Feels like I'm seeing more of these posts in recent months so figured I'd offer my 2c. My background is pretty vanilla here (IB to PE to the tech/startup world, where I've been at a couple companies now for the better part of a decade). Definitely not for everyone but happy to provide a sense for the good and bad.
Feb 20, 2022
Total Avg Compensation
April 2024 Investment Banking
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Director/MD (5) $648
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Vice President (19) $385
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Career Resources
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1. size of company (how many people and stage)
2. industry of current co.
3. sectors covered in IB & PE
4. think co. is going to get acquired or go IPO down the road?
5. how do you know if a (tiny) startup is where you want to go? how did you clean your thoughts?
1. Typically early growth stage (applies to all the startups I've been at) - call it 50-200 heads when I joined
2. All have been consumer/ecom, but different verticals
3. Not tech focused at all in either one
4. Unclear, but if we're just looking at the count of startups that IPO vs get acquired, it's acquisition
5. See answer 1, not sure how to judge tiny startups that are early stage. I think the finance pivot works best (for me at least) once a startup has found product/market fit and is focused on execution and professionalization, so that's why I was targeting startups that were in this general level of maturity. Like running a detailed model for a 5 person startup is almost pointless for a lot of reasons
how do you feel working with tech personalities compared to finance personalities
People can be a lot more forward given flatter hierarchies. Also wayyyy more different personality types - the commercial folks (finance, sales, etc.) tend to be more "normal" but there are definitely some characters in the more technical depts. Having engineers also gets you some reflected benefits - for example, have a friend at (now public) unicorn that was shifting back to in office work until the engineers all freaked out and that got squashed.
How did you go about finding a good startup job? Through your network? Websites of notable VC funds? Head hunters?
First time was spamming resume on linkedin, not ideal.
After that I had developed a good rep and used my network.
VC funds is a good callout - sometimes there will be a portfolio ops person or careers listed on a VC firm website, and making those connections can be a big leg up in finding out about opps.
HH's can be helpful but it's the wild west (even more so than regular finance recruiting since there are tons of firms involved).
Do people in tech look down on you coming from banking/PE? Is the comp decent?
You get jokes about it sure, but there's such a variety of backgrounds (people with PHDs vs some who didn't finish college) that it's really all in good nature. Comp is super variable depending on company. FWIW I'm in my 30s and make basically associate comp, but more salary, way less bonus, and equity is always a big unknown.
Thanks for offering to do this. A couple of questions...
1) What was the catalyst for the move from FO finance to start-up? For example, you always wanted to be an entrepreneur, you were recruited by a founder, you sat at one of your PE firm's PortCos and realized you could run a business, etc
2) In your opinion, what are the top factors that differentiate a successful start-up from a failed one? I'm not asking about market conditions or external factors, but more the internal 'checklist' that is directly attributable to success or failure.
Thanks!
1. Sick of finance and didn't want the life that the senior guys had (plus I was never really in finance for the money, even though I did wind up with a solid start to nest egg). Leaving for a startup was really the product of wanting a role that was strategic, leveraged past skills, and where I could make a big impact from day 1 (i.e. needed small team, so F500 was out). PE-backed portco would have been fine too TBH, just didn't work out that way as everyone has been dumping money like crazy into startups for the past couple years so perhaps just more opps.
2. Gonna need to put some more thought in here... will come back later
Thanks for doing this!
Currently an IB analyst in a top BB/EB tech group and pretty sure I want to end up on the operations side (Strategy / strategic fin). Do you think there’s merit to doing a stint as a PE associate before jumping to a role similar to your current position? Or would you recommend trying to make the move to operations sooner rather than later?
Yes, I think there is still some merit to doing PE before moving to the corp side, especially if you want to keep your options open or if you think investing might be of interest later on in your career. Also, sometimes you can move from your PE fund to an ops role at an elevated seniority (have one friend who is CFO of a portco now after leaving to be VP of Corp Dev for a rollup biz after his associate stint; another is C-level but transitioned at the director/principal level from PE to corp). But if you are pretty dead set on moving to an ops role, it certainly could make sense to do it now rather than later.
