It's 2018, and both PE and VC deal activity have rarely been higher. As a 3rd year Analyst in Consulting with both PE-transferable skills (Corp Fin cases, commercial due diligence) and VC-transferable skills (tech major), which of the two is a clear winner.
Here's my understanding - please do shout if something is incorrect:
PE has come clear advantages when it comes to comp, and being able to drive more impact (fund owns the target vs. a minority equity stake). Also, it's very possible to go to VC post PE. However, PE has more of a choke point at VP, and potentially faces a bigger downturn should we see anything like 2008.
VC has many things going for itself - meeting exciting people / ventures, building your own brand etc. Also, believe it's got a bit more of a moat (through the network you build). But it massively loses out on the comp front (~$180k vs. ~$250-300k?) Apart from that, less transferable to other investment strategies.
What do you think?
Ignore the cyclicality or temporal consideration of which is more attractive today. Focus on what matters to you and why. The ability to switch from one to the other or vice versa as your career matures will be a function of your network, how articulate you are, and your charisma.
Success in venture is very different than success in buyouts. computercomputercomputer touches on the difficulty.
I'd modify this to say that the power law in terms of caliber of thought that smart venture investors bring to the deals in their portfolio is extreme. Let me unpack that. I am not saying a brilliant venture investor is standard deviations more intelligent than his PE counterpart. I am saying that similar to how there is a difference between a .308 round and a .457 magnum, so there is a difference in how the most insightful venture investors think about analyzing a business and its market opportunity. Further, within the type of thinking that's necessary for the logarithmic success outcomes you see in venture investing, there's a massive J-curve between the truly great guys and the good ones, then even larger separation between the good guys and the weak ones.All of that is separate from how critical the team founding the startup is, so another huge driver of success in venture is how 'people smart' an investor is as that predicates your ability to support the founders through all the inevitable hurdles that pose a new life-or-death threat every other week for the first five years.
Founder fatigue, messy personal life issues (infidelity, breakups, divorce, unexpected children, expected children, major health issues, parents' death ...), disagreements over very senior hires, tough business steering decisions, general stress ... these are all things that you don't see written about on Medium much but are real-world things that put the working relationship between the two, three, or four people who started the company under duress.
Venture investors move fluidly between therapist, coach, cheerleader, adviser, headhunter, and house dad. One unfortunate side effect of the inverted pyramid that VC firms look like is that associates don't get to see all the weighty conversations within the partnership about how all of that goes down, so most people are simply unaware of its very real and very meaningful existence.
PE, on the other hand, is a really transaction-oriented profession. You aren't making magic soup by prognosticating about the future, you're buying stable businesses with healthy growth prospects. This means financial acumen plays far more central a role than anything else. That's not to say that EQ is irrelevant, just that it's not the massive requirement it is in venture.
You should figure out where your natural or learned strengths lie, then plot those strengths against your interests. If there's little gap, wonderful, you're in alignment and can make a decision based on what fits in that great overlap of strength and passion.
If there is a gap, your career choice should include intermediate steps that help you acquire or hone the strengths necessary to unlock a long-term outcome where you're in a role that fits your interests or dreams.
In short, you're thinking about this from the wrong end. Invert your mental model. Make a decision outside of temporal considerations like comp in the first role (the one that's more favorable today could be way less favorable in five years), promotion trajectory (if you have to do an extra year at three different titles of seniority, so what, you "lost" only three years to get to the apex title that you'll sit in for two or more decades), and exit potential.
Your penultimate line sums up everything I think about this. It's better to discover earlier in your career whether you're someone who can make it work in such an unpredictable field.
Would you rather wait until you're 36, eight years out from your MBA program, recently married, and maybe with a kid or two already out before potentially risking your seven-figure annual salary, bonus that's a multiple of that, coveted seat near the top of a skinny pyramid, and all the attendant social fallout that could accompany failure ... or try it in your 20s when your comp hasn't yet really taken off, you're more geographically agnostic, and effectively free of any familial or personal commitments?
You can make this as academic of a decision as you want (a path you're balls-deep in already, for the record), or you can rely on a more lightweight mental model of which route is costlier tomorrow and thus smarter to explore today.
You're correct that you can't get signals on your future success, so the simple answer is to walk down the path that reveals those signals to you en route. Make sure you stay heads-up and observe the signals diligently, and pair that with a strong stomach so you don't abandon course too quickly. In plain English, if you're interested in venture, do it early and don't quit within at least one year, ideally two.