IBD---> VC or no?

Rank: Baboon | 167

Hey guys My cousin actually went to goldman IBD then left ( after analyst ) worked Corp Dev at yahoo, then started hes own tech based business afterwards, well after that ( prolly at 30 years) started, founded his own VC and many famous guys in silicon. I was just wondering if that is the correct and most effective path to reach a high position of a VC. Or should u just try to get an analyst job at a VC and try growing there. Or would it be better to do IBD at a BB and then see if you can leverage yourself to a VC?

Thanks for the help!

Comments (44)

 
Apr 30,2011

be an entrepreneur over and over again

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Apr 30,2011

I interviewed at a VC for an internship before and talked to the staff, most employees have experience at a BB doing buy side or IBD. They tend to use head hunters to find their staff or friend of a friend. Why do you want to work at a VC? There's more opportunities at a BB.

 
Apr 30,2011

idk I like starting businesses and helping other people start businesses it seems very interesting to me. BB seems great too idk I feel like the VC side seems more fitting for an entrepreneur mind set. But at what grade levels do VC's give internships? like freshman year, soft, junior, senior? Also you think that corp dev or BB/PE is a better option for people who want to help and deal with business leaders?

I appreciate all the help

 
Apr 30,2011

Junior year mostly, it depends on your resume and accomplishments. From what I understand most VC have BB experience. You can check out resumes of Analysts working at a VC on linkedin and see what they did. You know you will be mostly doing due diligence on the prospecting firm and valuations as an Analyst.

 
Apr 30,2011

Depends on the kind of VC... Alot of tech-focussed VC is populated almost entirely by engineers, former entrepreneurs, straight-from-undergrad VC people, and former managers from the industry involved. Check out some Accel (not Accel-KKR) and KPCB bios. Almost none have banking backgrounds.

"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to become the means by which men deal with one another, then men become the tools of other men. Blood, whips and guns or dollars."

 
Apr 30,2011
 
Jul 31,2011

start your own company, work in business development of a tech corporate or in a start up. IB is not necessary at all, a lot of people get an mba if they want to learn more about business and finance but even mba is not necessary in VC.

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Jul 31,2011

If you are planning a career path with the end goal of VC, you will never be in VC...

 
 
Jul 31,2011

look at the profiles of analysts/associates at your target VC funds to see what their backgrounds are. tech banking will generally feed best from IB (GS TMT, MS Menlo, Qatalyst, etc).

 
Jul 31,2011

Being a tech banker in SF is the easiest transition. Top BBs and Qatalyst are the easiest paths, although some VCs really like MBB candidates...varies from shop to shop.

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Jul 31,2011

Think of your career as you would any investment. If you have a strong belief in this firm and your fit, go for it.

However, given the pay cut, I imagine you'd want to join with the expectation of future growth. Unless the fund grows its AUM significantly and has outsize returns, with standard management and performance fees, the overall comp. pool just isn't that large right now.

 
Jul 31,2011

I'm usually one of these people that argue that one shouldn't put to much emphasis on pay or a pay cut when moving to a different role, especially if the new role is more exciting or more aligned with personal interests. But $300k vs. $85k, that's a huge paycut and I wouldn't do it tbh.. But then again, I don't know about the growth opportunities at this VC firm so I don't know..

Maybe someone more experienced will have a more insightful advice for you. Still wanted to bookmark this topic.

 
Jul 31,2011

That's a great point about the growth of the fund and what that means for future salary.

I'll bring that up when I discuss with them next.

 
Jul 31,2011

A bit perplexed by your description of the fund as VC world as I'm sure you know, and I can't think of too many reputable shops with fund sizes below $60m. Are these well known and reputable partners? Would be a pretty bad move to leave $300k comp, especially post MBA, to move to a fund that's not near the top decile (my opinion obviously, for what it's worth).

 
Jul 31,2011

If you're at a Tier 1 BB and doing well there will future VC opportunities down the line especially as you get more senior you're rolodex will grow, especially with VCs (they are your clients after all). I just moved to a reputable VC and in our meetings with potential co-investors I rarely met one who had AUM VC consumer. Send me a PM if you want more info

 
Jul 31,2011
assocMonk7:

This is at a small fund (think < $60 million) with an OK track record.

I can't think of any VC firm, even a seed fund, that is

 
Jul 31,2011

Would be interesting to learn more about the firm - if recently started and performing well this could actually be a great opportunity. Prestige and brand name are the result of strong performance (and not necessarily a reliable driver of outperformance in the future) so I wouldnt reject the offer "automatically because it's not KKR / Kleiner Perkins".

You want to diligence whether (a) these guys are / will be able to make excellent investments and thus returns (ie have they proven in the past that they can pick the right firms and can they really help teams they backed succeed) and (b) if they have access to LPs that will support them with capital until that point where everyone believes the firm is good indeed.

