Q&A: Returning to PE After a Year and a Half at a Series C Startup

Been a poster on WSO for quite a while now (over a decade lol, good lord I feel old) and made a comment in this thread here about going back to PE after leaving at the end of 2020 to join a Series C startup on their Finance team (not corp dev). There was some interest in me doing a Q&A so here I am - given how popular of an exit this is becoming, hopefully this will be helpful for some people here.

Background: 

  • Non-target -> MM IB -> PE -> Series C Startup -> PE

Why I left PE to go Corporate:

  • Was honestly just a bit disillusioned w/ the world of traditional finance. Too many sharp elbows, didn't necessarily feel that I was "adding value" to society (cliché I know), and honestly had a really bad experience in PE after some leadership changes at my prior shop
  • Related to above, wanted to experience working w/ non-finance people for once
  • Wanted a better WLB, was tired of constantly working 80+ hour weeks. Knew I'd take a big pay cut, but was ok w/ it since I've never been somebody that has made it a life goal to own a Lamborghini, fly private, own a vacation house in the Hamptons, you get the idea
  • Having done IB and then PE, wanted to try a role that wasn't super transactional where you're constantly moving from deal to deal, company to company. The idea of focusing all my time and energy on one company was pretty interesting to me, which I felt could be potentially more meaningful
  • Honestly just wanted to try something new and expand my skillset / background. Knew operating experience was missing from my resume and felt that this was the right point in my career to do so, and if I stayed in PE it would be tough to make the jump until I was much more senior, at which point you'd leave to be VP of Finance or CFO somewhere. Figured worst case, come back to PE and use my corporate experience to help me become a better investor

Why a Startup, and How I Picked the Company I Joined:

  • Knew I'd be too bored at established F500 companies such as MSFT or AMZN, and joining "startups" such as FB or even Airbnb / Uber / Doordash, you're already going to be too siloed in what you can do (a lot of times you're only supporting 1 business unit or what you do is super narrow even if you're looking across the entire company), with less of an opportunity to really make an impact
  • Also didn't want to go too early where there are no processes in place and don't have the risk tolerance to do so anyways. Felt Series B-D was perfect in terms of being able to work on a large variety of projects and have a more flexible day to day. Also more exposure to senior management and greater opportunity to be external facing w/ investors
  • Targeted only places w/ a product or service I would use / strongly related to, or one I felt was actually solving a real world problem. So no, wouldn't have joined electric scooter startup #43
  • Also didn't want to join a company that only did enterprise SaaS. Great business models, sure, but really not that complex and didn't think I'd learn as much
  • Thought about each company from the perspective of an investor and whether I thought it had the potential to be a truly enduring business with significant upside (after all you do want your equity to be worth something)
  • Targeted places w/ more experienced management teams only - people who I thought I could really learn from vs. some random Stanford grads at their first startup for example
  • Looked at finance teams that were led by ex-bankers or investors. Those that were led by career FP&A professionals or ex-accountants were a lot less interesting since that meant you probably were focused more on just doing reporting and consolidation work which is super boring, vs. working on projects that could actually be impactful / drive strategic direction of the business. You want to be on a finance team that's a tier 1 citizen, not a team where finance is viewed as purely back office

Why Corporate / Strategic Finance, Not Corp Dev:

  • Thought corp dev would potentially be too transactional still, which was one of the main reasons I wanted to move away from PE
  • Wanted a true holistic lens on the company where you're able to learn how all functions of a business truly work together in tandem, which I didn't think would be as possible in corp dev
  • Most companies at the size / scale I was targeting didn't have dedicated corp dev teams anyways

Roles & Responsibilities at My Startup:

  • Fully owned financial model and all forecasting responsibilities
  • Fundraising - raised multiple hundreds of millions in multiple rounds of funding. Everything from materials creation and pulling together marketing / DD materials, to investor calls and legal negotiations / structuring
  • A bunch of standard FP&A work like monthly reporting, budgeting, headcount planning, etc.
  • Did some software systems implementation projects and building out new processes that touch finance
  • Various ad-hoc projects to better understand unit economics, analyze if we should shift our pricing model, which markets to enter / leave, where we could find efficiencies in the business, etc. Lot of cutting / analyzing data to better understand the business and make new recommendations

