Help on choosing from these 3 offers
Hi all, have currently 3 offers albeit different in nature. Very grateful to be in this position however need to make a decision soon. Any advice of comments / questions would be much appreciated!
Offer 1 - top team at a GS/PJT/JPM - associate 3 IBD in an ideal sector team
Offer 2 - SWF/pension/co invest PE type role - at VP 1 level - strong comp similar to IBD at VP but less significant increases compared after that and lower ceiling at senior level
Offer 3 - start up GP PE fund trying to raise first fund focused on a sector of interest. VP level - lower cash comp even compared to associate 1/2 IBD, but potential for carry if the fund takes off. However first fund target is $200-300m max and will be LMM for a while with intention to scale if successful.
Recognize key question is do you want to be a banker or investor. Which frankly I’m still debating because the jobs can be similar and both can be interesting/fun to me. I do probably like investing more albeit having medium to long term strong risk adjusted comp potential is important as well. So is the prestige factor and quality of people I’m working with. WLB is a factor but not a strong one for me frankly. The sector matters quite a bit but not a deal breaker.
Sorry for the predicament. Any guidance is appreciated or areas not being considered!
1 is safest with likely highest comp and worst lifestyle
2 sounds chill, you'll have a decent lifestyle and you'll make decent money. Obviously you need to determine if you're okay being just rich vs. really rich
3 highest risk, but potentially highest upside. You will work hard in early years, but lifestyle may not be too bad until you get a few portcos (at which point you'll hire more people and you'll be well positioned). Important to clearly outline carry expectations (10% carry at stated fund sizes is $4m-$7m). If you think the head people will be successful, I would choose this route
Thanks for your helpful perspectives. For the 3rd option - what if there is some doubt about founders ability to raise (it’s pre fund now) and if the firm stays more LMM type for quite a while… seems like risk adjusted comp isn’t maybe great.
The propose carry won’t be that high maybe half of what you quoted in first fund
50% of that comp is still pretty nice
Regarding ability to fundraise, can't add value here. You'd know better than me. Do they have a track record, potential anchor investor relationships, a first deal to be a catalyst? Do you care about LMM vs. MF (growing business vs. financial engineering; $1m-$3m at the senior level with a good lifestyle vs. $5m-$10m per year with a worse lifestyle and intense office politics)?
Go with choice 2, nice mix of comp and not tough hours.
I personally have a pretty high risk tolerance so I’d probably pick option 3 depending on the amount of carry you can swing. It’s not worth it though if you don’t get a decent amount and/or you’re not confident in the fund
number 3 has the most upside by far but you need to assess the GPs ability to successfully raise the fund because no fund probably = no job. Also it is completely critical to work out your deal upfront and set crystal clear expectations with the GP. You should understand not only the carry but also who owns the management co and who therefore has ultimate control of the firm. If it's truly a startup and you're accepting "founder risk" then I wouldn't be shy about asking for a piece of the management co yourself. Carry should be meaningful as the above poster said. Also, you should have a well defined outlook on when you could join investment committee (fund 2? 3?) etc.
Thank you. It is truly a start up and there’s a real chance of working there for a couple years and the fund doesn’t take off. There’s also a strong chance of maybe raising a $100m or so and then chugging along for a while.
how does that compare to being able to climb the ranks at a GS/PJT? Feel like the risk adjusted comp would be better in top IBD that way.
Tbh if you have any doubts that the founder(s) might have difficulties fund raising/deal sourcing/return generating, don't go
There are tons of first time funds in the market and only few will shine
I think number 2 sounds most interesting.
were you an a2a or mba associate? What type of bank are you lateraling from?
Thanks - why do you say 2 sounds most interesting? currently lateraling from a baml/citi
Is it possible moving to a PE when you become senior/dealmaker at a SWF?
Mostly for longevity purposes. Seems like a good mix of wlb and comp
Echo-ing other people on this post, if you truly believe in the founders ability to raise capital then #3 then there is a lot of upside. However if you have doubt/risk-averse I suggest going with option 2 or if you really care about the money then option 1.
As for why Option 2 it sounds like a good mix of WLB (my VP friends I know work 50-60 hours most of the time) and their all-in comp by the time they hit partner/MD will be $4-6m (this including carry), probably not the $10-15m carry that a UMM/MF partner receives but still great money with probably 20-30% less work. Caveat, the numbers I pointed vary a lot depending on firm/returns.
Thanks - very helpful. What if the comp for option 2 i know that MD/partner level max out c.$1m USD (they don't have any material carry). Is that still better than option 1 (or 3 with doubt)? Although they do work only 50-60 hrs typically unless intense deal time
Is option 2 a Canadian pension? I personally considered that option but decided to stay in IB since my group is relatively chill at beyond associate. What do you think the hours will be like as a VP/AS3 in IB?
I think the choice depends on your current financial position, future financial goals, family/friends obligations, and risk tolerance. I would make a chart of all these criteria and place a weighting on them.
On a side note, I personally find that both the IB and investing role to be pretty similar intellectually and does not make enough of a factor to sway me from one to the other.
Are those all-in comp numbers (including carry) per year or per fund?
Had the same question
For option 3, does the founder have a strong track record in the industry / have the commercial ability to successfully execute a first-time fundraise? And what is the sourcing strategy once the fund is raised? Is there a strong network in place with bankers / companies to help push dealflow your way? Feel like it's an exciting opportunity but there are some pretty key questions to answer before even considering taking a job here imo.
Otherwise, #1 will forsure get you the most money off the bat and will by far be the most intense role.
#2 will be way more chill and will allow you to see a number of deals, especially if it's a co-invest role, but your comp will scale much slower than option #1.
I would recommend option 2. I know an MD at a major SWF (i.e. GIC, Temasek, etc.) and they see every kind of opportunity. Lifestyle is excellent and based on his lifestyle, I would say comp is comparable if not better than an MD at PJT.
You should be considering the kinds of investment opportunities that you are interested in. If large, SWF is the way to go. If you prefer LMM, then Option 3. If you don't want to be an investor, then option 1.
Think option 3 is a hard pass unless the founder is ex-MF/UMM. Too much founder risk and you can work at the SWF for a couple of years, gain more experience, and move to a higher quality start-up fund or move to a MM/UMM PE fund.
Thanks - what’s your perspective if say the swf is tiers lower than GIC and thus pays less etc? On the other hand for the 3rd option the founder is from a MF/UMM but is looking to start a different strategy versus their own experience.
#3 may not have as much upside as you all may think. I joined a startup fund as a VP. We are now $500m+ and my comp is just getting to market...
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