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