Rationale Behind Returning to PE (In No Particular Order):

  • Lower comp - this one is obvious. Yeah sure if your equity hits you could be rich, but that's such a toss up. Point below is directly related to why the lower comp ended up being an issue
  • Startups aren't all sunshine and roses in terms of hours. Hustle mentality is real and I didn't love being paid 35% less for only working like 5-10% less (though to be fair I wasn't at some super chill SaaS company, mine was more operationally intensive and a lot more complicated of a business model). Especially during fundraising was hitting 80-100+ hour weeks at times, which is definitely an outlier case vs. most startups. But just because you're joining a startup, don't expect to work only 40 hrs / wk
  • Quality of talent you work w/ is a lot lower and can be really frustrating at times - might come off as douchey, but it's the reality. And I'm not just talking about like how "smart" people are, but also work ethic
  • I miss the external relationship aspect of investing more where you're constantly interacting w/ people outside the business vs. only working w/ the same people internally all the time (other than during fundraising really)
  • It was really cool to dig super deep into a single business and focus all your time and energy on one thing instead of jumping around from company to company / deal to deal, but after a while that got old for me. The incremental insights just weren't as interesting to me as constantly being exposed to and learning about different industries and business models like in PE (and talking to different people per point above)
  • Realized that CFO track wasn't what I wanted long-term. Sure investing also involves a lot of less glamorous tasks, but some things in the corporate world I just never want to do again and have literally 0 interest in (the idea of having to do another annual budgeting process makes me want to shoot myself, anything involved w/ audits, etc.)
  • Started getting bored and felt I was really plateauing from a learning perspective. Yeah investing is process oriented and you often follow a playbook for each deal, but at least you're hopefully learning about a new business with every new deal for example. Doing a 3rd budget cycle for example I don't feel like I would materially get anything out of it at all for instance. Even if I switched to a pure strat fin role, just felt it wouldn't be as good of a fit for me at the end of the day
  • New addition here is that the tough part for me was knowing that if I stayed corporate, knew that at some point whatever company I was at would become too big / bureaucratic for me and you start being more siloed or get more and more high level. It's why I was targeting Series B-D in the first place and obviously if the company is (hopefully) successful, it'll really start to scale up to a point where I'd lose interest, and the prospect of then later on in my career jumping from company to company was not very compelling

Recruiting Process to PE:

  • Reached out to all the old HHs and people in my network letting them know I was looking to return to investing. This isn't too uncommon of a story so it didn't require a lot of explanation or anything which was nice
  • Did have to do quite a bit of brushing up on interview prep and self-studying to get back into prime interview shape. Definitely got a bit rusty on some of the technicals because it's really a different world (like I did some valuation work, but that's such an afterthought at the end of the day really)
  • Interview process took 3-4 months between initial outreach to finally securing an offer
  • Came back at the same level that I left at. A bit disappointing, but at over 1.5 years out of investing I recognized that hey, you take what you can get especially in this economic environment, and I did really enjoy my time at the startup. Had some potential roles to jump up a level to VP, but cared more about team / culture, WLB, and overall opportunity of the platform vs. chasing comp and prestige only
  • New gig is non-SF / NYC

For the purposes of this discussion want to focus on why I left PE in the first place to join a startup, and process / rationale on why I'm now back in PE. Ask away!

Comments (37)

  • Analyst 2 in CorpStrat
2mo

Think you'd have enjoyed your time more in a non-finance role at the startup? 

2mo
NuclearPenguins, what's your opinion? Comment below:

Potentially, but I knew even going in that I wasn't 100% dead set on leaving finance forever, and felt that if I did switch to a non-finance role that it would be much harder to come back (esp since I wasn't super interested in going back to VC / growth - will add more color to this in response to another comment). I think personally some of the non-finance roles would've been a bit too nebulous for me in a startup environment and I didn't want to lose too much of my technical finance skills.

