Venture Capital and Venture Growth - Finish PE Program or Do CXO/Chief of Staff at Top Startup?
Current 2nd year Associate (IB + MF PE 2yr program, Advent /H&F type), I don't like PE at all but want to do a role that does both early and late stage venture (Seed to C/D) after HBS next year (I have some firms in mind with roles like these).
I am wondering if maybe I take the next ~8 months to be a Chief of Staff / CSO / Interim CFO at a flaming hot startup (you could take typical PE EBITDA multiples and square them and still not get to what this company just raised at).
I have the offer with some cool intended projects and equity at current valuation equal to what my bonus would be so not a money issue. And I don't like PE so don't want to go back so am not worried about re-recruiting for PE .
So I'm wondering if having this role would help me differentiate from the hordes of PE Associate + HBS --> VC hopefuls since I can develop a network in a crazy hot space and get a bit of experience operating. But maybe there's a downside I'm not considering. Thoughts?
Thank you everyone.
Edit: The other thing is, honestly, I really would like to do it. I think it would be fun and a great way to try something new, a great perspective to have before going into school, and the sector gets me fired up. But I'm risk averse and afraid of the unknown hence why I am asking for counsel.
Comments ( 32 )
Absolute full court shot tagging APAE and CompBanker to humbly seek some wisdom.
As an Intern in IB-M&A, I think this sounds sick. Go for it.
The bet you're making here is that you're SURE you don't want to do PE , HF , or really late-stage Growth (which I think of as unlevered PE). Those jobs will see you not finishing your 2 years as a PE Associate as a demerit, which would make it tougher to recruit if you end up deciding you want to go that route post-HBS. On the flip side, if you're confident you want to do Venture, earlier Growth, or a start-up this move will help you. Getting experience at a rocketship startup makes you more credible to entrepreneurs, which will help you as a VC . You'll get network access, and be able to test something you seem interested in. IMO the choice comes down to how much conviction you have in not wanting to do PE / HF .
Thank you. This is helpful framing of the decision at hand.
One clarification: when you say late stage growth are you talking firms like ICONIQ or Dragoneer (investments that are Series D/E and still losing money but growing minimum 50%+ p.a.) or are you talking Growth PE (mature cash flowing businesses growing 15-20% p.a.)?
In my mind there is a fulcrum around: no haggling over WC, no complex purchase agreement, not quarterbacking a million advisors, and most importantly no inanely detailed model, just market and business diligence and a fairly standard term sheet. One side of the fulcrum I'm good giving up, the other (the venture-y side) I don't want to give up any part of. This is probably the last key piece of information in my question.
It's a good question and I agree there's nuance here that makes drawing a hard line in the sand difficult. The way I would think about it is if you're trying to go to a shop that is all former IB -> PE -> more PE /Growth, then they'll probably view not finishing your Associate program as a demerit. If the fund you're looking to join has people with some sort of start-up experience they'll view it more positively.
At the end of the day people tend to be most comfortable hiring other people who 'look like them' in every sense of the word. My advice is to look at the team pages of funds you might want to join post-HBS and see what their backgrounds look like. If some/many have start-up experience, I think you're good. If everyone has been on the blue-blood finance path their entire life, it may be difficult for you to get hired there.
As a follow up I called a couple alums of my school in SM HF and most indicated they would not care at all, however one did and he was at a Tiger / Coatue / Viking type.
CoS roles are typically 2 yrs based on what I've seen, so the 8 months piece may be tough. That said, these CoS's are typically happy to talk to you if you just email them. Pick your top 10-15 favorite tech companies, find the CoS's and fire off some emails. They're typically coming from same background as you and understand the value of networking, particularly with someone with good pedigree like HBS / other PE . Can't hurt, and I bet they'd give you some good guidance on what roles are open, what stzrucurte of job really is, etc.
Thanks. This is super helpful. I took your advice and did some outreach.
