After 3 years of VC, I’m considering moving back into publics by joining a ~$50B LO AM/MF (currently in late stage in interview process; firm is well respected across the Street) (prior experience in SS ER; ~6-7 years post-grad). My current/prior experience is centered around a high growth sector (think: tech, healthcare), and the new role is aligned with this experience.
What are the pros/cons of making this transition from VC > LO AM? I of course understand the daily MTM piece, but trying to think beyond that. Current shop I’m at is increasingly focused on portco management vs. new deals, which is limiting my front-end experience. Thinking through things like deal velocity, workload, WLB/QoL, comp, upside potential, etc.
Based on the most helpful WSO content, here are some key considerations for transitioning from VC to LO AM/MF:
Pros:
Cons:
Additional Considerations:
Ultimately, the decision depends on your long-term career goals. If you're looking for a more stable, research-focused role with better WLB and alignment with your sector expertise, LO AM could be a great fit. However, if you value the entrepreneurial and operational aspects of VC, you might want to weigh the trade-offs carefully.
Sources: AM vs HF: The Business of Our Business, Let's Talk About the Pros and Cons of our Gigs in RE Finance, https://www.wallstreetoasis.com/forum/real-estate/lets-talk-about-the-pros-and-cons-of-our-gigs-in-re-finance?customgpt=1, L/S vs LO from a non-monetary perspective, M&A Pros and Cons
Following. Did you have prior HF experience or how did you get there?
Interesting background. We may have to chat since I think we’ll have a lot in common.
I think the key pros/cons are exactly what you’d expect and there’s not too much nuance broadly speaking. Unfortunately, it’s going to simply come down to what type of lifestyle/responsibilities you’d prefer.
I will share what I know about AM (not enough VC experience yet)
Lifestyle/QoL:
- AM and VC are probably fairly comparable
- AM will have very predictable hours dictated by the market with the heavy hours coming from earnings seasons. Expect range of 45-60 with average probably around 50
Comp:
- VC definitely has more upside and higher ceiling with equity/carry
- Average outcomes likely favor AM. Risk-averse/frictionless path to mid-to-high 6 figures with low 7 figure if you make PM
Responsibilities/Type of Work:
- This is where you get the biggest difference
- AM is far less hands on with investment opportunities (obviously) but you also have a lot more freedom to use your time however you see fit. You basically have total autonomy over your day to day but you better use it wisely otherwise you’ll likely fall behind since there’s so much you could be doing depending on mandate/strategy
- VC and AM actually have a shared philosophy in determining market sizing, share changes over a multi-year period, business quality, moats, etc.
- The AM investment process usually leans more qualitative than quantitative. The quantitative aspects come from understanding valuation, entry/exit points, ROIC changes, and investment cycles.
- This transition makes way more sense than VC to pod-shop where it’s much more granular modeling and incremental financials/valuation
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