Also felt that I could contribute more in a finance role and would've come in at a lower level if I was targeting BD or strategy or something like that. I did look at 1 hybrid BizOps / finance role, but other than that was pretty focused on finance roles only.

  • Works at KeyBanc Capital Markets
2mo

Cool, appreciate the response. Looking forward to seeing what you have to say about not going back to VC / growth as I am currently considering going down that path after a combination of a few years of MM IB + Series A strategy/ops exp.

2mo
mrharveyspecter, what's your opinion? Comment below:

Kind of curious what your interview processes were like. Were they all standard fit + model/case? Reason for asking is I left PE as a newly minted VP, working on some of my own stuff now, curious that if I chose to return in a year or two what that process would look like from a more tactical perspective. 

2nd question, do you feel like you got credit for having some "operating" experience? Lots of firms firms like to say that they value operating experience, but curious if you found that was the case, or if they really just cared about your PE experience and abilities.

Would you do it the same all over again? Was it worth the experience and time off from PE? 

2mo
NuclearPenguins, what's your opinion? Comment below:

Yep all pretty standard fit Qs + case studies, and then also in-person visits. 

For your second question the answer is both yes and no. No from the sense that I didn't get any credit for the extra years of experience which is why I'm coming back at the same level I left at, but yes in the sense that it seemed like people appreciated the experience and it made it easier to get the current job. In other words, it seemed to me at least that it wasn't viewed as a negative that I did a stint outside of finance, and made me a more compelling candidate for what could be viewed as a circuitous lateral, lol.

If I take a very narrow lens where I'm only thinking from a career pathing perspective and the compounding effects of comp being delayed over the years then no, I wish I hadn't done it, since I'm rebounding back and don't really have any aspirations to ever go back to a corporate role. Yeah sure I think I'll be a slightly better investor but don't think that tradeoff is worth it as all I really did was delay my career progression. However, I really, really liked the people I worked with and had some really fun times with not just the immediate finance team, but also across the entire business - people who I'll continue to be good friends with for a long time. I also developed some great relationships w/ a # of the execs at my company, all who could be really valuable connections in the future since as I alluded to in my OP, these were all experienced operators / entrepreneurs (CEO / founder had multiple successful prior exits, including a multi-hundred million $ exit). So for that reason yes, I would do it all over again.

  • Business School in CorpStrat
2mo

Very interesting - based off on how your experienced sounded, I probably would have stayed and tried to jump to a BU/P&L line. Eventually maybe start my own company/ventures. The IB/PE finance skillset is very well respected in growing companies. I have a buddy who left PE at a senior level and has been doing what I mentioned before ever since (ran a BU unit as the "head" for awhile at a high growth startup and now starting his own company in his mid* 30s).

1mo
elmerbobst, what's your opinion? Comment below:

I'm coming from similar background. Left PE to try something different and now thinking about coming back.

Questions for you:

  1. Were there any helpful interview resources (I can't recall the last time I had to answer "technical" questions in an interview setting and I'm guessing the resources out there are a lot better now than when I last interviewed)
    1. How did you specifically address the question: "why did you leave PE last time"?
  2. Now that you are back in the seat - do you feel differently about PE vs. the first go around? 
    1. Do you think your itch to try something else is gone and now your mindset of dealing with the grind is improved (with your renewed perspective)? I ask because I wonder whether I would once again feel the itch to look for something else once I jump back into PE  
  3. What's the ultimate goal for you now - climb the PE ladder to Partner?
  4. Did you consider any other alternatives to PE (hedge fund, family office, working for limited partners, etc.)?
2mo
NuclearPenguins, what's your opinion? Comment below:

I didn't consider VC / GE much because I'm not sure I'd be a really good early stage investor (I think I think too conservatively), and also a role that's more sourcing-heavy isn't what I'd enjoy as much currently. I do dabble a bit with some angel investing on my own, but that's just like a fun side hobby really. Potentially something to consider down the road still if my interests change, but wasn't something I was prioritizing.