It sounds like you are familiar with the role. Do you know where these guys usually go or what they do (intentionally broad question)?
delete delete
Hey man. For what it's worth, for a few months, tagging hasn't seemed to work the same way it did before, so you should also message a link to people you want to reach. I found this by chance.
Take the job. The simple reason is that you really want to do it. It's clear you find it interesting. That's the strongest signal possible and I'll firmly tell you that ignoring it will set you up for discontent, resentment, or at best, daydreaming down the road.
If you were to go this route, I'd recommend narrowing it to six months.
You then have two smart paths.
One: skip school.
Who knows, maybe you like it so much and find the company's future prospects so compelling that you decide this is where you should plug in. You negotiate an additional equity grant reflective of the fact that it's no longer a six-month mercenary stint, and you wade in. Maybe you know that this is what you want to do but the company isn't the perfect place to do it, but you're hooked and now you're off to find the same type of job but at a different prospective rocket ship.
Two: go to school and pursue the path you already laid out (early and mid stage fund).
Your experience in this interim role will give you limitless different things to talk about with founders. I can't state this strongly enough. Just knowing the founder mindset, the problem set they face, the language and rhythms of the startup executive role, and any operating insights or playbook pieces you acquire will be massively valuable. It will pour out of you naturally. You won't be trying, it will just be happening. This will give you an infinite leg up in sourcing. It will be a compound effect. The people who like you and choose to do a deal with you (even if you end up not doing it) will introduce you to other people who will end up liking you and wanting to do a deal with you.
I nominally understand the risk aversion (I am exceedingly risk-tolerant), but I don't think it applies here.
You don't want to go back to buyout, you have the HBS admission, you're clearly someone that can convince a startup of your value, and you have not only a defined idea of the type of firm you can see yourself pursuing the career track at but also a shortlist of firms that seem to match what interests you most.
I wouldn't worry about the comment from the guy at the crossover fund who said he'd hold you exiting your associate stint against you. That's not a firm thing nor a sector thing, that's a personal thing. You'll always encounter people with a scarcity mindset rather than an abundance mindset, or a dogmatic approach rather than a situational approach, or an "I did my time so you have to too" ethos.
So take the job, shape its duration such that you minimize whatever optics risk might hinder your future goals in a different investing seat, and keep an open mind regarding the optionality of the operator path.
Feel free to reply with questions, this is cool and I'm happy to help.
I hope you had a great Christmas and are enjoying the holiday week.
I am permanently behind on PMs, it's not personal.
Can't express enough how much I and many others appreciate your contributions. Happy holidays!
Consistently one of the best posters on WSO . Unbelievable.
Not OP, but I am currently an incoming analyst in a top group (GS TMT /PJT RSSG) and I am having a dilemma on going down the risk-averse path of IB -> MFPE -> MBA -> Entrepreneur or doing IB -> Strategy/Ops at Startup -> MBA -> Entrepreneur. Long term goal is entrepreneurship 100% as I founded a startup before and had a mildly successful exit (7 figures) and it is what I am most excited about.
A couple of questions:
Congratulations on your success. Your analyst placement is impressive. Your startup exit is rare.
Tell me why on earth you want to do banking.
Its sole value is the future optionality it creates for your career. Entrepreneurship isn't a career. It's a departure from the career track. You are signing up for the antithesis of the linear progression people pursue as the entire point of a career.
Therefore, a role that positions you well for another role (private equity, hedge fund , corporate strategy , venture capital , whatever) that then positions you well for an MBA (where you get a nonstop buffet of introductory touchpoints to the full menu of {a} business subjects [marketing, management, leadership, finance, operations, accounting], {b} people deeper in their career in every field imaginable, and {c} interesting peers who will be valuable to you in your journey) that actually slows you down relative to just rolling your sleeves up and getting in the trenches with your idea is by logic not the most sound path.
If your long-term goal is entrepreneurship, your short-term goal should be entrepreneurship.
Failing that, your short-term goal should be the job that singlehandedly best equips you for being a founder. That's an easy answer: it's being the earliest non-technical hire possible at a venture-backed company.
