IB Before VC/PE
So assuming someone is interested in ultimately ending up in Venture Capital or Private Equity, how important is it to begin as an analyst in Investment Banking. If a great opportunity presents itself immediately following graduation (such as a top VC or PE offer), would you recommend taking it?
Piss poor question. Let's get this straight. "Someone" wants to ultimately do VC or PE. That "someone" strikes gold and gets an offer from a top firm following graduation. Where does IB come into this argument at all? You want VC/PE. You get offer from VC/PE. You take offer from VC/PE. Unless the offer is for janitorial services or in-house shoe-shiner or similar bullshit back office dead-end job that will allow no advancement within the firm then you should take it. IB should not even be a consideration. The reason it is, most of the time, is that such top jobs are not available to fresh grads and an IB analyst stint helps prepare people to later make the transition/even get a look from top VC/PE.
What I've been told is that many choose to go through the 2-year analyst program as a contingency -- if you fail as a VC, you're going to have a lot of difficulty finding your next job. If you go through an Investment Banking Analyst Program and then fail as a VC, you are still qualified both for Investment Banking and PE. Does this make sense?
But nothing is going to be guaranteed during your ibanking analyst stint either. There is no guarantee that you will succeed as an analyst and that same offer from a top firm will be there waiting for you after 2-3 years.
Your basic logic, however, does make some sense and a lot of places are going to want to see an ibanking analyst stint, heavy industry experience, or the like on your resume before even considering you and IB is definitely the fastest track to do so (hence its popularity and acclaim for these coveted exit opps). But don't be so sure. Ask yourself why a top PE firm is going to open their arms to an ex-analyst/failed Venture Capitalist? Moral of the story: Don't suck.
IB analyst. 2 years. seems a really nice thing to show on your resume. shows that you've done the time.
Besides, very few good PE/VC hire undergrads, and even if they do, you are likely to get crappy work and not the best experience. Probably better to get some useful skills and exp in IB first, then try for a PE/VC position with decent responsibility.
Does anyone have any experience with people making the transition from associate at IB to VC/PE? Seems like most places poach 3rd year analysts from top banks. What's the likelihood of more senior positions jumping over. Heard from a friend that once you reach VP at bank, your chances of jumping over are pretty slim.
Just following up on the question above, seems like there would still be opportunities to make the IB to VC/PE jump as your network would be valuable to the VC/PE firm as a senior banker.
Any thoughts?
Is It Really Impossible to Break Into VC/PE Right Away? (Originally Posted: 09/05/2012)
So obviously it's very difficult to get a gig in VC or PE right out of undergrad, but is it really impossible? I may not be from Harvard, but I do go to a good school with a strong network, I have a pretty solid GPA and some good work experience. I just started my junior year, and I had some friends that worked at VC firms this past summer who are my age. They are not returning, but it made me wonder if it's possible to get a junior year internship at one of these bigger shops...am I completely naive, or are there a few firms that are known for taking on interns and then giving them the FT offer? Appreciate the help in advance
I scribbled out the word "impossible" in the dictionary. I suggest you do the same.
I would say there is a higher chance for PE (think a few big guys like CCMP and then some smaller boutiques) out of undergrad than VC. However, both are still very difficult.
I was fortunate to land one of these opportunities at a strong industry focused VC fund (think multi-hundred million AUM). I had a solid PE and IB internship under my belt and good grades but I think the real reason I got in was a mixture of the right connections coupled with the business need to expand the fund team's junior members (hired 4 new analysts since January and don't plan on hiring anyone else for a while). In reality the average analyst has joined my team with 3 years of professional experience - usually banking or consulting.
I was actually talking with a VP of mine today about why more undergrads don't get looked at. He made a good point in saying that a big issue is not skill or smarts, but rather simple experience that allows you to assist, mentor and coach new entrepreneurs as well as access deals and business ideas.
If you're willing, what is the general fund type your friends are interning at? AUM size, deal size, industry focus, ect.? Would be interesting to hear about what type of VC's are taking undergrad interns.
BTBanker - If I had any SB's I would send one your way.
The experience aspect is something I am beginning to hear a lot. At least with early stage it seems like you really need to have that entrepreneurial/management background if you plan to make it in the industry. To answer your question though, one of the firms specialized in transportation infrastructures/technologies with middle-to-late round funding and I believe has around 200mm AUM (not sure of deal size). The other is a early-stage (seed mostly) funder, specializing in social media and tech. I'm not sure of their AUM, but their deal size is roughly 1-2mm.
I know for PE I'd want to get into the Financial Sponsors or Leveraged Finance Group, is it the same for VC? Also how imperative is it to be able to code/program? I can model, but couldn't tell you the first thing about C++
Blackstone and Bain both recruit a small number of PE analysts from undergrad. Bain also recruits a few VC analysts.
From my limited PE internship experience, I just don't think it's efficient for PE firms to hire undergrads who would waste most of their time working on models... maybe benefit>cost, since their cost is really low?
I agree with BigBambino in that PE will be easier to obtain (in comparison to VC). However, keep in mind that you are still facing an uphill battle. Generally speaking, if you are interested in breaking into a PE/VC shop right out of undergrad, you should probably look at small/medium sized places as larger firms have the luxury/ability to hire more experienced people, while at a smaller shop you'll have a chance to demonstrate your usefulness/ability to add value (thus, a higher chance of landing a FT offer). However, at the same time, working at a smaller firm will also mean that it's less likely they want to hire an undergrad simply because they cannot add much value. Additionally, I think luck will play a large role because if the firm you are working at happens to be expanding and you do a good job interning, you'll stand a chance of landing a FT offer.
I would say if you are interested in VC, you'd likely want to be in a tech group as opposed to financial sponsors/leveraged finance. Many VC's value engineering/computer science experience so knowing how to code would be valuable. However, I wouldn't say it's something you "need" to know (and it's definitely not required to do your job). For the most part, growth/later stage VC's will require more modeling skills while early stage VC's value industry experience/start-up experience over modeling skills.
Finally, I'm guessing from your user name you are at UMich, which means I can probably guess which 2 funds you are referring to. They are both relatively new firms and from what I know none of them have hired their interns for FT (although both do hire interns every year). Feel free to PM if you have any specific questions.
I know this is an old post but I am just leaving this here for perspective monkeys. Bessemer and Kleiner Perkins each take only two per year. one as an intern
I think if you network well and have the technical down, middle market PE is definitely doable.
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