VC offer — lowball?

I recently got an offer to join a VC fund as an Associate. I think the offer was a bit of a low ball - only 100K base not including bonus or carry. I'm currently making a much high base. Is this normal? 

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Comments (10)

  • Intern in PE - LBOs
Jun 8, 2021 - 1:15am

No, this is a price anchoring mechanism to see if you'll fall for that lowball offer

  • Analyst 2 in IB - Ind
Jun 8, 2021 - 2:05am

Are you saying that you won't be getting a bonus or carry or that you're just not including it? If so, I don't think the base is really that low for VC. VC comp is generally a lil bit lower at the associate level versus LBO PE, but if youre not getting a bonus or carry then tell em to fuck off unless youre desperate to break in.

  • Associate 2 in PE - LBOs
Jun 8, 2021 - 8:59am

Here's an offer comp: 

1st year ASO $120k base $80mm fund (no info on bonus sorry) no carry 

Jun 8, 2021 - 10:35am

Would be helpful to get info on size of fund, geography, etc.

If all-in comp is $100k then yes that's low. If you're getting a bonus of $75-100k to bring all-in comp up to $175-200k that actually sounds in line with market. Large brand name VCs might be higher, smaller VC funds might be at the low end. I'd ask them whether you should expect a year-end bonus because that definitely would change my view on this comp package.

Most associates don't get carry so I wouldn't expect that.

  • Analyst 1 in IB - Gen
Jun 8, 2021 - 2:01pm

Agree with this. 175-200k is market for VC associate offer

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Jun 8, 2021 - 2:25pm

What size is the fund? Geo? VC generally pays a lot less than PE.

Jun 8, 2021 - 2:58pm

It's low but it really depends on size of fund and geo. In general, if you're not at a name brand fund or you're at a smaller fund, I wouldn't expect more than low 100s base with a small bonus. Hopefully for an early fund you can negotiate some carry, but that will take a while to realize.

I had a buddy recently go to a well known, brand name, early stage fund (with billions in AUM under other strategies) and as a Post-MBA Senior Associate he was a little over 200k all-in cash with no carry. Unless you're at a top 5/10 fund, I wouldn't expect $200k+ until you're a few years in, VC pays a lot less than PE.

Jun 8, 2021 - 11:25pm

I was surprised as well. This is anecdotal and just a single data point, I guaranteed it's correct and from 2021, so the number isn't stale. Again the fund isn't A16 or Sequoia, but it's a well known fund that has raised a few funds and would be a top choice for anyone who wanted to work in early stage VC. In VC, the AUM just doesn't go that far, especially at the early stage, the economics just don't work out. Think about it, you raise a Seed/Series A fund at $250M, which would be decently sized. Even with the increase in round size, if you're writing a $8-10M check on average, that means you still have to do ~25 deals, maybe a few less given reserves for follow-on, that's about a deal a month, which is a fast pace if you're trying to do quality deals. At the same time, $250M in AUM doesn't give you that much of a management fee to work with. Pull out money for rent, travel, events, insurance, misc etc. Maybe you have ~3M or so to go around. A few partners a couple principles, hard to guarantee $300k+ to that many folks. It's something I thought about as I contemplated a switch to VC, PE is more of a sure thing from a post-MBA comp perspective, even at small funds.

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