Startup vs. IB

Hello everyone,

I am a senior who has an offer from an elite boutique (satellite, not NYC). However, the group (which will remain unnamed) is doing terribly and there is a possibility it will go away in the coming years. I also have a few technology startups offers with a salary ranging in the 60-70k in SF. A few look somewhat promising and with the tech boom that is coming up, I'm not sure what to do.

Investment Banking vs Startup

Working for a startup and working in worth it though if you believe in the product or mission 100%.

Investment banking is the opposite. It’s for the risk-averse (save a market downturn). It’s a popular job because it provides diverse options for future employment and great pay. However, sacrifice in free time and job satisfaction are significant.

from certified user @SSits"

The key question is where are you in life and what level of job security can tolerate.

Looking to get married soon to a dependent lady who wants to pop kids? Go for investment banking for better job security and compensation.

No attachments to a financially independent partner or have a strong cushion of savings? If I was in your position, I'd go gamble on the startup for a few years on the basis that the opportunity cost/impact.

There are more factors like this eg where you want to get to in life, how old you are

Recommended Reading

 

recommend you actually tell us what the firm is so people can comment on the validity of the statement without it, best anyone can do is conjecture

honestly, are all of you people so afraid to even reveal a modicum of personal information? no one really cares about you

anyway, yes, in my opinion there is a definite boom coming to the tech industry even if your bank's businesses ceases to exist, you can still ride on the name value of the company for at least 2-3 years can't say the same about any random start up

.
 

Can't say for sure but my gut would say to go with IB. Guaranteed brand name vs. virtually guaranteed failure. Plus you can easily move to the startup full time if banking isn't for you.

What role would you have at the startup?

 
diaosi:
the tech boom that is coming up

Not sure if serious...

We are in the midst of the biggest tech boom since the dot com bubble in the late 90s.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."
 
meph:

Do you want to be a banker or work at a tech startup? Pretty simple answer here...

This.

Not trying to be elitist here, but only do a startup if you're prepared for what being in a startup actually entails. That means, yes, sometimes working IB hours. That means probably failing. And failing again. That means your salary probably being on the low end of a given range (sometimes less... or sometimes you get paid way late, lol). In short, do a startup if you believe in startup culture and actually want to champion the product you're building/selling. Angels and VCs can see through half-assed interest - they want to invest in a group of guys who are actually passionate about what they're making, not the guys who managed to hop in because of the "tech boom" or the prestige or what-have-you.

(Obviously the above doesn't apply to large-scale "startups" like Yelp, which are in a growth position already. I'm talking early-stage/seed-stage).

That said. Why not go to the elite boutique in the shitty group for 2-3 years, and then leave when (or slightly before) it closes? Entry-level IB is a 2-3 year stint anyways, so you can gracefully exit and then go tech-whore or apply to b-schools if it turns out your interests change.

Currently: future neurologist, current psychotherapist Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)
 

maybe see how much funding they've received and how much is lined up for the next few years

all startups look "promising", but for a lot of them, once you're in, you'll realize very quickly if the idea is fundamentally flawed

speed boost blaze
 
dew2229:

start-up! who cares if it fails? you're still young. now is the time to take a risk and do something a hell of a lot more meaningful and exciting than turning comments on a powerpoint deck at 2AM.

and make sure to get equity.

quick question: I have 20% equity stake in a failed startup - does this justify me cashing out for ~$450mm ?

speed boost blaze
 

I'd still rather take the risk on a start-up where I have more direct control over the outcome than work for a banking group that is, and I quote, "doing terribly and there is a possibility it will go away in the coming years". seriously, youll do nothing but pitchbooks and be incredibly miserable. If there were solid deal-flow, at least you'd get something useful out of the job.

And yes, I'm well aware that equity is useless if the company fails, but zero equity in a successful start-up while you're slaving away at a suffering ibank group is also useless.

 

as some people have already suggested, it really depends on 1) the details of these start-ups -- i.e., name, space/market, mission, product, founder and employee backgrounds/bios, # people, fundraising status and investors, stage, users/customers, competitors, growth, whether they're looking to sell or trying to go big, etc. 2) whether you actually know anything about tech/start-ups and want to be in that world/in VC vs. in banking or at an LBO shop or somewhere else, and where geographically you want to be, and 3) what the role is (engineering, product, biz dev, marketing, sales, ops)

happy to help if you PM me or whatever

 
Best Response

Key question is where you are in life and what level of job security vs salary vs risk you can tolerate.

Looking to get married soon to a dependent lady who wants to pop kids? Go for the IB for better job security and compensation.

No attachments or attached to financially independent partner, or you have accumulated a strong cushion of savings? If I was in your position, I'd go gamble on the VC for a few years on the basis that the opportunity cost/impact on your other priorities is not as great.

