What are the exit opportunities from a small VC firm?

Hello everyone!

I'm writing because I have to make an important decision and I really need a wise advice. I have recently got offered a job in a small VC firm in San-Fransisco. I have also got an offer from an Asset Management company in Boston. VC definitely sounds more appealing to me, however, I understand the risks of working in a small VC firm. Most of them have below the average returns, the number of VC firms is shrinking, despite the rebound in $$ volume.

I'm just starting my career and I feel like it is very important to make the right choice right now, because in case I change my mind it would be hard to make a transition. That is why my question is: if I choose a small VC firm what could be my exit opportunities there? Is it worse choosing a safe option and going for an equity analyst position?

Thank you!

Comments (3)

Apr 30, 2016 - 10:07pm

Is it an analyst or associate role?

The two are very different in VC. Analysts respond to partner requests for industry research, deal diligence, portfolio company support, and board meeting prep. Associates are primarily focused on sourcing: getting out into the community to advance the fund's brand and maintain/boost dealflow.

If you're an associate, you shouldn't ever really have a concern over your career prospects if you're doing your job correctly. Why? Because you are so knit into the community that not only is your access to dealflow stellar, but your access to career opportunities is as well. You should be seeing (and being asked for help filling) job descriptions for your portfolio companies, your friends at other funds' portfolio companies, and even roles at other funds.

If that's true, then basically every two years, you know you can hop into a role at another fund or startup with more pay and the exact set of responsibilities you want. Switching between funds typically happens when someone doesn't see as clear a path to promotion as they want (i.e. after three years as an associate out of undergrad you might switch to another fund to gain the Principal title / or after five years as a Principal somewhere without getting a seat as a partner, you may switch to a firm about to announce a new fund as a partner there).

You shouldn't be too worried about the fund you're joining imploding as long as they're still in the investment period of their current fund. They have management fee income and will be able to pay you. The only time I'd be concerned is if the firm was in the harvest period of their latest fund and had either chosen not to raise a new fund or tried to and failed due to lack of investor interest.

I am permanently behind on PMs, it's not personal.

  • 1
Apr 30, 2016 - 11:46pm

1) How large is the fund?
2) What is the background of the partners?
Odds are you are not going to stay at the firm longer than 2-3 years, but you want to be sure that the firm will be very active during your tenure there and get investment experience. You also want to be working with partners that have a strong track record and that you admire. Their reputation will naturally rub off on you while you are there and going on from there, so make sure they are people who are legit that are respected in the industry.

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