Forum,
I am a first year analyst at an EB in London, and I am wondering how one may best position themselves to exit into VC or Growth PE after their analyst stint. I have decided that traditional buyout PE is no longer the career I want to pursue and would ideally want to exit to somewhere where I could experience a better lifestyle. My questions are below:
Is it a common path for IB analysts to exit to VC in London?
What steps can I take today to be a competitive candidate for top funds? Are there any materials you can recommend?
Who are the main players?
How much of a salary cut can you expect from Centerview / PJT / Evercore?
What is the lifestyle like at top VCs in London?
Apologies if this has already been covered.
Best, Alex
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1) Yes - it’s an expected exit route, particularly from BB/EB. That being said - be aware that there are far far fewer roles in London VC than in PE etc and therefore, recruitment is more difficult and more relationship driven.
2) A few things to be competitive:
-Sourcing: Sourcing is EVERYTHING as a junior VC. Build demonstrable network and sourcing capability however you can. The single most powerful trick at interview is pitching a company you’ve sourced that hits the firms investment criteria. Add a bit of value before you even get the role.
-Basic Research: all VCs read tech crunch, venture beat, sifted, stratechery etc and listen to stuff like the a16z and 20 min VC podcasts. It’s worth being on the same page.
-Differentiation: get to know a vertical or sub vertical exceptionally well. Have a thesis on the space, know the major players, and identify interesting deals. Preferably fight through the cringeworthiness and blog about it.
-Network with VCs: most VC roles aren’t advertised and are filled through network or headhunters. Spend time networking with VCs and getting your name out there.
3) Ranking VCs doesn’t make much sense as it there so much variation across stages and vertical, but indicatively:
Top tier - Balderton, Accel, Atomico, Index, Sequoia (recent addition)
Others (no particular order): Northzone, Dawn cap, Draper esprit, Eight Roads, 83 North, DN cap, Notion, Amadeus, Passion, IQ Cap, Localglobe, Pentech, Felix, Octopus, MMC, Augmentum, first minute, fuel ventures, Hoxton, Kreos
4) The salary cut will be significant. Very significant. There isn’t much data - so it’s hard to be precise, but a junior Associate as a good fund would almost certainly earn 100k base + bonus. Proper comp in VC comes later in the form of carry. As VC isn’t scalable, smallish find sizes simply don’t allow for punchy cash comp.
5) Lifestyle is great. A lot of flexibility and autonomy. Expect c. 60hrs a week (although it doesn’t hurt to work more…). Deal execution can be intense and often involves short timelines - but it’s infrequent and comparably fairly tame. VC is a lot more social than banking - so expect a lot of networking inside and outside of working hours.
Feel free to DM if you’ve got other Qs
thanks really helpful
Thank you for this. What are your thoughts on Softbank?
SoftBank are playing the same game by a very different set of rules. They’ve made some good investments and have some smart people - but they operate fundamentally differently from traditional VCs and growth investors.
The returns in VC are power law distributed: a tiny number of companies account for the majority of the industry’s returns. There isn’t even central tendency. VC investors approach this by building a large diversified portfolio and supporting/empowering founders in the hope of getting 1 home run in a fund.
Tiger takes the approach of hyper diversification to maximise home runs: massively overpay to get allocation and invest in a vast number of deals, then operate passively.
SoftBank I) has a huge macro thesis on the inevitable dominance of tech, and 2) often sees itself as a kingmaker: using vast capital as a moat to create category leaders. If they believe they can make a category leader that becomes a home run - it can make sense to massively overpay. This is obviously a gross oversimplification, but you get the point.
SoftBank is clearly a serious investor - who have made some excellent bets - and shouldn’t be entirely dismissed for their fuckwitted investment in WeWork and the megalomaniacal ravings of their founder. The question is whether this is a style of investing you want to dedicate a chunk of your career to.
Thanks for this and appreciate this is a pretty old post. How does the comp scale from there? How easy is it to move from a seed fund to A/B?
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