There's more factors like this eg where you want to get to in life, how old you are.

If you're sub-30, I'd recommend the start up even more. You have plenty of life left to get back 'on track' and you'll be richer for the experience - as will your resume. I didn't become a commercial banker until I was 33. A lot of good, well paid bankers I work with lateraled in from other careers (eg engineering) in their 30s. The idea that you have to get into and stick with one career path as soon as you're out of university is a self-delusion.

Without any information on your risk tolerance and the opportunity costs you face, it's impossible for anyone to give you meaningful advice on the choice.

Those who can, do. Those who can't, post threads about how to do it on WSO.
 

I have done the technology startup route and know it well. What will you do for the startup entry level sales? Depending on the stage of the startup, I doubt there is a meaningful opportunity on the financial side of the business. And if it is on the financial side it is probably advance administrative work. I continually hear about bankers wanting to pursue startups. They see the huge valuations and think they can make millions fast. Well most startups fail. And even the good ones do not hold their value long enough for you to vest your options and cash out. Picking the right one is extremely difficult. If you are joining one that is highly touted you will not get enough shares to make up for the $75K per year loss of income which adds up. They good one have smart investors/VCs. They are not giving a recent college grad enough shares to make even a $1M on their stock. If you have the opportunity to work in IB even at a sub par firm, it is a significant accomplishment. Most recent grads don't get the opportunity. Startups are a lot of fun. Correction--successful startups are a lot of fun. being at one that does not crush it which is probably 99% (not kidding) then it bites as you see people at the few that do skyrocket. Working at a startup absolutely does not require the hours of IB. Only the founders and key personnel (which you will not be coming out of college) work crazy hours because they are looking at huge payouts. Bottom line, you can always go to a startup, but you cannot get back to IB from a startup.

 
idontwearglasses:

What kind of entry level startup SF jobs are paying you 60-70k?

You'd be surprised. Obviously the devs will be paid that much (or more) just for breathing. Sales pulls in 40k-ish. I assume OP is talking about a startup that has gone through a few VC rounds and is hoping to scale up, not an early-stage.
Currently: future neurologist, current psychotherapist Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)
 
idontwearglasses:

Obviously devs get a lot more and Sales pulls in 40k-ish, so again, what role is giving him 60-70k at entry-level?

cuz all start-up jobs pay the exact amount ppl r saying, no deviations whatsoever

inb4 startups r the next bulge brackets

speed boost blaze
 

70k is about I would expect a post-seed or Series A-ish company to pay for a product manager, data scientist, or maybe biz dev (partnerships) in some cases. could also be an engineer salary for a super early stage start-up that knows it can't compete on price for good talent so they don't even try

 

Sales comp for an entry level position for a startup is $30-40k base salary 2X if you hit your quotas. In this role be ready to dial and smile. Someone said you don't join a startup if you want to make money. Not true. You accept the risk and lack.of stability of a startup for the opportunity of a big payoff. Unfortunately entry level people do not receive enough stock.

 

I don't know why you're asking this question. If you have just an idea and no business now, spend some time working on building your business (you should have time to do this in college) and then we can have this conversation. An idea with no execution behind it is worthless.

 

Why don't you apply to the Thiel Fellowship? Pretty sure Peter would be very interested in finding out how you're going to disrupt the porno industry.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."
 

Hustle the start up! Worked in REPE / Development meanwhile starting my first company. Launched my second venture two weeks ago with several client accounts and a pipeline in the dozens. You'll be plenty fine if you ever want to go back into finance - regardless of what people say, decision makers value the risk you took and the value you bring to their organization after having your hands in every part of your startup much more than someone that is extremely good at just analyzing data and building models. I do agree, don't do it unless you have pre-commitments in sales or some other pre-revenue cash flow guarantee that will ensure the viability of your business - you have three months, go hustle!

 

If the idea is really good and fairly unique i.e. you're not proposing something that requires massive scale for investment, and that can be fairly protected, depending on your stake in the firm, you can expect to make in the high 7 figures - low 8 figures range.

And No. Having been on both sides of the table, the PE skillset is vastly different from the startup skillset. PE is all about making sure the checklist is fully checked, and that things are running smoothly they way they should be. In startups, nothing runs smoothly anyday - you're constantly hustling, whether on the tech side or the strategy side or the BD side.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."
 

I'd go with the FT offer, mainly due to them not having received VC funding yet. The odds of this start-up turning out very profitable (at least in the short-run) are extremely low in comparison to you having a safe ground and excellent exit ops as an IBD analyst into PE/HFs, for example.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 

The failure rate for VC backed companies is between 20-30% depending on what tier of VC firms you are looking at, but I would also pick the FT offer. Work there for 2 years, and then decide on whether or not banking is right for you.