You have already succeeded to some extent at running a company. I don't know the complete details around the exit (how long did you work on it; were you the primary founder or co-founder or the fifth guy on the project; did you take any investor money or bootstrap it; did a pref leave you with nothing after the sale; was it an acquihire for equity and you received basically none), but I do know that your battle stripes taught you valuable things that you can build on.
The people who enjoy success launching a startup after doing private equity have that success because they're smart people who happened to get into private equity, not because a private equity associate stint taught or gave them something special that prepared them for entrepreneurship.
So, answering your questions directly:
Yes. See above, both in this reply and in my first comment replying to the original post.
Speaking with all the appropriate caveats (there are numerous wonderful schools that any person would be immensely fortunate to get into, would meet amazing classmates who are fascinating humans with bright futures, and so on), there are only two schools I personally would be interested in today. HBS and GSB.
Given the admission trends at those institutions, the startup role is likely to give you better odds. The applicant pool of insane banking to insane private equity to 'I wanna do b-school' is really saturated, and it's essentially impossible to differentiate yourself at this point.
This is amplified if you are at GS TMT rather than PJT , first because of optics (it's more congruent to move from tech coverage to an exciting tech company; you can sell this easily in your essay with a narrative of a long-time fascination and a logical desire to develop foundational analytical skills, supplement them with foundational operational skills, and pursue a degree that comes with component resources that will help you launch your own thing) but also because of the immediate network (you will have met so many people that make accessing a quality startup for that second job easier.
Yes. The megafund lifestyle sucks. You can corroborate that from the litany of threads here going back to the site's inception. It got worse during the pandemic. Because assholes have an easier time being assholes when they don't have to look at someone in the face. Because it's apparently easier to expect people to be online and available forever and always because 'where else could they be?'
You'd be missing out only on prestige, which is the equivalent of wrapping yourself in something that only the other slaves in the mine can see.
Unsolicited advice. Pick a thing you are passionate about. Dedicate yourself to it unwaveringly. Apply the breadth of your intellect and ability to it. Sacrifice other things in favor of it. Good things will happen; you'll get a morsel of success, and that will allow you to create a bit more, and it snowballs and you break through into the sunshine.
You have an exit you can point to. It's not like you'll even have to live the ramen lifestyle for years. In this environment, you can raise three million in a seed round just off the strength of this being your second company and the fact that you're willing to forgo a banking job that good.
Yes, the work you do in growth equity is more relevant.
You'll be interacting with founders and their management teams, learning how and why they got the business to the state it's currently in, all the elements of their strategy for continued growth, the operating playbooks they use ...
This is in contrast to burying yourself in financial analysis and minute diligence that will inexorably crush your soul. It also happens to have negligible relevance to anything related to the process of starting and scaling a new company.
Moral of the story: you sound like someone who's got the brains but maybe not the stomach for entrepreneurship. In my experience, that describes a tremendous number of people in finance. If I wanted to test that for myself, I'd want to do it earlier rather than later in life.
Good luck, and congrats on your success so far.
I am permanently behind on PMs, it's not personal.
I'm contemplating a similar path but am a couple months behind (just approaching the one year mark and still interviewing for the CoS role) and am wracked with nerves. Interested to see what you decide.
Any update on CoS from you or OP?
I did a hard pivot and will be joining a HF instead lol
Bump - Any update from OP on CoS move?
I am the OP and will provide an update. I ended up not taking the CoS role at the Series A / B company (I forget which it was at the time of original writing). My original intent was to take the role after hearing @APAE's reasoning. However the scope of factors in decision making extended beyond what was discussed in this thread and so I made a poor decision. I do regret my decision now that I've had time to reflect on it.
I explained the concept of getting "off the path" to the founder I was speaking with and the gravity of doing so, which I believe spooked him a little bit, although he was appreciative of the context. At that point we "reset" the conversation. We had discussed a few different projects that I would work on: (1) an acqui-hire, (2) a pricing strategy, and (3) standing up a new sector vertical including developing the marketing, doing research to find use cases, finding a few new customers, and then making a repeatable process within the organization.
