I recruited on-cycle too early
Hey everyone. I am finishing up my two years of banking and about to start soon at a well-known PE shop. Don't get me wrong, I am very grateful to have this offer and appreciative of the opportunity. However, it's my fault in that I recruited too early on-cycle (~2 months into IB) and 100% rushed the decision to jump into PE. I now know that I am much more interested in VC / early-stage investing but feel trapped with my PE commitment.
This switch to VC is because I find VC companies more interesting / cutting-edge and there is more focus on higher-level market strategy / operational growth and improvement rather than squeezing valuations for a marginally better IRR or endless, tedious months of diligence. The work-life balance improvement in VC versus PE is also a large plus. Unfortunately, this is all something I did not realize until my second year in banking. I know I do not want to pursue PE long-term nor do I want to go to b-school so I want to ask for next steps advice. My ideal future job would be either a senior operational role at a company or long-term VC / growth career.
Is the best venue to get into VC via direct networking rather than reaching out through headhunters? How long should I wait before contact (6 months? 1 year? 2 years?). I am worried about being judged if I leave the PE program before two years - would this be a major obstacle? Thank you.
fohofa7695 - I'm in the exact same boat. Recruited on-cycle and signed to do mainly industrials at a well-known PE shop. Also very thankful but after spending two years in the industrials group, I realize how much I hate the sector.
honestly don't know much but I'd imagine transitioning to growth equity first might be easier
Thank you for this post. Feel like a lot of analysts (myself included) need to step back and really think about what we want in a career rather than jumping into on cycle PE recruiting for no other reason than that everyone else seems to do it... have heard of a lot of people getting depressed and even feel like they got cheated when they found out PE buyouts is nowhere close to something they want
Do the people here think that the whole "rush to PE" is overrated and misguided? Doesn't the potential carry down the road make things potentially worthwhile? And would you have rather stayed in IB, of is that not an attractive option either?
In general, VCs don’t give a shit about your PE experience beyond that you have it and it’s been at a reputable firm. It’s like how BCG doesn’t really care if you went to Northwestern or Yale or Dartmouth - they let in students from each of those three. The nuances of PE programs are probably lost on most VCs. I know some of my peers have recruited from all strategies of PE fund but they don’t know the difference, they just know that folks have seen lots of business model, can quarterback diligence, and are wicked smaht. They want to see that you’ve done some of it (probably 1 year is safe) but you could spin 6 months as “look I’m competent at my job but I am dying to be in VC”.
Look if you’re trying to go to Sequoia early stage it may help to be coming from TB/SL but otherwise what I say holds true. Some recruiters cover VC but it’s more of a wild Wild West. Get in touch with funds you want to work at. Get in touch with the VC headhunters like Glocap (they are miserable to work with) and go from there.
Can you speak to why Glocap is so miserable to work with? I hear they are really the only headhunter / gatekeeper into VC?
Because they are not transparent
Some conjecture:
The best place for someone to break into early-stage VC is obv PM at a well known startup, or one that is about to be well known.
However, a lot of VC funds in the $75-400M fund size range still need people who are true wizards in excel and understand transactions, especially when it comes to thinking through pro rata at Series B and beyond. Also, if you're working at a fund with 4 partners, a principal and another associate, you're most likely supporting a partner in whatever they're looking at. I think a tech focused PE background would be really useful (not applicable to OP). At the early-stage, a product sense is important, but an analytical toolkit and willingness to learn will get you pretty far. That's why a lot of early-stage funds have recently hired folks who've previously worked at growth shops like Insight, TA, TCV, etc. Despite being sourcing heavy, they still worked on dilligence teams and understand markets. Since OP isn't coming from that area of the world it might be harder.
OP, if you look, you'll see a lot of current VC partners at early-stage funds did the IB>PE>MBA>Dropbox/Slack/Etsy/ETC > VC. If you're in it for the long game, it doesn't hurt to have a plan.
Last thing. There's a woman who works at Bain Cap as a VP and oversees angel investing for the owner of the Celtics. I'd say anything's possible in life, just work hard
What roles should you do at Dropbox/Slack/Etsy/ETC as a post-mba guy or attempting to get into vc after corporate finance for that matter? Corp dev / M&A or product development? Wouldn't it be hard to get into product dev given the lack of technical knowledge you'd have?
what is TB/SL ?
Thoma Bravo / Silver Lake, two very strong tech buyout shops. Thoma Bravo is almost exclusively enterprise sofware; Silver Lake is broader TMT investing.
Many VC's prefer to hire Investors that have IB experience PLUS PE and/or start up experience, so you likely can pursue VC after your PE position. But not all experiences are equal, and some things you should assess about the PE firm you're joining include: 1) Will you have exposure to the industries that are relevant to the VC path you eventually want to pursue? 2) Will your Associate experience include deal execution as well as sourcing? At VC/Growth focused firms, they value the ability to start a dialogue and to evaluate/recognize a possible investment opportunity. 3) Is the team ACTIVELY investing, and do you anticipate that you'll have an opportunity to see at least a couple of processes through completely during your Associate program? Will you also have a chance to go through a sales process? You don't want to find yourself at a firm that is using the last of their current fund, and facing an uphill climb to raise the next one.
In terms of when & how to pursue VC: Hiring in VC is fragmented there is no set cycle -- they hire as needed, often with an immediate or near-term start date. I'd strongly suggest you leverage your network of recruiters AND direct networking contacts. You don't necessarily have to stay in your PE program for 2 years. Plan to benchmark the program as you reach your 1-year mark -- (Are you enjoying it? Are you building relevant skills for VC? etc.) If not, you need to leave anyway. If so, it's a great time to reconnect with your contacts and start to take a pulse on upcoming VC opportunities.
Good luck!
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