Comparing Offers: Megafund Associate versus Startup VP

Lol at $1B fund being called megafund.

Listen dude, don't flatter yourself. Megafunds are like $30B. A $1B is more like a middle market.

I would personally go with the startup but thats the entrepreneur inside of me speaking.

Honestly though, great job on both. Must not have been an easy feat.

don't megafunds have multiple funds even for capital raised in the same vintage year?

i.e. they can set aside $1b of the aggregate fund for a smaller special situations fund targeted at something like South American petroleum intermediaries

Interesting career path...

3 years consulting --> top MBA --> 1 year IBD --> PE

Same # of years as the typical IBD --> PE --> MBA --> PE route, but you got to substitute consulting for a year IBD and 2 years of PE. Did you find that PE firms liked how you had both a strong management consulting background as well as investment banking experience?

The startup seems to be offering a huge amount of money which I found find hard to pass up if I were in your shoes. KKR has been known to pay at least as much though - $1 M in 2 years out of MBA.

If your ultimate goal is raising your own fund, I would try to understand what it takes to do so. A great person to shoot a message to would be someone at a FOF who specifically invests in MM PE. A conversation with them will (1) help you build a rapport with someone who may fund you in the future (2) help you understand the backgrounds of individuals they are funding. Surely your MBA network can point you in the direction of someone you can trust to bounce ideas off of.

The monetary aspects IMO are much unclear @ this point to comment on, but Billy Ray's framework is probably in the ballpark. Then again your consideration of the startup's partners' track record vs. mega's track record, and how you think plays into each funds' expected returns, as well as your own outlook on each funds' industry focus and expectation of the exit environment in 5-6 yrs -- def. something to think about.

I think one big consideration is the type of role you will honestly have at the mega, which will undoubtedly provide you with a top name on your resume, but if at the end of the day you are purely the excel jockey then how will that play into your ability to raise capital? (this should be a big part of your necessary conversation with an FOF person before you execute the offer). Given the mega partners' track record, and what seems to be a top-heavy hierarchy (you "will be the most junior person in the fund"), I highly doubt you'll obtain Board Seats and wont have an ability to showcase that you drove portco performance/returns and led an exit. Then again you have no buyside/equity investing experience, and may "need" to pay your dues - an FOF will have an opinion on this as well...All of these considerations might be importance when you are promoting your bio during your own fund's capital raising process.

I would think one of the bigger considerations would be upward mobility. I would assume at the megafund that there may be issues promoting people to partner, i.e. the current partners are unwilling to share the pie. At the startup, you may find that you would have more flexibility and opportunity to move up. If you want to raise your own fund, what is the context? I.e. do you want to raise a fund to do one deal and go from there or are you looking to raise institutional money? Does being a partner a firm that raises a new fund meet that criteria or are you wanting to do it on your own, which would require you to have other partners most likely? Just some food for thought.

def the vp spot. you have someone to hand down your bitch work to and you have less of the hierarchy in a smaller fund. In the end of the day, you might not have the name, but you will have the dough and the VP title in a PE fund, which is what really matters

Those are great offers considering you didnt have preMBA PE experience. Howd you land them and where did you go to undergrad/what were your grades? Did you have industry experience?

Just five monkey shits? Suckas

lol @ someone asking him his undergrad grades

I'd go for the VP role, not a particularly tricky promotion route to principal, from where launching your own Fund or getting into partnership would not be too difficult.

At the megafund you will just be another (albeit well compensated) monkey, with no cut of the carry....if the MM is a decent fund that can return c2.2-3x you're looking at a very decent payday.

If you want an LP perspective of the two Funds, feel free to pm me names and I should be able to offer a few thoughts, assuming I know the MM.

Waow - I was not expecting so many differing and valuable insights. Thanks all

@ The Shit: It's a fund of a mega-fund. I am not aware of any specific $30bn fund that is not under the umbrella of a larger organization (maybe SWFs...)

@ Schwarzmanegger: Both funds liked the fact that I had both consulting and IB (although it is only a year) experience. Not sure whether that was the differentiating factor though...

@ Billy Ray, DurbanDiMangus, goalieman688: Valuable aspects...

@ bIastoise: It's been quite some time since someone asked me my undergrad degree :) For your reference, I don't have an ivy-league undergrad, but career-wise I had a consistently good track record at my employers and a balanced resume if that's what you are asking...

I am no expert so I can't give you any advice.

just want to say congrads though! all those offers sound terrific, especially in this economy. Goodluck!