Joining New Growth Fund of Mid Tier VC Out of Undergrad

Based on the most helpful WSO content, here are some key points to consider when deciding between joining a large, brand-name fund or a new growth arm of a well-known mid-tier VC out of undergrad:

Pros of Joining a New Growth Arm of a Mid-Tier VC:

1. Entrepreneurial Experience:

   • Being part of the founding team can provide significant entrepreneurial experience.
   • Opportunity to shape the direction and strategy of the new growth arm.

2. Impressive Team:

   • Working with a highly impressive team can offer valuable mentorship and networking opportunities.

3. Career Growth:

   • Potential for rapid career advancement if the fund performs well.
   • Possibility of moving up to Principal/Partner level by late 20s/early 30s if the fund is successful.

4. Skill Development:

   • Hands-on experience in deal-making and fund operations.
   • Opportunity to develop a broad skill set that can be valuable in future roles.

Cons of Joining a New Growth Arm of a Mid-Tier VC:

1. Risk Factor:

   • Higher risk due to the unestablished nature of the new growth arm.
   • Uncertainty about the fund's long-term viability and success.

2. Competitive Segment:

   • Early-stage VC is highly competitive, making it challenging to differentiate yourself.
   • Success may depend on luck and the ability to find a standout startup.

3. Capital and Runway:

   • Ensure the fund has enough capital to operate for several years.
   • Verify the fund's runway and ability to place the right bets on the right companies.

Additional Considerations:

• Diligence on the Fund:

  • Conduct thorough due diligence on the fund's returns, reputation, and the role you'll be given.
  • Vet the firm carefully, including reference checks on the partners and understanding the vision for the fund.

• Brand Name vs. Experience:

  • A strong brand name on your resume can be an asset, but the experience and skills gained at a smaller, entrepreneurial fund can also be highly valuable.

• Personal Preference:

  • Consider your personal preference for the type of work and environment you thrive in.
  • If you are highly entrepreneurial, the new growth arm may be a better fit.

Conclusion:

Ultimately, the decision depends on your risk tolerance, career goals, and personal preferences. If you value entrepreneurial experience and are comfortable with the associated risks, joining the new growth arm could be a rewarding opportunity. However, if you prefer the stability and brand recognition of a larger fund, continuing to pursue opportunities at Tier 2 growth equity shops may be the better path.

Best of luck with your decision!

Sources: Is VC out of undergrad a good idea?, Q&A: Joined a top Hedge Fund out of undergrad, Leaving Megafund for Lower Middle Market - Am I Crazy?, Why Growth Equity vs Buyout?, Q&A: 1st year VC analyst (~750M AUM)