Whats your role and how much do you make $?
Role covers regular FP&A plus strategic finance (company not big enough to have a dedicated strategic finance/corp dev/strategy team).
Pay addressed above, basically associate comp (+/- 10 years of professional experience for context)
How has your pay progression been since leaving banking?
Can speak to the junior path more generally:
Most IB analysts would be entering the corp world as senior analysts, maybe manager. Senior analysts would make something like $90-100k base, but there can definitely be some noise both ways based on location and with the market being as hot as is it is right now. Manager would be the next step up and would be +$20-30k or so with another intermediate bump for senior managers. Above that is director (then sr director then VP) and that is where you can start to have a wider spread.
The numbers above are base, so you'll want to tack on another 25-50% for bonus and equity, though equity is obviously a big old ?????? in terms of how much it is actually worth.
What would an ib mba associate join as?
Any regrets? Things you would do differently knowing what you know now?
$$$ is not really a regret but have to acknowledge I definitely gave up a lot of comp. Worked out fine for me given lifestyle choices (wife and I do a good job of managing finances, plus she makes good money), and COL is low in Chicago compared to other big cities, but could certainly understand how it might be different for others.
I used also (not seriously) daydream about what it would be like to return to the buyside. I think 2020/21 have basically squashed those rose tinted lenses for me - there are certainly aspects of finance that I miss, but I am not willing to give up WLB for that, and I have seen how these past few years have been really bad for some in finance.
Honestly my biggest career regret is probably before all of this - when I left PE, I thought I hated investing. What I have realized in the years since is that I actually do like investing, but I really hate PE-style investing (binary deal outcomes, winner takes all, ton of DD coordination, etc.) I definitely should have explored the public equities/AM/HF route, either out of IB or when leaving PE - it is entirely possible I would have hated it too, but I do regret not giving it more of a chance at the time.
In terms of my life in tech/startups, I don't have any huge regrets... in part that is because opp cost can be a bit lower in this world (it's easier to get new jobs and tenures average 2-3 years, so making the "wrong" choice to join a given company isn't as consequential as, say joining the wrong PE firm at a mid level seniority). One of the biggest "mistakes" I can think of is not joining this one startup right out of PE as I would have been one of the first finance hires after the CFO and it is now a unicorn. Even with this, I put mistakes in quotes because I don't really regret joining a different startup - I had fun, made a lot of friends, learned a lot, and enjoyed my life, even if I made a lot less money in the exit (maybe the common theme here is don't ask me for advice if you're solving for dollars lol).
Super helpful and appreciate the write up. Any perspective on the “ideal” time in career to jump (junior/mid/senior)?
Does having MBA/no MBA matter for career progression or breaking in at all?
On timing the jump from finance to tech, doing it at a senior level (say, IB director+) can be tough because you wind up leaving a lot of deferred comp on the table, plus you're pivoting to a completely different role after presumably a decade or so in finance so there is definitely some risk. I don't have super strong feelings about junior vs mid level transitions, but at the mid level, you might have some outside factors pushing you toward better WLB (i.e. starting a family). Not directly relevant but the tried and true route of exiting a buyside role to a portco can also accelerate your career path - know 2 guys who did this, one left as an associate (maybe senior associate) and got a VP title; another left at the principal level and got a C level title. Just being at the right startup can obviously be a huge accelerant too.
MBA is not especially helpful in career progression or breaking in, at least in my experience. Like I'd rather hire someone with 3 years of finance and 2 years at some startup over the same person with 3 years in finance and an MBA. Certainly there are exceptions though, and I will readily admit that a significant minority of commercial folks I've come across in this world do have MBAs.
Thank you for doing this!
1. Do you find yourself working outside of your "scope"? E.g. Learning/helping in legal
2. Advice for a first-year analyst eyeing startups? I've built some solid connections but am hesitant to "ask" for a push on my resume
3. Skillsets that would be helpful for the transition to finance at a tech firm? Seen tech finance roles ask for more coding ability (e.g. mid-tier python) than traditional finance roles.
4. Joined/left any sinking ships? How do you think about burning cash vs turning profitable?
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