Breaking into VC from IB vs Start-up

Based on the most helpful WSO content, here's a detailed comparison of breaking into VC from IB versus a start-up:

Investment Banking (IB) Experience:

• Role: Analyst at a middle-market (MM) bank in New York.
• Focus: Sell-side M&A, particularly in tech-enabled businesses.
• Duration: 1 year.

Start-Up Experience:

• Role: Founder/CEO of a B2C start-up.
• Achievements:
  • Won a university competition.
  • Completed a pre-seed round (raised $300k-$500k) with a small VC.
  • Developed a Minimum Viable Product (MVP) and assembled a competent team.
  • Start-up failed after 1 year.

Factors to Consider:

1. Skill Set and Experience:

   • IB: Provides strong financial modeling, valuation, and deal execution skills. Exposure to tech-enabled businesses can be a plus for tech-focused VCs.
   • Start-Up: Demonstrates entrepreneurial spirit, ability to raise funds, product development, and team management. Even a failed start-up can show resilience and learning from failure.

2. Network and Connections:

   • IB: Access to a network of bankers, clients, and potential investors. This can be valuable for VC recruiting.
   • Start-Up: Direct experience with VCs during fundraising can be beneficial. Building relationships with investors and other entrepreneurs can also be advantageous.

3. Relevance to VC:

   • IB: Traditional path to VC, especially if you have experience in tech M&A. VCs value the analytical and deal-making skills from IB.
   • Start-Up: Hands-on experience in building and scaling a business is highly relevant. VCs often look for operational experience and the ability to identify and support promising start-ups.

4. Perception of Failure:

   • IB: A stable and prestigious background. One year in IB is often seen as a solid foundation.
   • Start-Up: Failure is not necessarily a negative. VCs understand the high-risk nature of start-ups. The key is to articulate what you learned and how you can apply those lessons in a VC role.

Conclusion:

• VC Recruiting: Both paths have their merits. If your goal is to join a VC fund, the decision depends on your strengths and how you want to position yourself.
  • IB Path: If you prefer a more traditional and stable route, IB experience can provide a strong foundation and network.
  • Start-Up Path: If you want to showcase entrepreneurial skills and direct start-up experience, the start-up route can be compelling, especially if you can articulate the lessons learned from the failure.

Additional Considerations:

• VC Preferences: Some VCs prefer candidates with operational experience, while others value financial and analytical skills from IB.
• Personal Fit: Consider where you feel you can add the most value and what aligns with your long-term career goals.

If you need more specific advice or resources, consider exploring WSO's Venture Capital Course or reaching out to professionals in the field for insights.

Sources: Biotech finance: from IB to VC / HF to funded startup, https://www.wallstreetoasis.com/forum/venture-capital/early-stage-vc-101-5-questions-you-better-be-able-to-answer?customgpt=1, https://www.wallstreetoasis.com/forum/venture-capital/founding-a-startup-exit-opps-if-things-go-under?customgpt=1, Would you ever consider joining a start-up fund that your friend started?, Q&A: 2nd Year Associate at a VC fund - Breaking in With a Fund of Funds + IB background