IB vs PE vs VC : The rundown

It is no surprise that finance in general is a competitive field, and getting into any role is difficult. The only problem is that most people have a hard time finding out what they would do in each role, and underestimate how different each role is.

Below is a list of some of the main differences and qualities of each. Feel free to chime in with your own advice!

Venture Capital:

Article by Investopedia - Private Equity vs. Venture Capital: What's the Difference?

Venture Capital is funding given to startups or other young businesses that show potential for long-term growth.

Pros

• Deals with start-ups (usually healthcare, tech, biotech, etc)
• Opportunity sit on company board, retain 25%(ish) equity usually (50 or less generally)
• Gets a thorough view on what ideas take off and which ones don’t in the market
• Interviews are less formal/technical than PE or IB
• Work life balance is MUCH better than IB or PE
• Employee backgrounds can come from a start-up, IB, etc. it is not as specific on where you came from

Cons

• You have to say no….. A LOT
• Pay is not as high as a HF or PE (pay gets higher in later stage funds usually)
• Very hard to break into without connections/ no set recruiting season
• Almost no job postings anywhere, really need to hunt
• Exit opportunities into a PE can be harder than from a PE to a VC

Private Equity:

Article by Investopedia - Private Equity vs. Venture Capital: What's the Difference?

Private equity is investment capital in a company or other entity that is not publicly listed or traded.

Pros

• Invest in already established companies that are going downhill
• A LOT of control, much higher equity, usually 100%
• A steady recruiting season, can be scouted by headhunters
• Have basic criteria to get in, usually 2 years of IB, prefer M & A background
• Pay is higher than VC
• Get to restructure an organization with better operations/management to make a profit

Cons

• A LOT of hours, work life balance may be difficult (this can improve the longer you are there)
• Interviews are much more technical than VC
• Not as much flexibility in your background, usually scout for certain criteria
• Although there is recruiting, this is competitive and hard to get into

Investment Banking

Article from the Julia Kagan at Investopedia - Investment Baking

Investment banking is a specific division of banking related to the creation of capital for other companies, governments and other entities.

Pros

• Much easier to land an analyst position here than start in VC/PE
• Pay is high for an entry level position
• Good exit opportunities into PE/VC/HF
• Many different areas to work in, not as specific (M&A, Lev Fin, Industry groups, etc)
• Many well-known BB, Middle Market, and Boutique banks to help your resume

Cons

• Very competitive to break into
• TERRIBLE work life balance as an analyst (expect very long weeks for the most part)
• Not as secure in terms of long-term employment

Please feel free to chime in and help pass on more advice and knowledge or ask any questions