I have a couple opportunities I am pursuing that on which I could really use some input:
1) A large, established financial firm has a small equity fund it wants to build (other strategies are much larger). The team has been around for maybe 5 years and manages ~$300M, management fee only. They have
2) A startup science company that has also been around for ~5 years, but has serious financial backing (including a PE megafund and industry partners). They are getting close to going public, and the PE firm wants them to hire a business analyst to improve analytical capabilities. The economics of the business is legit once they commercialize production, and solvency isn't dependent on hockey stick growth. I have a unique background which would be very applicable, so they are going out of their way to bring me in. Comp would be less (from what I understand, less than what I have been making and 10-20% less than the asset manager), but the role is "highly visible" (including with members of the Board, such as the PE investors), and there is a lot of room for growth.
Both are appealing, but in different ways. I was by no means looking to get out of finance (I really enjoy what I do), but I have to consider #2, as a very unique and promising opportunity. What do you think?
"The role is highly visible"
Translation from corporate speak:
"We want you to work extremely hard to enrich us, but we're not going to pay you much, and we will not follow through on any of our non-binding verbal promises to provide you with career growth."
Fail.
Some PE backed venture does not care about your career development. You can actually say that about 95% of firms out there, PE or not (sad but true). If you are still really interested in the role and feel that is the direction you want to take your career, I would counter and ask for pre-IPO equity if you truly believe this is a worthwhile venture likely to succeed. If your role is so "visible" and important, they should have no problem granting you a material amount of equity to bring you on board.
If they can't help enrich such a visible and valuable member of the team in a start up environment, I would go with #1 hands down. If they balk, that's really all you need to know -- nothing else they say matters after that.
Harsh does of reality, but appreciated. I don't know if it makes a difference, but the firm is 100+ people and has raised a few hundred million dollars. That makes me think the prospect of getting equity is close to nil. On the other hand, I have heard before the backdoor way into PE is to work for a portfolio company, so if that is true, the second option has that potential going for it, but I have no idea how feasible that is.
Honestly, since getting into finance, I have been reluctant to go back into industry because I see how companies are run from the top down, and I don't like the idea of being a victim of "cost control". I feel like this startup may offer more because working directly with the business leaders and the Board could creat connections, not just visibility.
We'll see where negotiations take me, but I would imagine most industry jobs can'tp ay on par with wall st jobs. I'll definitely push for equity, though.
Yeah, harsh reality, and I'm probably right, but I wasn't there so take it with a grain of salt. I would say this though -- there is a natural conflict in any buyer - seller relationship and the buyer's incentive is to mislead you if possible. You might think that is unethical, and it is to some extent, but that's business. Everyone does that. If it's not in writing, it doesn't count. So just make sure you don't sell too cheaply. It could be a great opportunity, but don't weight the verbal portion, weight the tangible value they're offering.
There are exceptions -- I'd work for a really, really skilled investor for basically nothing, but this does not sound like one of those exceptions.
Great points. I have no idea what the upside is and will need to get clarification.
I'm trying to think of the analogy to a really skilled investor. This startup is based on Nobel Prize-winning tech, which should provide a huge cost advantage. However, I don't know much about the people running the company (yet).
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