 

Do you believe in the startup? I would take the startup only if I truly believe in the idea and wouldn't mind spending the same time in it as I would in a IBD job. Also the name of the bank would matter a lot too.

 

It depends on the position within the startup. If you're one of the scientists/engineers or salespeople, then the startup would likely be a better fit and choice overall. If you're a business person, then banking would be the better choice.

 
eagles7:

@Predilection
@QGKZ

I definitely have more finance-related skills since I am a Finance major at a target school for banks, but I've been looking hard into startups and Silicon because of the chance to hit it huge. Needless to say, I don't have lot of experience in tech and coding, etc.

I am a rising sophomore, and my position at the startup is Prod Dev, Sales & Marketing.

I have no idea what 'Prod Dev, Sales & Marketing' even means. Find out what the role specifically is, what it involves, compensation structure, career advancement, ect.

You firstly need to decide what career you're interested in. Is it sales? If so, then you'll likely prosper in startups, rather than IB. However, if your interests lie in finance and accounting, then you'll likely prosper in IB.

Obviously, this is a simplistic view that does not take certain lifestyle factors into account. The hours are far more brutal and unenjoyable (less perks, more strict environment) in IB. However, the meritocracy of sales is very cutthroat and unforgiving.

 

Investment Banking. You have a high fail rate for a StartUp if you somehow did not get funding. Do not be dis-illusion about a StartUp, it is just another company being formed (unless we are talking about engineering and machinery parts). If I got the opportunity to do the same, IBD is far the best choice.

http://www.wallstreetoasis.com/blog/why-you-should-reject-that-start-up…

This thread will work.

 

I'm all about entrepreneurship, if you think there's opportunity to be had at the start up, even down the line I would stay. Not only will you be working a quarter of the IB hours but you will also be making much more if it takes off.

 

What kind of a startup? I wouldn't go throwing that offer away yet, getting funded is a lot trickier than it seems. Also, it might not hurt to have some IB background before going in front of the VC sharks.

 

Tech area. College marketplace idea. Makes sense, I always had the plan to get into startups after a few years after IB but I think this one opportunity could be good (I understand that's what everyone thinks too). If we get funding, which we will have the opportunity to do so in a few weeks, things may get interesting. It would be tough handling SA position and CEO at the same time, albeit the latter is part time.

 

Depends what you want to do. You didn't specify what kind of internship. I'm assuming the internship is impressive enough and will move you closer to your goal.

If the point of the business is to gain extra credibility, you've already gotten that benefit. It's on your resume. Will running it for another year enhance the appeal on your resume? If not, shut it down and focus on your goal.

The ultimate coup - if you can do it - take on a partner or employee that you trust and have them run the business while you work. That will teach you some lessons about managing/delegating (not easy), and will impress anyone IF you can pull it off.

 

Minus voluptatum odit dolorem. Eveniet sequi aliquam aliquam voluptas. Vitae veritatis repellat aut maxime.

Sit ut sapiente eos est et voluptatum. Inventore id amet dolor distinctio ut sequi dignissimos. Porro est fugiat dolores ipsum minima voluptatem.

Unde inventore pariatur sed. Nisi deleniti incidunt atque mollitia magni nisi. Ipsum saepe velit occaecati sint dolor occaecati iusto. Molestiae nemo nam vel ea doloremque quam. Temporibus et perferendis rerum eos.

 

Perspiciatis qui aliquam quia modi. Hic non laboriosam nemo eum blanditiis et totam. Ipsa libero pariatur optio doloribus repellendus. Sit repellat iusto adipisci suscipit.

Qui sit et tenetur minus consequatur ut eveniet est. Vero officiis vero vel dolor. Beatae in nemo vel ex earum praesentium.

 

Illum sit aliquid odit unde. Voluptatem quam quia qui rerum. Totam qui similique et ex. Rerum harum non libero quo. Pariatur rerum officiis commodi vel excepturi amet amet quidem.

Ea nisi officia assumenda autem doloribus omnis incidunt. Alias maxime possimus accusamus temporibus voluptate. Voluptas ut ipsum rerum ut atque facilis. Eveniet reiciendis nesciunt ad ratione. Nesciunt ipsum quae dolorum rem minima.

Sunt est maiores inventore beatae est. Earum maxime suscipit rerum et nesciunt mollitia. Unde sed in voluptatem neque excepturi qui. Amet non tempore vel perspiciatis. Corrupti laboriosam dolorem mollitia quia ut eos quidem.

Ex amet ex at illo in sequi delectus. Id qui quod iusto quaerat ullam. Ratione nulla ut possimus velit. Incidunt sed perferendis illo error ratione vel voluptas.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
DrApeman's picture
DrApeman
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”