The right answers to these questions (happy to detail in PM) should really help lower the risk of this career move. Your interest in these points should only irritate them if they're got something (terrible secret?) to hide.

 
Jul 31,2011

Thanks for all the advice guys!

The one point I differ with is the availability of VC offers to associates in IB. I haven't heard of (in the history of my group) anyone making that move at any level from A1 - A4.

Furthermore, the senior associate / associate level is the only entry level position to break into until a partner opportunity would come up (would also require bringing in $mm to the fund). As an A3 - VP, it just wouldn't be smart to move to the VC associate level. A1 / A2ish is probably the last year I'd make that jump.

 
Jul 31,2011

This is crazy that you're even considering it, to be honest. The fact that they haven't offered you carry means they don't give two shits about you or the position. Imagine if you were them...would you offer someone a 70% cut in pay to lure them to your firm with no sort of optionality attached? You should be insulted.

 
Jul 31,2011

The salary is market for associates in VC and associates don't get carry in most cases.

 
Jul 31,2011
assocMonk7:

The salary is market for associates in VC and associates don't get carry in most cases.

$85k with nothing else is probably the market rate for a second year out of college person in ops. You must really trust these guys to let them screw you this hard.

 
Jul 31,2011
DickFuld:
assocMonk7:

The salary is market for associates in VC and associates don't get carry in most cases.

$85k with nothing else is probably the market rate for a second year out of college person in ops. You must really trust these guys to let them screw you this hard.

Great point...for this kind of position you shouldn't accept anything less than $500k, anything less is humiliating

 
Jul 31,2011

$85k base salary with no bonus and no carry is definitely not market for a post-MBA associate. Even pre-MBA associate get more than that.

 
Jul 31,2011

This is not a post-MBA role. I have no VC experience and wouldn't be able to land one of those. I know I have to take a step back to enter the industry and am willing to take the pay cut.

There is a bonus. Expected around 25 - 50k.

Pitchbook's 2014 VC / PE comp report states associate (pre-MBA) roles pay on average 90k + bonus w/o carry in firms with AUM under 100mm. Senior associates earn $125k + bonus +

 
Jul 31,2011

135k is like what a first year associate gets out of Harvard Law School at a corporate law firm for instance...I think if you want to pursue the VC space you could probably do this for a year or two then transition to a better opportunity...if you do the IB associate role then you're pretty much stuck there I would imagine.

 
Jul 31,2011
assocMonk7:

This is not a post-MBA role. I have no VC experience and wouldn't be able to land one of those. I know I have to take a step back to enter the industry and am willing to take the pay cut.

There is a bonus. Expected around 25 - 50k.

Pitchbook's 2014 VC / PE comp report states associate (pre-MBA) roles pay on average 90k + bonus w/o carry in firms with AUM under 100mm. Senior associates earn $125k + bonus + < 5% of carry. That's what I'm using as "market" comp.

You're a post-MBA banking associate and should use post-MBA positions as a comp. Post-MBA VC associates do not usually have prior VC experience so it doesn't make any sense that you have to take this much of a step back just to get into VC. It keeps sounding like you're way too experienced for this role. I know VC analysts directly out of college making more than this. Compensation is correlated with the quality of the firm. Don't sell yourself short here just because you want to break into VC. It's extremely hard to move upstream in VC, i.e. from a microfund to a larger firm. If you're confident this firm will outperform over the next 5-10 years then go right ahead but otherwise don't settle for a no-name shop just to get into VC.

 
 
Jul 31,2011
cjl2g:

I don't know too much and I don't know anyone in the industry.

If you really want it you should start reading and learning more about VC and the tech industry in general.

Robert Clayton Dean: What is happening?
Brill: I blew up the building.
Robert Clayton Dean: Why?
Brill: Because you made a phone call.

 
Jul 31,2011

I was referring more to the recruiting process and questions firms in specific stages concentrate on.

Thanks!

 
Jul 31,2011

I was referring more to the recruiting process and questions firms in specific stages concentrate on.

Thanks!

 
Jul 31,2011

Do a search. I answered all these questions and much more in previous threads.

 
Jul 31,2011

Enter
"best-headhunters-for-vc"
into the search box. Not being facetious, I just can't post questions yet.

 
Jul 31,2011

In any case. Glocap is great and they offer a searchable partial listing..

 
Jul 31,2011

The OP wasn't asking for headhunters, but for very generic advice that was covered ad nauseum in my AMA on this exact forum. The reason I did that in the first place was so people could use it as a resource and not ask the same 5 questions over and over.

 
Jul 31,2011

Look at the thread i posted in a few weeks ago about this very topic. It's on the first page.

 
Jul 31,2011

And I would say there is nothing to lose (despite what others may say) about reaching out directly to partners at VC / growth equity firms in parallel to working with recruiters. Worst thing they can say is we don't have space or not interested. Your job in VC / growth will almost certainly be focused on sourcing, so they won't be bothered by your outreach.