PE Fund of Fund to MBA to Direct PE?

Hey guys,

I'm seeking some advice on whether it'd make sense to do an MBA to move to direct PE.

My boss started his career in structured finance then an FoF, before moving on to direct PE. Now he's back at my FoF as he prefers the lifestyle over direct investing. His advice is to do an MBA to switch to direct PE.

Has anyone made this move before and have any thoughts?

Yes I took this exact path. Unfort I had to do a consulting stint between the MBA and the move to direct PE, which made me older than average, but I am fine with that (came from a poor background / random country; I am proud of the distance travelled though) and it’s usually more OK to have this in Europe. I actually really enjoyed my stint in consulting! The MBB folks were very nice, admittedly I saw the whole thing as a means to an end (direct PE). 

Wow! That's a very impressive move regardless. I feel it's quite common to make a move from MBB to PE outside of the US. See this type of background quite often in European/Asian funds.

I actually started in audit at a Big 4, then did a stint in a growth equity firm (though they were underperforming and almost had to close shop completely). 

Good to hear from you that at least this is a proven path!

Yes, and I've seen at least 2 others who went to the same M7 program take the same path. Works well, although takes time! You can def enjoy that time though - the MBA was lots of fun, and having an MBB on your resume instantly makes it recognizable for recruiters regardless if e.g. you decide to do something else. 

There are pros and cons to both careers but one might be a better fit at a different stage of your life/career. 

Pros of FoF:

  • Work-life balance - I used to have time for hobbies... And I think you value this more when you have a family/kids indeed 
  • Depending on the FoF you get to travel to quite cool places, which works if you are young. E.g. I did a bunch of Asia trips, went to Sydney a couple of times on company dime / business class, extending the stay here and there if I wanted. This can be really awesome for a poor kid from middle of nowhere 
  • You meet super interesting, senior people who have all the incentives to treat you nicely and answer your questions. You get wined and dined loads
  • It's diverse in the sense that you look at a bunch of companies in a varied list of industries so you learn a little about everything


  • It's slower paced so after 3 years I felt I wasn't learning as much. The FoF was in Benelux and I was going crazy with the way people were treating their work - too much life balance... I wanted more dynamism 
  • Relatedly, I hated being a mile wide and an inch deep in industries
  • You question your level of impact - you have zero control over these funds / companies after you sign the LPA 
  • Pay is not great vs. right now

I think pros/cons of direct investing are mirror images of the above, so I won't bother listing them again. Hopefully it makes sense - I'm crushed with work much more nowadays but I prefer this lifestyle tbh.

I'd say in FoF, you basically get paid to network. So if you're able to pull off a more direct investing experience or somehow make a transition, you probably have a list of readily available contacts that you can always reach out to later on in life. Though not many of them will reply given 1. they probably don't remember you if they've met a ton of LPs, 2. you were too junior and couldn't drive any decisions so it's a waste of time.

Interested in your boss’s journey. Did coming back to FoF mean a paycut? Also curious how carry works at FoF?

Yes, I think the paycut was pretty significant too. But I think he made his buck already in direct and just wanted to spend time with his kids. So I get a lot of autonomy and great exposure as he just offloads stuff to me.

Carry is very much like direct. Direct usually charge the 2/20, FoF then charge the 1/10 on top of the fund's performance. Then for co-investments, we build an SPV for our LPs to pool the money and charge them 2/20 or 1/10 or sometimes an upfront fee depending on the deal and the relationship. Funds usually offer us co-investments at very low costs. So the carry for co-investments is obviously much higher than the normal fund investments and hence drives up overall comp if a deal performs well. The good thing with co-investments is, we get to cherry-pick deals after funds cherry-pick deals. So most of the time, co-investments drive quite decent returns.

On an analyst level, my firm doesn't pay that great and I don't even get a proper bonus (one-month salary lol). Carry only comes in at the senior associate level.

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