VC/PE senior track with or without a top MBA

All,

I'm looking for feedback from the more senior people on this forum; not to be dismissive and disrespectful, but please don't comment if you're an undergrad or a banking analyst (and I now sound like an awful pretentious human being, apologies). Ideally, I'm looking for feedback from peers in VC and PE who are now considering business school or have gone through it, OR have decided to NOT go to business school to go forward.

At my last review (at a large VC fund), I was told I could get to Senior Associate (Post-MBA Associate) without an MBA. I was immediately told to be also objective and realize that I could make it to Principal but could hit a ceiling there. I see it more as a cul-de-SAC, where I will be too old then for business school, too expensive for portfolio companies (and not operationally experienced enough) and not "networked" enough to get a partner gig at another fund.

I see the value of vastly expanding my network and increasing its quality at a top MBA program, which will help me source more deals and help me break that ceiling (by getting some operating experience at portfolio co and/or jump to partner somewhere else through that network).

I have a good shot at the top 3 schools... However, the $ are just staggering:
2 years of tuition: ~$110k
+ 2 years of foregone income: ~$400k

+ extra trips and parties that I would not do (as much) if I were working: ~$20k

That is an opportunity cost of over a half million dollar!

I try to tell myself that I will get great jobs over my career and source deals which fees will outweigh this on the long run, and will have fun, but ...

... Help me make sense out of this!

 
Best Response

The MBA has a lot of option value when working on the more pedigreed side of finance. I wouldn't look at it as short-term opportunity cost, but rather focus on the expected range of net present value post-MBA (i.e., what is the opportunity of NOT having the degree, which could easily be higher than the op cost you laid out). If your goal is to be a BSD in the VC or PE world, then it probably makes sense. I am less familiar with that side of finance, but it seems to me that you have to have an MBA to make it to the highest levels -- if that's true and that is what you want to do, then the decision is clear cut.

On the hedge fund side it is much less clear cut. There is definitely value in having a top 3 MBA for fund raising and opening doors into top funds, but it is not strictly required -- if you can make money, dollars will come your way. Personally, I think it would still be helpful to have the MBA just to be safe (and because I am sick of swimming against the current in the lame credentialist world that we live in). To me, the cost is pretty much irrelevant if it helps me attract capital in the future and make millions a year running my own firm. I might be able to do that without the MBA, but I also might not, and hence am considering going back to school with an even higher op cost than what you have. I'm also considering asking my boss if I could work part-time for him while in school, which would reduce the opportunity cost on both a cash and non-cash basis. That might sound ridiculous, but I'm not expecting b-school to be that hard after working at a top HF and passing the CFA exams -- for me it will be a box checking exercise.

So in short, I don't think the MBA really makes sense if your goal is to slowly grind up the curve (I wouldn't get one to go into corp dev at a F500 where I would get an incremental salary bump). But if you really want to knock the cover off the ball, it may be the only way unless you have connections or get very lucky. My boss has talked about carving out come capital for me to go live with my own fund by the end of the year, but I'm still throwing my hat in the ring for round 1 in case that doesn't pan out -- hopefully I'll get in and have a hedge in place. In your situation, I would go.

 

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