Two-Year Sabbatical/Break from PE

I'm a Senior Associate at a MM PE fund in my mid-20s. I enjoy what I do, but want to try something different.

I've had an entrepreneurship bug as far back as I can remember, so this would be the most logical place to jump, for me. Chances are I'll fail. I'm quite realistic about the probabilities of becoming a successful entrepreneur. I'm aware of the stats. Nevertheless, I feel as though there's no better time in my life than now - to try and to fail trying. I'm at a point in my career where my future could take one of two fairly different paths. I could see myself continuing to move up in PE and next thing you know I'm 40 with kids and am making okay money, not fuck you money, but doing well enough to remain complacent. The proverbial "golden noose." Nothing wrong with that scenario, but I know myself well enough to know that I'm not going to be truly satisfied until I take at crack at something else at some point in my life, taking some fat risks and pursuing with purpose. I could completely fuck up and wake up a few years from now and still be under 30. Even if I am to fail, personally, I think it could be a journey worth having.

But I don't want to get hung up on that part as much. What I want to focus on and what I wanted to ask the WSO community is about how this "break" would be perceived in the echelons of the finance world if I wanted to return, after, say a 12 - 24 month period.

  • Would temporarily pivoting away from "the track" hurt my chances of returning to a MM PE fund?
  • Would it look better to join a start-up, than to found your own company?

There wouldn't exist a "gap" on my resume necessarily, but certainly would not show as following a linear PE/finance route. My sense is that having 2 years IB experience and 3 years PE experience (with solid reviews, recommendations, etc.) is still strong, even if you did take a year or two to experiment. Perhaps you even become a more interesting candidate to some.

Thanks for reading and I look forward to your comments.

Comments (20)

Dec 2, 2018
spinyourwheels:

I've had an entrepreneurship bug as far back as I can remember, so this would be the most logical place to jump, for me.

What are you thinking exactly?

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Dec 2, 2018

Specifically, to be determined. Directionally, a software-based niche/unique consumer transaction platform that would deliver a convincing customer value proposition.

Most Helpful
Dec 4, 2018

So just an FYI, in 2018 there is a SaaS application and 10 clones for every conceivable niche...

It's insane.

What is a "consumer transaction platform?"

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Dec 6, 2018

Holy buzzwords Batman. You're well on your way to getting a 15x revenue exit.

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Dec 2, 2018

I followed a similar path to what you outlined (PE -> entrepreneurship) and am a few years ahead of you so I can offer a bit of color.

1) I haven't tried to break back into PE so I'm afraid I can't provide personal perspective on that process, but I have seen others do it in my extended network. They've taken anywhere from 2-4 years working on entrepreneurial endeavors (starting from scratch, joining startup, or entrepreneurship through acquisition). A couple needed b school to get back in, others didn't (one did it after b school). They all had strong backgrounds however - top schools, top banks, top prior funds etc.

2) You can do either. However, in my biased opinion starting your own company will provide a better story and life experience than joining a startup, provided you get it to a point where there's a real business there (i.e. revenue). It's also much more stressful. I'd recommend testing ideas while you're in PE so you can hit the ground running. 12-24 months is usually the minimum time you need to get a business off the ground, so the more of that time can overlap with your current job the better.

Joining a startup is fine too. You can do that for a couple years then go to B school to recalibrate. Or, jump right back in to PE if your network is strong and an opportunity arises.

I think you'd be a more interesting candidate if you can spin it the right way. But probably better to ask folks who are Principal+ in PE and make those hiring decisions now how someone with your hypothetical background would look in a stack of resumes.

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Dec 2, 2018
kuf135:

I'd recommend testing ideas while you're in PE so you can hit the ground running. 12-24 months is usually the minimum time you need to get a business off the ground, so the more of that time can overlap with your current job the better.

Yeah I completely agree with this. There is a lot you can do before you leave including starting the company/business on paper, developing the core framework and values, and then using your corporate income to pay for some of the startup expenses associated with the business.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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Dec 3, 2018

@APAE answered this beautifully not long ago but I can't find the thread it was on. Search up his post history. It's been within the last year for sure.

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Dec 3, 2018

So I'm only a first year analyst and not in PE, but out of curiosity, do you have an MBA? If not, I imagine you could take a stab at entrepreneurship and if all else fails in trying to get back into PE, I would think getting an MBA could put you back on the track. You seem like you would be a strong applicant given your work experience. I also could be completely wrong, but thats just something I thought of.

