Smaller fund or Mega Fund?
Hello, So I am presented with two options here and I would like some insight from people on WSO. I could either go do a VP at a mega fund, total comp in the 750-1000k range. Second option, a small (10-15 member) fund, as a Director. One step from MD. The fund size is just north of 300mm and my base+bonus would be in the 600k~ range with a potential to receive a big carry. Now my thinking on this is that if I help the firm grow, and move to say MD in a couple years I could be earning way more than in a megafund. Am I thinking straight? Thanks!
How is your network in the LMM and sourcing ability?
I would say it is definitely above average for my experience/position.
If you're confident you can source and close good deals, your path to partner and big carry is clearer at the smaller fund. That is provided you believe in the leadership team, the fund's trajectory and if there aren't already too many partners above you sharing the carry. Otherwise, life as a mega fund VP is pretty good risk reward.
Depends how quickly you want to be partner. Being a VP sucks and it’s more and more common for 4 years VP 4 years principal at MF.
whereas at your other fund you could feasibly be partner in theee years. Also consider lifestyle. I wouldn’t worry about comp. at your age, that’s enough money wherever you go. The extra cash won’t make you happier. Sorry for typos—mobile posting.
After 2 months at a MF, I can tell you that many of my VPs work 8am-12am M-Th and around the clock on the weekend. The lifestyle is absolutely brutal because there are so many layers of people to impress / do work for (even the partners have a boss who have a boss who have a boss...). I honestly have zero idea how they do it, as a few of them have families / SO / kids. Seems completely unsustainable. Keep in mind they have been in this spot for 3+ years.
Obviously a ton more to consider but as you get older I think this is just such an important factor.
Also at a MF and second this. Huge deterrent from wanting to stick around. If I do, I wouldn’t try to have a family until MD / Partner, just doesn’t seem remotely feasible. I guess you have enough $$$ that in normal times you can afford either constant child care or for a non-working spouse, but you’re still barely going to have enough time to see them
I wonder how some these guys are manage it, just seems impossible to have a stable/happy family life working that much.
It is...
I guess there are outliers, I know this one guy who married his girlfriend in their senior year, they are still together and seem happy. I was talking to him and he said the trick is to not be too needy and HAVE to spend every waking moment together. His said his wife met her "new best friend" at work and he has been keeping her happy. His wife is SUPER understanding of his work situation too, she doesn't mind at all when he has to work 100hr weeks, so when he's busy working on models at midnight their having a night out. So I guess the trick is to find you an understanding women who doesn't need you all the time. He's about to become a dad too, so I guess that's an example of someone who made it work.
Do the hours become more manageable at partner level or are you still cranking 80-90+?
After you make decent salary you need think about how you can compound your money fastest. It will quickly outweigh what you make in salary and offer you true freedom from being a glorified wage slave.
I'd go with the smaller fund but be very aggressive about negotiating meaningful carry and what the path forward with them looks like.
I’m a bitch ass analyst at a MF and I fully intend to ride it out all the way to the top. Do I work ridiculous hours? Yes. Do I hate my life a lot of the time? Yes. Do I do pointless work sometimes? Yes. However, I want a god damn beachfront mansion and a Ferrari. I want to be able to spoil my wife and kids, retire at 50, and travel the world for the rest of my life. It’s lonely at the top. As Aaron Burr would say, I’m willing to wait for it.
is this a troll?
Can you eat MOIC?
you should know that people who work this much and retire at 50 tend to die at ~53
i see it all the fuckin time in ex-partners at my firm
Damn actually? Heart attacks I'm assuming?
.
It depends how stable the small fund is and how money hungry you are. I have seen that people make calculations that include potential carry from smaller funds which dont have the track record or end up not producing (or even worse: people even end up suing each other etc.). If the small fund is a name you trust to be around in X years and you like the people (read: founder who really holds all strings usually...), I think both would make sense. Otherwise go for stability and more payout for some years then reassess
A few things to consider:
- Track record of the smaller manager, history of raising funds, etc. Is this a Fund I?
- What do they want their next fund size to be? At 300m, there isn't that much in mgmt fees to go around, which could cap your salary/bonus for awhile. Stepping up to 600m on the next fund will also likely require hiring more ppl, diluting the revenue pool somewhat
- Do the math on the carry, and also take into account the likely timing of payout. Is $100k +/- difference in carry in year 7, that important to you vs job stability?
- How likely is a quick move to MD? You should have a sense for how difficult/easy it is to break into the "inner" circle
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