IB vs PE vs VC : The rundown

It is no surprise that finance in general is a competitive field, and getting into any role is difficult. The only problem is that most people have a hard time finding out what they would do in each role, and underestimate how different each role is.

Below is a list of some of the main differences and qualities of each. Feel free to chime in with your own advice!

Venture Capital:

Article by Investopedia - Private Equity vs. Venture Capital: What's the Difference?

Venture Capital is funding given to startups or other young businesses that show potential for long-term growth.

Pros

  • Deals with start-ups (usually healthcare, tech, biotech, etc)
  • Opportunity sit on company board, retain 25%(ish) equity usually (50 or less generally)
  • Gets a thorough view on what ideas take off and which ones don't in the market
  • Interviews are less formal/technical than PE or IB
  • Work life balance is MUCH better than IB or PE
  • Employee backgrounds can come from a start-up, IB, etc. it is not as specific on where you came from

Cons

  • You have to say no..... A LOT
  • Pay is not as high as a HF or PE (pay gets higher in later stage funds usually)
  • Very hard to break into without connections/ no set recruiting season
  • Almost no job postings anywhere, really need to hunt
  • Exit opportunities into a PE can be harder than from a PE to a VC

Private Equity:

Article by Investopedia - Private Equity vs. Venture Capital: What's the Difference?

Private equity is investment capital in a company or other entity that is not publicly listed or traded.

Pros

  • Invest in already established companies that are going downhill
  • A LOT of control, much higher equity, usually 100%
  • A steady recruiting season, can be scouted by headhunters
  • Have basic criteria to get in, usually 2 years of IB, prefer M & A background
  • Pay is higher than VC
  • Get to restructure an organization with better operations/management to make a profit

Cons

  • A LOT of hours, work life balance may be difficult (this can improve the longer you are there)
  • Interviews are much more technical than VC
  • Not as much flexibility in your background, usually scout for certain criteria
  • Although there is recruiting, this is competitive and hard to get into

Investment Banking

Article from the Julia Kagan at Investopedia - Investment Baking

Investment banking is a specific division of banking related to the creation of capital for other companies, governments and other entities.

Pros

  • Much easier to land an analyst position here than start in VC/PE
  • Pay is high for an entry level position
  • Good exit opportunities into PE/VC/HF
  • Many different areas to work in, not as specific (M&A, Lev Fin, Industry groups, etc)
  • Many well-known BB, Middle Market, and Boutique banks to help your resume

Cons

  • Very competitive to break into
  • TERRIBLE work life balance as an analyst (expect very long weeks for the most part)
  • Not as secure in terms of long-term employment

Please feel free to chime in and help pass on more advice and knowledge or ask any questions