Founding a startup - exit opps if things go under?

Hello all,
I am currently a first year analysts at a decent MM IB who has always dreamed of being a VC or starting my own thing. Recently, I've been presented with the opportunity to do the latter from a buddy of mine who had already exited a semi-successful venture backed startup as its co-founder.

He would like to bring me on as his co-founder for this new venture which I have high conviction in and am excited about. The thing is however, I feel like I have no safety net should things not work out. Unlike him (rich parents, very well plugged in the venture scene) I went to a non-target, grew up poor, and don't have an extensive VC network. I am beyond grateful for my current gig, although I am tempted to jump at this opportunity. Given the high probability that this wouldn't work out, would an associate role at a VC be within reach if we raise a seed (and ideally beyond that) round and do something material with the company? I'm just trying to imagine what I would be able to do after should things not work out given I only have ~9 months of IB under my belt.

Thanks everyone

Comments (7)

Mar 25, 2019 - 7:07pm

It's absolutely worthless unless you achieve serious traction and have a real skill set.

  1. If going the VC funded route, probably need to at least have raised $5M - $8M for anyone to care.

  2. At least $10m+ in revenue if not raising.

  • 1
Mar 25, 2019 - 8:22pm

Thanks for your input - assuming we go the first route, ultiamitely raise ~$10m, and my skill set is limited to ~1 year in IB and ideally at least 1 year running a startup, would that be meaningful? Or would the safe bet be stay in IB and try to lateral to growth equity, considering I don't have much of a safety net if this thing doesn't pan out.

Mar 25, 2019 - 9:41pm

I think the fact that you're even thinking about a back up job says it all.

  • 2
Mar 25, 2019 - 8:31pm

Here's how I look at it. You have
1.) Safe job, potentially a very white shoe'd career (1-2 more years of IB, go on to do PE)
2.) Unusual, but potentially huge pay off option - take the start-up idea and run with it.

Questions: 1.) Are you absolutely 100% sure you can't do the start up and your IB job? You need to be absolutely certain that that isn't possible. How soon does he want to start? If it's immediately, that means in three months. If it's in 6 months, that means in reality about a year. Get some sort of forward clarity before jumping ship from the IB. "If you're going to check the depth of the river, don't do it with both feet"

Also - If I were you, I'd cold email about 10-20 VC guys and look for guys (with less white shoe'd backgrounds) and get their input on it - since ultimately - they have the job you want.

Most Helpful
Mar 25, 2019 - 11:20pm

Part of what attracted me to IB (as miserable as it was as an analyst) was the opportunity to jumpstart your financial situation for the rest of your life, even if you decide to get out of finance altogether in 2-4 years. The value of that relatively safe financial opportunity is going to be different for each individual - for example, it probably doesn't mean much to your friend, but it sounds like it could be very meaningful to you.

For me (middle class background), although I hated IB, I am certainly grateful for the comp I made and the opportunities to make more $$$ on the buyside. And it's not just the dollar value of your nest egg itself, it can also mean having financial comfort and career flexibility that you otherwise wouldn't - even though I don't work in finance anymore, I don't have to think twice before taking a vacation or spending any amount of money within reason. I'm not trying to brag here, just offer you my 2 cents on the value of money apart from what it can buy you.

Is there a chance that if you don't take the startup role, this company hits a home run and is the next unicorn? Sure. But even if that happens (say 4 years down the road), are you really going to be that upset/regretful to have missed that boat but still have 6 figures in your Fidelity account? (Oh and BTW - there's no reason why you can't join a startup at that point too).

Two other things I wanted to point out:

  1. You say you have "high conviction" in this startup. It's kind of hard to have high conviction about early stage stuff in general - you yourself acknowledge the risks later on it that paragraph.

  2. Always assume people are full of puffery when they talk about how good their shit is. In your friend's case, unless you know more specifics from a different source, a "semi-successful" exit can mean anything from "investors doubled their money" to "investors didn't lose everything".

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