Dayman?

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Dec 4, 2018

If you're tight with some folks at your current shop that are senior enough to see this play out a couple of times, why not ask them?

For what it's worth, if you were okay with going to a VC fund instead of a PE shop after, starting something up would 100% help you stand out.

Dec 4, 2018

I'm in a similar position but with a little less desire to start my own thing and more of a desire to just do something different. I kind of just want to aggressively try and build passive income and see where that takes me, anyways to your point.

If you're a few years into PE hopefully the hours aren't terrible or you at least have some control over your life. With that I'd spend the next year grinding out your startup idea to see what you can do with it.

I don't think you leaving to do something entrepreneurial is bad at all, I think it would be silly to leave if you have no idea what you want to do. You can easily spin up a SaaS application over the weekend, work on it part time over the course of a year or so and see where that gets you. Maybe its starts to get some traction and it becomes clear that it could be a full-time thing, maybe not.

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Dec 5, 2018

Are you more interested in starting something innovative and changing how people do things, or are you looking for something that replaces your job and gives you stable, passive income ?

Dec 5, 2018

12-24 months is not a long time to try an entrepreneurial endeavor from my personal experience. I'm almost 8 years deep at this point and I don't remember things turning to really good until maybe 5 years in. The first 3 years were absolute hell and tested me mentally lol. I can laugh about it now, but that time in the trenches will change you.

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Dec 2, 2018

Thanks for your comment. What type of company are you running with?

Dec 5, 2018

I own a lot of residential rental properties and do 99% of the maintenance myself. I've also totally gutted a few on my own and did all the electrical, plumbing, framing etc.

Dec 10, 2018

+SB interested as well

Dec 10, 2018

Recently, a friend went back and became a senior executive at a coverage desk in New York. He spent three years in Southeast Asia doing a wide range of entrepreneurial things like setting up distribution companies, M&A advisory, real estate brokerage, investor relations, industrial zone development projects, fintech startups, and also co-working spaces. Things don't turn out the way he wanted but he got back to his previous track.

I think the key things that he did well are 1) his resume was already solid before becoming an entrepreneur - Semi-Target Undergrad > BB IBD > Target MBA > BB PE, 2) he was able to sell his entrepreneurial experience as actual operational aspect of private equity, 3) he also sold his deal origination skills since he was still able to get things done without having a brand to back him up, and 4) he still maintains his international network within the finance world that he kept in touch who also seen his progress both in term of maturity and executive presence (soft skills).

So net net I think if you are good, there is always a seat at the table. If you are not good or growing as a person, even if you don't quit PE, you will eventually get fired or won't be able to move up in the career ladder. So I don't think you need to worry that much. It might be an experience worth having.

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Dec 11, 2018

Before you leap into the entrepreneurial journey, it's crucial for you to understand and commit to the fact that an entrepreneur's life is a roundabout of countless failures and starting over and over again to find success. If you really want to make your venture succeed, it's vital not to quit the first time you fail. As such, make a pact to kiss your desk job goodbye for good.

In US, especially, entrepreneurship and entrepreneurial failure is 100% accepted, encouraged, and dissected across all industries. Common key questions: What kept you standing as an entrepreneur when you faced failure?What efforts did you make to keep the venture alive? Were you successful the second time? What lessons did you learn? These are always present in all meetings and interviews, so its important to build a lengthy entrepreneurial record (don't want to be seen as a quitter).

To give you a sense of security, options I can think of is going for an entrepreneurial residency at a hedge fund or a VC, etc. You'll still sit in the middle of financial services, but with ample opportunity to build your own brand. What I like about these posts is that they're usually 6 months in length so you don't get too comfortable with the desk job. Another option we often see, especially with guys working emerging countries, is them going into consulting alongside their ventures.

In the early stages specially, the VCs operate on pure gut, therefore its all about playing up your energy (#1 selling point), communicating your entrepreneurial passion, and selling your skills to execute a strategy (list complementary skills and proof that you can deliver results), etc. Although a bonus, it's not necessary to move to Silicon Valley. In fact, we often recommend our guys to stick it out in areas where they have most trust and network. Many choose to be close to their alma maters.

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Dec 11, 2018

While everything is situation specific and likely ties into your personal network / how blue chip your background is - my hunch is that it would be an uphill battle to get back into PE. Possible, but definitely a risk in leaving. Really boils down to if you absolutely want to return to PE or not and your risk tolerance.

Dec 19, 2018
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