IB vs. Start-Up For VC

Hi All,

I currently have two offers: one from a large IB firm in a southern city, and one from an up and coming startup that is just beginning to generate revenues (should be around $250k+ this year). The role at the start-up would likely be very all encompassing (finance, corp strategy, business dev; essentially all hands on deck). Long-term I think VC would be a great path, as I have entrepreneurial interests and have already invested in multiple start-ups.

Any insight into how each of the paths might set me up for the future would be appreciated.

Comments (14)

Feb 26, 2019

Is the startup funded? How do they intend on paying you anything meaningful with $250k in rev?

Feb 26, 2019

Have a funding offer on the table currently, obtaining an SBA loan, and pitching to some Silicon-Valley "Mega Funds" within the next month.

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Feb 26, 2019

I would only do it if the equity package is chunky and founders have a real track record. $250k isn't enough traction to really justify it IMO.

Feb 27, 2019

"Have a funding offer on the table" is bullshit for "don't have funding" You have funding or you don't. That's it.

SBA loan is a bunch of bullshit. You're way safer going to IB and getting a more legit startup job in a year if you hate IB. Also when you transition from IBD, there will still be a big pay cut, but way higher (than youd get not coming from IBD), because when youre coming from IBD they know they cant jerk you around too much -- you're valuable and you have other opportunities.

For your benefit and the benefit of anyone else reading this, when evaluating startup equity, the value is zero. Especially when comparing to salaray / bonus. Not trying to be salty, just being honest. Most half decent founders can sell you a bag of dreams -- and it's exciting and fun -- definitely more fun than grinding out sellside process updates. Some of those dreams may eventually pan out, but when comparing comp, you should discount that shit to 0.

Feb 26, 2019

is the startup a VC, or is it a product/service company?

just google it...you're welcome

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Feb 26, 2019

Saas

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Feb 26, 2019

If your long term goal is VC and you're set on it, then IB is the better route. For one thing, it's way easier to do IB -> startup than vice versa.

There isn't really a set career path from startups like there is in IB, but there are certainly plenty of folks who join early stage startups and the vast majority of them have essentially no shot at getting a VC role, so I don't really view that as a distinguishing factor wrt to your future goals.

That doesn't mean that IB is necessarily better, just that I see it as a better way to get to your end goal.

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Feb 26, 2019

I would say IB is the safer bet, and consistently has people go to VC type foundations and funds. The startup route is highly dependent on how much success it has over the next few years. If it tanks in your first year or two, you are S.O.L

"If you ain't first, you're last!" - GOAT

Feb 26, 2019

In early stage VC, the work is more relationship management and business plan evaluation / ideation than it is crunching numbers -- so not the best fit for an ex-IB analyst. That gets less true as you move "upmarket" to growth stage investors but even those are less technical roles.

If you ask a VC, they'll generally advise you to join a startup, ideally in a product role. The more successful the startup (and the earlier you join) the better, and you'll probably find it tough to join a reputable fund without a unicorn's name on your resume. That said, you're looking at a pretty long journey for the company you're talking about. I'd advise you to focus on a firm with meaningful traction (say, that has raised $10-50M) and go from there

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Feb 27, 2019

$250k rev... how many years did it take to get to this point (trajectory)? Is this a B2C or B2B? Quality of founder/mgmt team? Competition? Temperature of the fundraise so far..?

I'm not asking you to answer the above here... more like things to ask yourself. YMMV with a startup. You'll probably get a more interesting experience vs IB, but it can be quite risky. If you do, make sure it's a quality team, has decent $ runway, you have good options, and your have conviction / passionate about firm and what they're trying to solve.

Though, as above mentioned - going from IB to startup is easier than the other way around. If it were me, I would do IB just to provide me with a good first job out of school (it's a good foundation gig - provides great training). And in a year or two, after getting some money in the bank, look at joining startups as a more valuable applicant with credible exp. You can join a Series A company if you want to roll up your sleeves and still participate in helping shape direction + growth in strategy/bus dev/ops type roles, but also join a firm that has funding, a bit de-risked, and product market fit. After that, having IB + early startup background gives you an attractive profile to target both earlier stage funds (that would value startup ops exp more) and later stage (where it could get more technical and IB could help).

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Feb 27, 2019

If you think you can have a significant impact at the startup I'd go that route, especially if they can still pay you enough to cover your overhead and offer vesting equity package.

The thing with the whole IB vs Startup is you know exactly how the IB path is going to go. Do your 15 hours of excel/ppt, create a deck, try to close a deal, rinse wash repeat.

At the startup you'll be actively setting out fires, generating leads, closing sales, identifying partnership opportunities, doing deals, marketing the business, building financial projections and more. Not to mention, you'll more than likely be working directly with VCs so the networking portion takes care of itself. If you want to be a good VC be good at startups first.

Oh, yeah, and in the case of a successful exit you'll make 10x + what you would have made suffering through an IB stint.

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Feb 27, 2019

I'd respectfully disagree with the people telling you IB is the better route to VC. Very, very few people get into VC from IB, let alone succeed at it. And not to sound snobby about geography, but VC is heavily concentrated in NY, Boston and SF. Getting into that field, in those cities, from Atlanta or Charlotte is going to be very hard.

VCs need to understand how businesses scale, what can trip them up, who, how and when they need to hire, etc. IB gives you none of those skills.

I wouldn't take the startup job until the funding comes through, but if it does I'd join the startup. $250k in revenue is indicative of escape velocity, meaning that the company is unlikely to totally fail. But it's not so far along that your stock options will be overvalued.

Most Helpful
Feb 27, 2019

IMO if you were to compare purely based on branding power alone, IB would take you farther in impressing VC's than a startup because they'll assume you're trained and competent. With a super early stage startup, you'll have to do more work on your end explaining what you've been doing and how your perspective/skillset is related to VC.

The biggest thing to consider here is that your approach to VC recruiting will vary drastically between the two. Most VC's recruit from networks and knowing people in the ecosystem so there's time synergies with working at a startup: you're already participating in the ecosystem and you'll likely have more time after work to share deals and network.

The networking approach in IB is going to be fucking hard because you'll be chained to your desk so you can't go to demo days or networking events. This is especially worse if your industry coverage has limited tech/startup involvement. The network approach in this case would basically be doing a part-time job on top of IBD because you'll need to do work outside of work. I had to do this to break in VC out of FIG ER and I HIGHLY DO NOT recommend it because it was the most physically and emotionally exhausting period of my life. That said, if you're in tech IB you get the benefit of headhunters leading you to some top tier VC's and if you're able to position yourself like that, I'd suggest this method.

In short, I'd choose IB if you could be in the right group. If not, choose the startup but be aware that VC recruiting becomes a networking fuckfest process that I've seen last 6 months to 2 years for some people.

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