2mo
MakersMark, what's your opinion? Comment below:

WHat about CFO track to you was less exciting? Do you think you want to grind out for VP/Principal/Partner still?

2mo
NuclearPenguins, what's your opinion? Comment below:

Yep, this is why avoiding finance teams led by accountants was a big part of the screening process for me. Even if you are on a strategically-oriented finance team, there's a lot of crap on the reporting and budgeting side that I just 0% want to be involved w/ ever again.

And yes @MakersMark that's the plan now to go partner track.

  • Analyst 2 in IB-M&A
2mo

Did you ever consider going back to banking as a senior aso? Obviously being an advisor vs investor requires a different skillset, but you mention comp as the #1 motivator for going back to PE and with banking comp having been raised considerably since you left, curious if/how you thought about it. Have seen more than a handful of people in my network do this in the past year, spending 1/2 years in pe then jumping back to banking

2mo
NuclearPenguins, what's your opinion? Comment below:

Comp wasn't the #1 motivator for me, it's just what I listed first. Definitely did not want to go back to banking despite the big comp raises. 1) You see all the layoffs that are happening now, 2) don't love the idea of being in a client-first industry, 3) didn't want more and more of my skillset be sales as you get more senior in banking, 4) WLB considerations, 5) not as intellectually stimulating for me.

  • Associate 1 in IB - Cov
1mo

Nevermind my tag- I'm in Corp Dev at a F500. Those were my main reasons why I didn't want to stay in banking either. Compensation is still (kind of) a major factor based on the economic standing I've had growing up. I'm not sure if I'm interested in PE tbh, but I do like the "investor mindset" that comes with the job and the financial engineering piece that is used sometimes. Ideally I want to move to another Corp Dev role that pays more. Is it possible to have an intellectually stimulating career at Corp Dev or Corp Strat roles that pay as good as PE/IB (except MFs of course lol)? What's the ceiling in pay for those type of roles at a senior level? $300K-450K? 

Most Helpful
2mo
NuclearPenguins, what's your opinion? Comment below:

On team / culture, I would allude to this when explaining my background during interviews. I'd explain that I left because I wanted operating experience and it was the right time in my career to do so, but that there was also a large cultural shift on my prior team after new leadership changes. And then when I explained why I was looking to go back into finance and why I'm interested in the place I'm interviewing at, I'd also drop in that I'm looking for an environment that's really collaborative with a strong culture (like how I felt my prior shop was before the leadership changes) as what I've always valued the most are the relationships and friendships I've built throughout my career. Now I wouldn't straight up trash my old firm, but more just hinting that yeah, culture mattered to me because I've experienced what happens when it changes for the worse. Was this the best thing to do if I was solely focused on getting a job? No. But I figured if anybody cared that I was bringing this up, that probably wasn't the place I would want to be at anyways. 

On WLB during Q&A I'd ask what people did outside of work - if they gave something generic like "oh just hanging out with friends when I have time off" and couldn't really give any tangible examples, that probably wasn't a great sign, vs. if there were actual hobbies and things that maybe take a bit more time, and if they talked about being able to spend time with their partners or families. This would also be helpful at times to figure out team dynamics since you'd sometimes hear about people hanging out together outside of work, which I always took as a good thing. Asking "what is your favorite part about working at x" would also help me get a sense of what it would be like to work there. Also relied on off-sheet references as much as I could, mostly looking for existing connections that knew of the firms or people I was interviewing with (bankers / placement agents / HHs are actually great for this since they see so much), but also did some cold LinkedIn outreach to see if former employees would be willing to share their experiences working there. Then taking everything above together and layering in some personal intuition / gut feel.

At the end of the day team and culture still mattered the most to me - I'd rather be on a really supportive team where everyone helped each other out and enjoyed working together cranking out 80 hours per week, vs. working 60 hours per week w/ people I hated.