I was most interested in (3) but we came to the mutual decision that if I could not commit to at least ~20 hours per week while at my MBA , then it might be difficult to slot me in as responsible for an entire vertical given I would unavoidably leave them in the lurch by leaving the company. I have minor regrets about not committing to the ~20 hours per week but overall feel good about that decision especially given that I am not certain what my MBA will look like.
(1) and (2) I could do in my sleep and volunteered to take those on readily. However the founder was unsure about whether or not he would be able to fill up 8 months filled with random CoS projects and so declined to take me on in the CoS role. I still feel a bit frustrated by that response because over time it has become evident that those projects did appear.
What I was offered though was a role to slot into the marketing organization as a #2 and from there help build out the team by hiring and overseeing a large domain of growth / a large growth objective / basically a net new marketing domain. At the time I thought of marketing as a low-level function (e.g., in my PE job , working with CMOs is a joke). However in hindsight I realize that was exceedingly foolish given that in the early stages of a startup, finding avenues to grow is the name of the game, and I would be learning an essential skillset that I had no direct operational exposure to performing. This one is on me, and is my main regret because that would have been a real startup experience.
After that I poked around with some of my other contacts in VC looking for CoS roles. I found another opportunity with another Series A startup with Tier-1 backers and ended up declining that one as well. I spoke with the founder about coming on for... 5-6 months I believe, at that time. They were growing top line somewhere between 50-100% MoM (that is not a typo) with 50-100 employees. He spoke about how as CEO , he was becoming bottlenecked as he still managed payroll, HR, all the other nuts and bolts of running a business, and mentioned it would be helpful to have someone to offload those functions on to who would then do general corporate infrastructure building by hiring for those roles and setting up that organization.
I pushed back saying I was more interested in doing high level work (as I had in mind the work I had done from consulting and private equity background) and that while I would be willing to do the nuts-and-bolts work, that was not was I was in it for. That was one of the most immature perspectives I have had in my short career thus far . Similarly, doing that work is integral to startup growth, and having a chance to own building out corporate infrastructure with limited oversight would have been a remarkable opportunity. In fact, I think it would have been more valuable than parachuting in to do a special project / recommendation workstream and then leaving.
Let this be a lesson in humility. I thought I was going to go in and change how everything was done and emerge a hero but that simply is not how it works in startup land. You are not doing causal reasoning, where you have an end goal and you are solving for how to get there. You are doing effectual reasoning, where you take stock of what is happening around you and divine what you can do with what you have got at the present.
As of writing I am scrambling to find any startup to give me any sort of experience as side-of-desk work while I finish out my PE Associate experience and as PT work during my MBA to gain experience. My ultimate goal is still growth stage VC . As you can imagine, while I understand now what I should be looking for, because of my timeline I am not an appealing candidate to many founders.
Fuck me
OP - thank you for posting this thread and this update as this is the most insightful post I've seen on this forum. I'm looking to make a similar move as the one you contemplated and have a similar background (2 years IB + about to start at MF PE doing tech investing).
I have a few questions about your thinking/decision, would also appreciate any additional thoughts @APAE has to share:
1) How did you manage to find not one, but two seemingly great operational roles at early stage startups with Tier-1 backers? Did you have a structured process, i.e. reaching out to a list of Series A companies backed by Accel , Sequoia, etc. and seeing if they had opportunities, or was this more ad hoc through your existing network? Would also appreciate any general advice you have on exposing yourself to these opportunities - I'm currently trying to do so through my friends who work in VC as well as those who are operators.
2) When you got in touch with founders/CEOs for these CoS/non-technical roles, how were you selling yourself? Put another way, what do you think is the best way to market the skillset you have from IB+PE into something that's valuable as an early hire at a startup?
3) Why not postpone HBS and re-apply, or just not go in general? What value do you see HBS /GSB providing to your goal of becoming a growth-stage investor? From friends I've talked to (both operators and investors) I don't see what HBS /GSB could offer you that getting operational experience and meeting people on your own wouldn't -broadly speaking seems like people care much less about pedigree.
