Switching into PE/VC?

My outside in view from a lot of MC friends who either went to IB/PE/B-school @ H is that PE = Dollars and a lot of respect for MC/IB.

VC respects Startup experience or product management experience a lot more than IB/MC

I'm looking to go VC only (and not PE unless it's the internal consulting group @ Carlyle / Blackstone) in my "ideal" world.
Let's see how the apps and THEN the damn applications for jobs pan out.
Cheers

I'm not really too interested in pursuing PE/VC after my MBA, but I was just wondering what kind of salary a first year analyst would make. Is there a big difference between PE and VC? It seems like a lot of people at HSW come from PE/VC backgrounds. What is a pre-MBA comp level for them?

That was a funny post, Rhyme, I wonder if it was funnier if you have a background in programming languages.

I think there needs to be a distinction made between PE and VC. While in actuality VC is a subset of PE, the term PE nowadays almost always refers to LBO PE firms. PE hiring is becoming a little more institutionalized than VC ever will be, but it still is quite unlike IB/MC or other traditional career paths.

For VC I think the “network” angle is as important as rhyme says it is, I really don’t know. However, for LBO PE it’s a combination of that plus your previous experience and pedigree that will get you interviews, usually via recruiters. To get jobs in LBO PE you are competing with those who have pre-MBA work experience doing (in order of general competitiveness, according to me):

1) BB IB / Top MC + Mid-Large Cap PE
2) Mid-Large Cap PE
3) BB IB / Top MC
4) Small no name PE / MM IB
5) Small no name IB / Non-Top MC / Big 4 Transaction or Due Diligence
6) Industry / Corp Development / Big 4 Other
7) All other career switchers

Keep in mind that almost all of these people will also have good academic pedigree including: a respected undergrad (high GPA), test scores (SAT + GMAT), and a top MBA. It is possible that pedigree, e.g. HBS MBA, could help you jump a level relative to the above ordering, but the problem is that pedigree is already there in almost all of those groups. The good news is that the smaller and less established the PE firm, the less this ordering applies (not because they would rather take someone from #6 and #7 over #1 and #2, but because there aren’t so many of #1 and #2 to go around.)

While there might seem to be a good amount of PE shops, they are staffed very lean and definitely don’t want to train their junior professionals. In my limited experience, I’ve heard a lot of guys that are in #5 or below and not going to a H/S/W say that they want to do PE and I have to refrain from telling them that they are pretty unlikely to get a job in PE, because I don’t want to be “that guy”. But the reality is that it’s very, very tough. However, networking can be the great equalizer. I would encourage all those from #5 and below to give considerable thought to doing IB first before putting their eggs in the PE basket.

I think the range is probably like 200-400k for PE, depending on how many years they've been working before business school. I want to say that many 1st year pre-mba PE associates (so call it 2 or 3 years experience in IB) were pulling 250k at the megafunds.

PE/VC recruiting is basically this:

If "You were in PE/VC before an MBA"=TRUE {
solid=like a rock;
else
solid=like water;
}

If solid=like a rock {
Then
You have a Network = TRUE;
Else {
You have a Network = FALSE;
}

If You have a Network = TRUE {
Then
PE/VC Job Probability Function = .0009;
Else
PE/VC Job Probability Function = 1x10^-42;
}

Recruiting_Begins();

If solid=YOU SUCK {
while (calls<10,000) {
Network_Like_Mad(Every Day, All The Time);
Foreach(Call(EveryoneInTheWorld())="ACTUAL CONVERSATION")) { calls++; }
}
Pray->God(); // Warning call to null pointer? There is no god?
Backup_Job_Plan->Trash(NOW());
Watch_Everyone_Else_GET(IB);
Watch_Everyone_Else_GET(MC);
Watch_Everyone_Else_GET(GM);
if (male = true) {
Make_Of_Steel(Balls);
else {
Dig_In(Heels);
}
Job_Offer=PE/VC Job Probability Function*calls
}


In short, landing a PE/VC gig is 98% who you know. It's ALL networking.

The biggest issue frankly is that you have to be 120% commited. PE/VC recruit in spring - after IB, after MC, after GM, marketing, hedge funds, commercial finance, leadership programs, after basically everything. To do PE you have to roll the dice - and roll with a big bet. Its not for the risk averse.

I worked in PE so I'll chime in on that piece:

PE is an extremely competitive industry and these days if you don't have pre-MBA PE experience (as an associate), it's extremely hard for you to get a post-MBA role.

The reason is simply because most PE firms don't need that many investment professionals. The people who are in the post-MBA roles are considered lifers (meaning they plan on staying in PT long term). The partners at the top have super cushy jobs (no crazy hours like ibankers, and way higher pay), so most of them are not going anywhere. If the people at the top of the pyramid aren't leaving, that means there's fewer and fewer spots the higher up you move.

Since they can be so selective with their hires, they have no reason to hire someone who hasn't done private equity before business school. In fact, the people who did PE before business school noly went back to business school because their PE firm required them to do so before they would even consider promoting them to a post-MBA role.

So long story short, if you want to go into PE, your best bet is to do PE before business school. And to do that, you most likely should start out as an investment banking analyst right out of undergrad. Being a management consultant after undergrad is OK too, especially if you're at Mckinsey/BCG/Bain but it's still harder than going straight from banking. Also if you're making the switch from MC to PE, the easier time to do it is as a pre-MBA PE associate, not post-MBA. Just my 2 cents.