Starting out at a small/ recently created firm
A couple of VPs at a sizable firm that I had previously interned for (x2) have left to start their own shop, focusing on market rate multifamily and affordable acquisitions/development, based out of Atlanta. They've raised $ one hundred million and are interested in hiring me. I'm going to meet with them on Monday to discuss comp and I'm unsure what to expect.
They're super bright group who I greatly respect and get on very well with, but is this a risky move? Should I take a possible hit to overall comp compared to the market in favor of securing a full time job at a place with a good culture (I'm graduating in December) and a good amount of responsibility? Or should I hope for a commitment to giving me a shot at getting some sort of carry/promote earlier than the norm (especially if the base is below market)? I've received other offers so I guess I'm not entirely dependent on this role.
I'd suggest making sure they're committed to getting down in the weeds and training you. They're likely going to be preoccupied chasing down deals with limited time to walk you through the nuances of the transaction / underwriting process. Had a friend that started out in a similar position and it didn't work out because the principals realized he was more of a burden than help. One of the benefits of a large company is the training and support system.
Another thing to consider is the benefits of having a name brand on your resume early in your career. On the other hand if you can swing it then there can definitely more upside potential with a smaller company.
It depends on your tolerance for risk. If these choices were easy, no one would need help thinking them through!
Look, if they've raised $100mm for an affordable fund, that's a pretty respectable first pass (fund sizes just don't get as big; $500mm is enormous in this space). If you do really well and prove yourself, you'll probably have a decent case to ask for carry in the future. Especially given the size here, if you can help source deals and go above and beyond a typical junior role, which you'll have an opportunity to do (since, again, low headcount). Also, you'll probably be given way more responsibility out of necessity.
Flip side is you won't get much training. Frankly, getting in on the ground floor of a new fund is kind of the dream, so my answer would be to jump on it - if it doesn't pan out, it won't really cost you much. What are you giving up? A little bit of base salary for the chance at bigger returns down the line? That seems like an easy value proposition to me, and this kind of opportunity probably won't occur that often. You can always take whatever you learn and go back to a more established player. The failure of someone else's fund won't negatively impact you.
The obvious caveat here is what your actual responsibilities are. Being a glorified gofer isn't worth it, nor is it if you're just doing managerial or administrative tasks. I know of a new(ish) affordable acq/dev company in NYC where the first full time hire was the person who interned there (out of a grad program, to be fair) who ended up with equity
Sounds like a great opportunity, but as others have mentioned its a bit risky as a first job bc there could be a lack of training and brand recognition for your resume. At the very least I would stay in touch with these guys and look to join them in 2-3 years after starting somewhere with a more established analyst program. Or join now but be ready to network into one of those analyst programs ASAP if you end up being a glorified administrative assistant (and starting an analyst role at 24 vs 22 is not a big deal at all, lots of people jump into CRE late after starting in a different industry entirely).
I'd also add that $100mm for a first fund is great, don't worry about it being too small, that will provide a ton of capital to deploy especially if they are doing JVs. As far as comp, I wouldn't get too sucked into the allure of deferred comp via promote unless there is a quick vesting period. Odds are that even if you love working there you won't stay for the full 10+ year fund life. I'd rather have great training and immediate salary/bonus / share of mgmt fees / equity in deals instead of some big chunk of promote i have to stay for 10 years to get and may not even be that great if the fund underperforms.
Also, in the affordable world, that's a big number. You don't see multi-billion dollars funds being deployed. I can't think of any affordable-focused funds that have more than $500mm AUM. In a given fund, obviously - might be several billion aggregated over a series of raises.
This is coming from someone who went with the small company out of school and is about to go to an even smaller one, so obvious bias is obvious, but take the job. (Also DM me because I'm struggling to think about who the VPs are.)
It is a risky move, but that's the entire point, and you don't even know yet if it is a hit to comp or not.
Definitely take the job. You will likely make more and learn more over the next few years than going somewhere else.
I guess that I don't evaluate risk like the other commenters, weighing the upside against the downside - the upside is that you could further your career and earnings faster than at another larger firm, possibly getting on the ground floor of the next big firm. The downside is that the fund blows up and you find yourself at age 23/24(?) without a job and you'll have to find a new job. That kind of stuff happens and it's not that big of a deal unless you have a wife, kids, actual responsibilities, etc. You may not be able to afford taking these risks later in your career.
It sounds like you're weighing the upside and downside exactly the same as the rest of us...
Playing devils advocate here but OP, want to point out that getting exposed to as much as you can starting out can be a double edged sword; on one hand, sure you might see more than some counter parties at larger firms but that doesn’t mean much if the learning environment is trash and you’re not a good self-learner. Some people might prefer having teammates to lean on and a gradual learning curve than what may be many late nights and 100+ forum posts on WSO asking how the hell to fix your model.
Perhaps you're right; I'm just not viewing it the same. I've always liked a little risk!
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