Thinking of jumping ship?
I'm a first-year PE associate at a reputable b-school heavy firm that's feeling burned out similar to many recent other posters. I have the opportunity to join a high growth Series C/D start-up's finance team where cash comp is in the 200k+ range excluding equity. This doesn't seem to be your typical FP&A role - seems to be a mix of capital allocation, IR, and a few other hats. Senior guys at this place are your ex-banking / deal types. I think it is a small team.
Hoping that someone can play devil's advocate on why I shouldn't make this jump. I never truly saw PE as a long term career and have more interest in this start-up's industry. I feel that I would easily trade the PE cash bonus for equity upside at this particular company and feel comfortable with that risk. I'm also guessing there is more of a lifestyle balance in this role. That said, what should I be looking to diligence further / what are pitfalls to avoid before committing to this type of jump?
Simple heuristic, because money wise, you’re going to be fine in the long run.
If you look back in 20 years and you didn’t do this, would you regret it, or wish you would have? If not for money, then for the experience or the things you’ll learn?
If you will, then do it. Don’t let any feckless wastrels who are focused on “prestige” on this site distract you from what you want to do with your life or the joy you’ll find pursuing a path either more or less trodden.
I would trust your instincts and do what you want to do not live someone else's dream.
if you really want devils advocate, then surviving another year and then getting into b school (sounds like placement is great there) would set you up for more optionality and also more time to get used to PE and decide if it's what you want. I do think it's hard to know if it's for you after just one year. Frankly it's hard to know that after two; the job really changes after you get through the crappy associate years (but often still sucks).
likewise if you did 2-3 years (rather than 1) and then a role like this, it would be much easier for you to get back into PE if you decided you didn't like it.
So the best contra argument I can come up with is losing optionality. But if you know you want to do this, and you don't think you can replicate this offer easily, then maybe it's time to leap.
Thanks to both, +SB. More than comp or optionality, I’m worried about the lack of clarity for upwards progression that’s so clearly outlined in PE. I also feel there’s risk in not being front office in terms of possibly becoming a synergy down or not having much influence in the actual financial direction of the business. Are these fair considerations?
Sounds reasonable, but while there isn't a predefined/clear path up for promotion, taking on more responsibility and by being proactive, you can probably move up faster than you could at a PE fund.
Did they skirt the question or say they aren’t sure with regards to progression? If so, try to work with them to outline a plan/rubric of sorts IN WRITING on how progression will work. You have the power here since you don’t necessarily need to switch jobs
Don’t get me wrong, but from a financial prospective, wouldn’t your earnings in PE be larger than your potential equity windfall? I know partners at APO in their early 40s worth 50 mil+.
Yes, from a risk weighted comp standpoint PE will always beat a start up. But that doesn't mean it will win in happiness / life satisfaction
True, just depends on the startup. Sometimes it’s different smell same shit.
If your hurdle rate is projecting 50M+ net worth by early 40s, you are going to be sorely disappointed. Absolutely awful way to manage your career and earnings expectations. Think about the odds of you having the ability to make partner at APO combined with the probability that you will want to make the huge sacrifices to effectuate that outcome...like saying "From a financial perspective, I could parlay a senior PE seat to join Citadel and start a new PE strategy, that could net me a $100M net worth by 40."... Open your eyes and grow up.
lol, some of you need to get some fresh air and get off the internet. :
- I’m in my 30s
- Lol the probabilities of a startup being successful is just as hard if not harder than Partner because:
1. If you’re an employee you can get fucked out the upside.
2. Most startups fail
- I was basing my risk assessment on the chance op generally likes PE, just feel’s burnt out and thinks the grass is greener.
- Have a Happy New Year dude, smoke some weed or something and lay off the Adderall
- If you hate PE also Mr. VP, fucking quit and stop being a coward. Go take those risk bro, life’s too short
FP&A is not viewed as core to the business at startups (only engineering/product are) and will be among the first roles to go in a downturn. Additionally, FP&A is also not given significant resources or attention. Finally, many startups at the stage you’re looking are overvalued by 50-100%, so if they haven’t raised recently, consider that when reviewing the equity offer. Hopefully this isn’t Ramp.
When did they last raise? And at what value? It sounds like you don’t want to be in PE, but I’d make sure to make the jump to somewhere with equity upside. Many growth investments raised at stupid valuations and have limited upside given huge prices and may not be in the money for years.
path to CFO?
In a similar boat, constantly thinking about jumping ship but very unsure. Would love to chat with you OP if you're open to it
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