Drop out of MSF for $200M HF internship

I would like some advice about a potential opportunity.  I am currently enrolled in a top MSF program on the east coast and am trying to get into consulting. So far I was dinged from all MBB's and have nothing else on the table in terms of offers/interviews. Through a friend, I have an opportunity to intern at a small hedge fund in Los Angeles which has the potential to turn into a full time permanent position.  However, I would need to drop out of school since the PM wants me to be physically in the office. I would obviously have limited options if the hedge fund doesn't work out.  What should I do? 

Was told that the internship will turn into full-time (obviously given I'm not a fuck up)

Comments (45)

  • Analyst 1 in IB-M&A
Oct 22, 2021 - 11:45pm

This might be just me, but I don't really believe in MSF programs' placements, on average. Obviously good candidates are good candidates, but I don't think the MSF degree makes people more competitive candidates. Dropping out of school is a little rough, though

Oct 22, 2021 - 11:48pm

It is and I wouldn't really consider it if I had something on the table. But the way I see it, it's late October, deadlines for all areas of finance and consulting are passing and I don't have any interviews or offers. And at least this is an internship for a hedge fund, albeit a 1 year old $200M fund, but still....

  • Analyst 1 in IB-M&A
Oct 23, 2021 - 12:01am

From an outsider think it's a little suspicious that they're asking you to drop out. Unless it's completely off the table, I would push to intern "part-time" (i.e., still put in however many hours you can while managing classes) until you feel comfortable enough to pursue it full-time and get a feeling for compensation/the team, etc.

Oct 23, 2021 - 12:06am

Why would you need to drop out?  Do you have to be enrolled in classes back to back with no breaks in semesters?  Is there no way to take a semester off?

Oct 23, 2021 - 12:08am

My program has no leave of absence policy. Yes I have almost 8-10 hours of classes a day. It's a super rigorous program given it's ranked in the top 3. I have a 6 week break in December but that's it. Obviously not enough to do a HF internship and the PM isn't going to wait until December anyways probably. 

Oct 25, 2021 - 10:00am

If it's a top 3 program, stick with the degree.  After finishing it, you should have plenty of great opportunities and this won't be the last one.  Actually a small hedge fund in LA might be one of the crappier opportunities after the degree is done if it is truly a top 3 program.

  • Investment Manager in HF - Other
Oct 23, 2021 - 8:18am

What have they agreed to? Will they pay you during the internship? You said it converts to full time if you don't F up, do you trust them? How long will that be? What will your pay be? Any of this in writing?

This may be totally legit, but it has a very skewed power dynamic that can lead to you being thoroughly screwed. You are desperate for a job, you don't have many opportunities in HF (they know this), they are a small shop that needs cheap talent, what better way to accomplish this than with a promise? It's free, gets them the work they need, and there is little risk (reputation, etc) for them, while a lot of risk for you. For that to work, you need to really believe the opportunity is large. 

I'm normally a person who bets on myself, and I'm fine with risk, but in this case you need to not only believe in yourself but really trust them. Usually when firms don't come to the table with anything (not sure if they are that's why I'm asking) they don't really have the resources to actually make it work. 

Oct 23, 2021 - 12:36pm

So I haven't had many opportunities to talk to him but in the text messages we have exchanged he said verbatim: "we are looking for an intern for now but come beginning of the year, we will be looking for a data analyst and a research analyst. Given that you haven't worked for a hedge fund before, it might be better off for you to start as a intern and move up to a more senior role when you learn the ropes". That was the last text from a week ago. How should I respond? I agree those are all very valid questions you are raising, I'm just really unsure how I can bring those up to him. Can't say "so what's my pay gonna be? etc." Please advise and thank you so much

  • Investment Manager in HF - Other
Oct 23, 2021 - 1:08pm

It is going to come down to what other options you have and your risk tolerance (in terms of how you communicate). Has this person interviewed? It is pretty strange to offer a job without interviewing or getting to know you, that's usually a bit of a flag. Also you were interviewing for MBB but are now considering a HF, what are you actually interested in? those are pretty different fields so I'm just trying to get a sense of what you want to do. 

I would write back something along the lines of:

- thank them and reiterate how excited you are to work there and learn about HFs, etc

- remind them that you are graduating in May and it would be preferable to start then, but understand that if you need to start now you are happy to do so (this will remind them that it is a pretty big risk you are taking, dropping out of school, etc)

- ask if you can setup time to discuss the details of the role (responsibilities, start date, etc and of course during this try to fit in the compensation question)

- reiterate again that you are excited and looking forward to learning more. 

Most Helpful
Oct 23, 2021 - 3:04pm

Stay in school. 

The probability of 1) the fund growing into something real and 2) you getting a good full time offer there with a 3) PM that pays/treats his juniors well is too low in my view to drop out of a top MSF program. These small funds are a dime a dozen (no matter what the PM tells you) and you should be able to land a comparable job post-MSF. 