1mo
olena123, what's your opinion? Comment below:

I recently left my buy side role to join an early-stage startup and it was definitely not what I expected. Here's why:

- To your point on taking a compensation hit that was greater than the improvement in WLB. However, in my 2 weeks here I see that WLB might actually be WORSE than in PE and its far from 40 hrs / week

- The talent aspect is very true (not that they are less smart but there is a greater range of people)

- Im scared shitless of the layoffs I can barely open the news (seeing all these companies laying off is making me scared). I realized security and stability matter more to me than I thought

- I thought leaving would make me happier. No. That does not come from one's job that comes internally. I started looking outward into things that bring me joy outside of work and seeing work as the means to allow me to do that (get involved with volunteer work, buy painting supplies, travel, explore restaurants etc.). 

Adding on to your post in case someone finds this helpful :) 

1mo
d4c, what's your opinion? Comment below:

Hey man - shot you a message. Going through a very similar decision right now and would love to get your perspective.

1mo
nanometers, what's your opinion? Comment below:

Do you feel that stint in startup corp finance helped clarify what you wanted in that you've continued to find out what you DON'T want to do? Productive in the sense that you doubt you would have learned that otherwise? Seen quite a bit of people who get to the crossroads of considering other avenues and if they stay in default mode (PE in your case), they may not realize what it is that keeps them there, so they're continually left wanting.

1mo
NuclearPenguins, what's your opinion? Comment below:

Oh for sure, and that was something I took away from the brief detour which I was glad to realize happened at this stage in my career, vs. seeing senior people in IB / PE (had an MD I was really close to do this) make the switch but then realize oh damn this is not for me. That opportunity cost of switching is probably a lot worse and probably a lot more disruptive.

1mo
olena123, what's your opinion? Comment below:

figuring out what you dont like to do is even more valuable i think because it narrows your focus and reduces your feeling of FOMO. i now know to count my blessings in corporate-ville haha because i realized i actually like the structure and processes of corporate roles as well as the security of a role (even if laid off in PE if at a small shop its a bit different than being laid off from a startup -- your severance for starters).

1mo
StrategyJunkie, what's your opinion? Comment below:

Thanks for doing this. I've been in PE a few years at a LMM firm and have generally had a good overall experience. I have always wanted to go into a portco / corporate / start-up to get "operating experience" because (i) I think it'd make me a better PE investor (ultimate goal is PE partner) and (ii) it'd be nice to do something different for a bit (and not sure when I'll really have that chance after another 3-5 years).

Do you think your experience has made you a better investor? Able relate to management teams, "know" the weeds vs. just being a "finance" guy, which may or may not mean you don't always know what you think you do. Would love to hear your thoughts. 

1mo
NuclearPenguins, what's your opinion? Comment below:

I definitely think the experience has made me a better investor. It was interesting being on the other side and I was pretty surprised by how much even some really well-regarded investors just seemed to take what we said at face value and didn't dig into the next level as much as I would've thought – like our LTV / CAC analyses for example all had far less scrutiny than I imagined around the assumptions used, what was / wasn't included, etc. So if I'm ever looking at a company's LTV / CAC trends over time, I'll 100% be digging in more on that than I previously would've as a result.

Beyond that though yeah every once in a while I'll get a comment along the lines of "oh I'm sure you experienced this when you were at x" – I can't point to anything specific that really elevated me from being just another "finance" guy necessarily, but it feels like it's a net positive at least.

1mo
StrategyJunkie, what's your opinion? Comment below:

Very helpful. LTV/CAC is a great example. Anything else come to mind in areas like HR, operations, sales, other marketing, etc.? I'm pretty set on trying to figure out a way to go to a portco for ~year. At the very least, it's something new and at best makes you a better investor. 

1mo
MantisTobogganMD, what's your opinion? Comment below:

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NuclearPenguins, what's your opinion? Comment below:

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