IB vs PE vs VC : The rundown

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Rank: Neanderthal | 2,565

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

Comments (3)

Apr 17, 2019

I feel like hours can be bad in any sector (PE/VC/IB) depending on your firm. I would say often time the firm can lead to a much better work life balance. Get a chill lower middle market shop your set (if that is for you). Work in a Wallstreet Mega PE fund hours will suck. No doubt that every front office role will be harder to break into than back office. But Generally if you keep networking nothing is impossible.

    • 1
Apr 17, 2019

This is definitely true, from what I heard all have genrally 50+ hours but VC usually has less. But yes like you mentioned it very much depends on your firm.

I definitely agree that Wall Street mega funds/BB have the worst hours. I have a lot of friends that have slept under their desks.

Apr 18, 2019
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