VC vs IB as a pathway to GE
Looking for some advice regarding 2 job opportunities, with my goal of joining a Growth Equity firm in Europe following a couple years of experience at one of the two below;
Opportunity 1. IB Analyst for a mid-tier Investment Bank, in their TMT division in the UK. Most exit opportunities were VC/GE shops.
Opportunity 2. VC Analyst for a ~$200 AUM VC based across Europe, does multi-stage tech investments, but primarily focuses on Seed and Series A. No clear exit opps given its a newish team.
I'm leaning towards Opportunity 2 primarily because of the better WLB and also I'm just more interested in the opportunity. However, I'm concerned that the lack of modelling/quantitative tasks one might do on Seed/Series A investments, compared to what an IB Analyst may do, would hurt my chances when looking to move into GE.
Would really appreciate hearing what you guys think.
Bump
For our associate program (growth equity), we interviewed kids coming out of banking / private equity / public equities / other growth funds, but we did not interview anyone from early-stage investing backgrounds because, while they offered a complimentary skillset on sourcing and had a network that was additive to ours, the diligence skillset is completely different and we do not have the resources or the team size to train them effectively.
This is super insightful, I'm in VC right now and trying to move toward Growth Equity. When you say Diligence Skillset what exactly are you referring to? Would you mind connecting and exchange on this topic?
Would you consider someone that had 2 years IB + 1.5 years in early stage?
IB is probably better for junior level growth positions. We interviewed a lot of people with Series A/B VC backgrounds who had miles better investment acumen but just sadly lacked the technical aspect which is so key to add value... If you're dead set for late-stage growth think IB is safer but it's still going to suck to exit. Just make sure it's TechMT and not TelcoMT group or the net benefit is zero or negative
Do you think prior IB internship experience/ Modeling courses could make up for this?
If you're dead set on moving into growth, go into banking first. It's quite difficult to transition from early stage to growth, as the skill sets are pretty different. And there's an expectation that a growth associate should be reasonably proficient in financial analysis, which you don't learn in early stage venture.
I've done both banking and VC, now in growth equity. Agree with other folks, IB is still the way to go if your goal is true growth equity (minority & control stakes, cash efficiency) vs. late-stage venture.
I actually think the venture background helps me more often day-to-day - finding interesting segments/businesses, building founder relationships, developing well-informed perspectives on new markets and their evolution. But the banking background fills in the rest, which even if it's not a day-to-day task, still is mission-critical to success:
- Most deals I work on are not clean, primary, minority VC deals but typically include some level of structure in the term sheet and occasionally leverage, seller notes, etc.
- Post-LOI execution - coordinating third-party advisors (QoE, tax, legal, etc.) and past the first 1-2 years, playing a key role in negotiating definitive documentation and funkiness that comes up in specific situations, i.e. key man insurance. Overall being able to drive a deal from origination to close
- Managing banked processes - a fair amount of the deals we look at involve a banker (typically a MM Tech IB). It does give you a leg up to know how they operate, how they might spin a story, and navigating the sometimes tricky dynamics of winning banked deals
- Portfolio M&A - being able to support portcos in both M&A execution and on the sell-side, often without investment bank support, will become a critical part of the job and this is really only learned in IB or after a few reps in PE/growth
Can i please PM you? Would love to hear more looking to move to something similar. Would really appreciate the time!
Did banking and now in VC and need to get out ASAP. Seems like hiring for anything "growth" is frozen - any advice?
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