / UMM lateral roles and every now and then something interesting like this. I’ve focused on Tech / Tech-enabled services at my current firm, which makes for an easier story when talking with HHs. Firm is one of the few that’s done well even in this climate , with a lot of upside in our portfolio, hence my hesitancy. Just feels like I’m at one of those firms now that is the complete package, so maybe I’ve already answered my own question, but would suck to turn down at the same time. The ultimate finance dilemma, I suppose…
Left IB (BB) after 4 years and spent the last 16months trying my own business. "Sort of failed", becoming a side gig > now trying to break into VC. Any suggestions, HH names to reach out? Does it typically work without HH? When I worked in banking typically worked with KEA, Blackwood, etc. but that was for large cap PE so assuming its quite different for VC?
If current firm is the "total package", think you've answered your own question. There will always be cons to any role, so depends on what is more important to you.
I would think more long-term about this...the pain of data cubes is only temporary. If your current firm is growing and there is a visible path to Partner, it's a no brainer to stay for me.
There's always a risk when switching (i.e. you discover aspects of VC that you hate, lack of cultural fit, no long-term path, you might not be as good at the job).
IMO this type of move only makes sense for the following reasons, which don't seem to apply to you:
1. You are not happy in your current role or you are getting booted
2. Significant bump in comp
3. You have an extremely burning desire or childhood dream to become a VC
4. Geographic / personal considerations
i think the most important thing to think about is which long-term path you want. temporary comp (even after accounting for VC incentives/upside) shouldn't be a key factor. long-term path success depends a lot on what you're naturally good at (apart from just liking it), unless you have a burning passion for something and that level of passion usually drives people to become good at whatever they're passionate about simply because they spend SO much time on it. Why do you think VC/growth equity is something you're good at, and you may be better than other people at?
another point about growth equity is the limited deal universe. since growth equity doesn't employ much leverage, if at all, they have to grow at a much higher rate than traditional buyout targets in order to make the math work. there are simply not as many high-growth companies out there, and the few high-growth ones will be very expensive deals. you know that when too much money is chasing too few deals, returns diminish in this field.
Have a few friends who ended up choosing MM PE over Top VCs and they’re very happy with their decision. But ultimately it depends on the specific firms - for example you’d likely value Sequoia way more than NEA. But many would likely still choose NEA over say an Audax or Centerbridge.
I know a lot of people at both Top VCs and MM funds - so very familiar with the space and happy to DM if you have questions about specific firms!
I'll add that PE jobs are generally harder to get (or at least qualifications and sequencing are more rigid). Once you leave the PE path, it is fairly hard to re-enter, so only take the VC job if you're sure that you're done with PE. The only potential re-entry is probably MBA, though certainly far from guaranteed.
Also, very importantly, is this a partner-track VC role or just general associate/mid-level? VC roles often top-out with few general partner track opportunities for individuals without actual entrepreneurial/operating experience. There's plenty of sourcing monkeys running around but very few make it to the top straight-through (to my knowledge), even post-MBA.
Would you mind PMing me? Would be great to pick your brain about the PE to VC transition.
Echo with many answers shared already.
Overall I do think Growth Equity is a narrower asset class than MM PE, and it’s prob much harder to source good deals to make the return math work too. Now I feel everyone is chasing for token AI companies, and who knows how much bubble it’s there.
As someone mentioned already, after senior AS / VP years, you can prob still find a VC gig, but much harder the other way around.
Agree with the first point, but actually think there is a pretty low likelihood of finding a VC gig after Sr. Asso / VP, the industry is too small and there is no reason to hire someone from PE v. an existing VC investor with deals under their belt + already bringing a relevant network (founders + other VC investors for deal flow)
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