If you're finishing in May and the PM is a decent guy who wants you to join his fund, I don't see why he can't be more flexible with a remote internship to perm position. The fact that he isn't being flexible and pushing you to drop out is a massive red flag in my view. 

Let's say you drop out and join the $200MM fund. What if the PM then gives you a full time offer that pays near nothing? Say his fund goes nowhere and you get a near zero bonus? What do you do now? You lost how many years? Spending 1-2 years at a tiny fund that can't make it is not the best work experience and offers limited exit opps VS graduating from a top MSF program and joining a real fund/company.  

I just see this as a ultra high risk and questionable (if any) reward move. Maybe I'm a bit jaded having been in this industry for a while, but I've known way too many PMs at small funds that screw over interns/juniors at ever chance they can get. I just hope this won't be you. 

Best of luck!

Oct 23, 2021 - 3:12pm

Thanks so much for your insight! Really good perspective. I wouldn't say he is pushing me to drop out. So my friend who is in a HF himself told me about this PM that he knows who is looking for an intern. Then my friend put us in touch. He explicitly mentioned that he is looking for someone to be at the office physically and I indirectly said that I am currently across the country for my program. He didn't really respond so I chimed in and said I'd talk to my program director to see if I can make something work.

Im assuming he doesn't have to wait for me to finish in May since there are so many people in finance clamoring to be working in the HF space. So chances of him waiting for me to finish are non-existent.

Talked to the program director last week and he is not willing to do remote. So neither party seems to be willing to do remote and I am left having to choose. This is probably my only shot at the HF field given that I have no banking or finance experience/internships. I have some pretty stellar experiences but they are all research/pre-med since that's what I did in undergrad. 

This is one of the toughest decisions because, as you said, there is a lot of risk but also potential upsides if the fund does well. But you know more than I do and it seems that the chances of that are low? I don't want to drop out of the program but I also don't want to lose a potential once-in-a-lifetime opportunity. But I know I have to pick one... 

Oct 23, 2021 - 3:34pm

Let me get this straight - A guy you barely know offers you a temporary role in a remote city with vague promises of salvation if you drop your entire life? Sounds like a cult leader. 

But in all seriousness, chances are this isn't a once-in-a-lifetime opportunity and chances are his fund doesn't work out. Most of these startup funds never make it and the ones that do are once-in-a-lifetime opportunities only for the PM, not the staff. It boggles my mind when ppl assume a small HF PM is going to pay juniors well. RIGHT!  Never expect to be treated well at a small HF, always get comp in writing from day 1. These small HFs have zero reputation risk and can very easily mistreat juniors (which is why many do). 

How bad can new small new HFs get? I know snr analysts who never got paid at startup HFs and had to sue the funds. I know PMs at HFs who lied about their AUM. I know juniors who took internships and never got promised payments, the stories goes on and on...It's really a big bet on a guy you don't know. 

Obviously there are small HFs that do very well with a PM from a great background. Which we never even got into! If this guy has a golden CV and LPs are flocking to him, that's a different question. What do you know about this guy? What's his background? Has he run his own capital before? 

You could move out there and the PM could have you get him coffee daily and then decide you can't order a cappuccino the way he likes and gets rid of you. He also may never hire any full time staff. So your internship stays an internship while your MSF classmates get real jobs. These startup PMs tend to always think things will work out, but most don't make it.

At the end of the day, it's a small startup fund and these are a dime a dozen. If you do it right, you should find a comparable job upon MSF graduation. These jobs are just in time fills, so you likely won't see them until you get closer to graduation. 

I don't think it's a hard decision at all. I'd stay in school and then go to him when you graduate. If he likes you enough, he'll offer you the same role.

  • Analyst 3+ in IB-M&A
Oct 24, 2021 - 12:44pm

Others have covered this ground really well - cheers all. Just wanted to add that small HFs appear and disappear all the time with no warning, no fireworks, no news. A colleague once said that funds >$5bn AUM have some level of security due to economies of scale and stickiness but that's it. OP - this isn't a once-in-lifetime opp. You'll be okay just keep grinding in school and recruitment

  • Associate 3 in IB-M&A
Oct 24, 2021 - 3:01pm

I agree with others that this is a bad idea, a tiny HF can blow up so quickly and then you have neither real work experience nor a completed degree to show for it. Breaking into HF is great, but a $200mm fund definitely isn't the once-in-a-lifetime opportunity you think it is, and you'd be pretty screwed if you don't get an offer, fund blows up after 4 months, etc. Plus, having zero flexibility to be remote for a very finite time is a cultural red flag. If you're at a top MSF you shouldn't have an issue getting into consulting.

Really chiming in to say this though: I'd be shocked if your MSF won't let you take a leave of absence - plenty of people have medical/personal issues or what not and have to take a year or more off. Even if the program doesn't officially state a policy, you would almost certainly be able to get a year off for unspecified personal reasons. I'd diligence this a little more if you want to take this role.