4) Was your ultimate goal always to be a growth-stage VC investor and you just wanted operational experience as a way of differentiating yourself? Why not become an operator full-time (does this come down to risk aversion?)
Thank you for your time.
bumping this thread
Even indirectly, having someone both ask for my thoughts and APAE's thoughts in the same sentence... I think I can retire now :)
Do what you're doing by talking to founders and other VCs . Be deliberate about building your network by hanging out with these people and osmosing information from them. LinkedIn has tons of events listed that you can go to. I'd say probably 1/10 founders would just be open to chatting if you email them.
You could also start posting thoughts on Medium. If you feel bashful about posting theses or newsletters, just write memos about markets and memos you like for your own consumption. You'll eventually find people you feel comfortable sharing them with as you build your network.
Your skillset will be different than my skillset given you had two years of IB and I did not. You will be much more finance oriented so if there are any strategic finance related projects, you should be able to crush them. However for startups, that work is not as relevant as building products, selling them, and then building a company that builds products and sells them.
Unsolicited advice #1: At your fund, I would get as plugged as possible with portfolio companies you invest in. Depart from "ivory tower with spreadsheets" and head towards "person who can interface with companies and create value" (see paragraph after next about relatability). You will get plenty of deal reps so do not worry about the tradeoff.
Unsolicited advice #2: I would consider finding startups on the side to work with between deals. You should advertise yourself as someone who can just get things done. Unlikely they will actually need your finance skills but you could be a helpful pair of hands.
I can't stress enough how little you speak the founder language or know how to operate. I am just myself beginning to comprehend how little I can relate to founders. In these conversations I often just try to listen to what problems they're facing, toss ideas out or give my thoughts on their ideas, and interject whenever I think they've mentioned something I could probably solve for them.
Candidly, because it sounds fun, I'm worn absolutely dog ragged from PE , and my parents are paying for it
I realized venture growth investing made sense for me about a year into my private equity program. There are a few reasons, in no particular order: (1) the diligence is the "art" of VC and "science" of PE which is more fun, (2) the role is more social role sooner in your career, (3) helping founders grow new technologies is cool, (4) I want to live in California long term so that's a pretty good social circle to occupy, (5) the lifestyle is sustainable for me, (6) compensation is satisfactory; better cash comp than venture with decent bonuses. In short, there are little to no things I hate about the job on paper.
Operational experience would make me a better investor. It would make me more relatable to founders. It would help me develop networks in sectors I am interested in investing in. I think it would be fun. I think I would be better as a founder than investor but investing is still a good choice and ticks more boxes of what I want out of life.
Enim non eligendi ea perferendis rerum laudantium nesciunt. Optio ab et dolores non praesentium ipsum velit. Corporis quibusdam ut autem temporibus.
Nobis aut autem quis ut quam temporibus. Nisi esse a et sequi sed ducimus qui quidem. Ut tempora hic tenetur fuga consequatur quia provident. Sint cum nulla et dolorum reiciendis. Quisquam quia hic fuga qui et et nulla. Nemo saepe illo eveniet enim et eum officia similique.
Natus est omnis aut ullam qui vitae non. Qui excepturi minima tenetur molestiae nihil autem. Tenetur aut alias reiciendis numquam qui enim ex.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Array
Iste enim voluptas doloribus possimus. Rerum voluptas quo non doloribus. Nisi sapiente eligendi aut eum qui. Perspiciatis autem eaque earum nihil officia et fugiat.
Nihil dolores in vel id est culpa. Eius earum corporis et porro labore. Sint voluptas veritatis laboriosam omnis aspernatur modi iusto. Mollitia neque voluptatem voluptatum voluptates voluptatum.
Hic ipsa in placeat molestiae. Ipsa dolorum et debitis vero. Earum soluta rem eos minima. Quibusdam eligendi occaecati molestias doloremque esse cupiditate.