Oct 24, 2021 - 3:52pm

only applied to MBB, Deloitte, and OW. Unfortunately put all my eggs in one basket and now the deadlines are passing/have already passed... my ultimate goal was VC and I knew that nothing other than MBB would get me there. Foolish thinking but too late now...

Oct 25, 2021 - 5:00am

In what world is a 200m a small fund? It might not have hit the magical 1bn but that's still a very decent chunk of money... on a 2 and 20 structure (if they have it) that's more than enough for all involved to pay the bills.

I'd say the fact it's only one year old is a great thing as it allows you to get in on at the ground floor should you wish to stay there, whilst also providing you lessons on how to start a fund should you wish to do the same thing yourself later.

Do you believe in the strategy of the fund? Does the PM have a good track record so far at this fund or in earlier jobs? Do you like the PM as a person? If the answers to these questions are yes, and you're able to come to an agreement in principle on remuneration before you drop out, then I say go for it.

In a worst case scenario where it doesn't work out for some reason, you could spend a couple of thousand dollars doing a MSF in Europe somewhere and enjoy living in new environment and experiencing different cultures for a while. You could still even mention your original "top MSF programme" on your CV, caveating it by saying you dropped out to join a fund. Moreover, if the reason it doesn't work out is because of a an issue with the fund itself, i.e. not a personality clash with he PM or because you're incompetent, it's likely the PM would do what we could to see you right with his network, no?

I would argue that the downside is actually really limited if you can trust that the PM is a good guy and you back your own abilities. I guess whether you do this or not is indicative of your temperament... there's nothing wrong with being a person who doesn't want to take risk / wants to avoid having skin in the game. Maybe your desire to pursue consulting is indicative of the type of person you are?

Are you 100% sure your college wouldn't allow you to defer your studies? If you're doing it because you have a job offer at a hedge fund, that makes the school/course look pretty good in terms of their placements.

Oct 25, 2021 - 5:14am

One more thing... 

The pass rate for the "top MSF programme" is probably 100% or very close to it. It's the getting in that is the accomplishment, not completing it.

I'm certainly not your target market, but if I had two otherwise identical CVs come across my desk, I would be more impressed with the guy who started MSF XXX and dropped out to join a hedge fund, than the guy who started and finished MSF XXX. If you drop out to join a fund, the expectation is that you'd have successfully completed it had you decided to stay. If anyone holds non-completion against you, particularly if you make up for it with a low cost European MSF option, they're probably not that bright. Not to mention the fact that work experience > education. 

Oct 25, 2021 - 1:12pm

Congratulations for your offer and best luck with either option.In my opinion things can change very quickly in the markets, specially in the HF arena and blowout is always a possibility that as close as zero as it may be will never disappear, on the other hand a MSF from a top school will be always under your belt and nobody will be able to take it from you, just saying....

  • Investment Manager in HF - Other
Oct 31, 2021 - 12:58pm

Well the OP said they want to do consulting so that is a reason to stay. But more importantly, a HF with $200mm, limited/no track record, and that isn't willing to wait 4 months for a new hire is a huge red flag. If you don't finish your degree and the HF fires you, goes under, ends up being a crappy place to work, you don't have that additional degree (that you have already spent money on and time to do well in the courses) to fall back on. 

You need to think longer term than just "tomorrow". Yes you are trying to get a job out of school, BUT you are also trying to setup a career and account for risks. I don't think it's the best idea. 

Oct 27, 2021 - 12:53am

I am no expert, but to me the top MSFs are the ones that consistently place their students into the "desirable" finance jobs i.e., IB and consulting. However, outside of MIT, MBB and BB IB are not that easy to come by in the first place. Nonetheless, if you really are in a top three program you should be able to find something before you graduate. You said you don't like IB work, but I suggest bite the bullet and try to find something in IB then try moving to consulting after a year. Start by finding those 5-10 person boutique IB or PE shops in your city and offer to work for free. If you say you got stellar non finance experience and are now at a top MSF someone will give you a shot. 

Once you got that IB or PE experience on the resume you will be more competitive for full time roles. Even though you missed out on the official recruiting timeline there may still be one off opportunities that get posted from time to time. However, make peace with probably getting an offer from some place that is not on par with the MBBs of the world. After a year at this IB place, depending on the size of the firm, you may be able to move to one of the middle tier consulting firms. You probably need to be at a BB bank to move to a MBB. So if you are hellbent on MBB you need to first move to a BB bank then try to switch to consulting. 

I don't know much about consulting so I am not sure how feasible the move from IB to consulting really is. However, from any solid middle market IB and above you will start getting opportunities at hedge funds. Also people are right about those small hedge fund jobs. I was a finance major and internships for start up hedge funds got posted with enough frequency to not be a now or never type of thing. Just stay in school and try to get into the biggest IB firm that will take you. From there, move to a hedge fund, consulting or to a big enough IB platform to make the move to where you really want to be. Also if you are at MIT maybe you could extend the program to 18 months?

Nov 17, 2021 - 10:43am

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