Switching into PE/VC?

wow totally did not recognize him with the glasses...am more used to seeing photos of him in profile

terp, you're scaring me.

That was the intention

hahaha, not sure if I can stand looking at that avatar long enough to answer your questions in the future.

Folks,

I don't know where you're taking this rather discouraging statistics from. I can't tell about other schools, but as a Wharton student, that was rather easy to get into VC/PE for all those who really wanted this.

Most of my Wharton friends ( internationals, no prev. PE experience whatsoever), all those of cause who worked to get it, got a nice PE internship. Truth must be told though, most of them are working in UK, not US, but does it really matter?

As to the VC industry, I know at least 4 people here, my personal acquaintances, who got a VC summer job again without any prev. experience in the field ( some are even without any blue chip experience, just your regular start-up techies ).

Yours truly, for example: just an IT guy, international, no blue chip, no prev. work experience in US. No networking whatsoever. Sent about 7-10 resumes , got 3 interviews and 1 offer in a VC shop close to home.

So keep your chins up. If you really want it , you will get it.

I'm impressed, but I still think your advice only applies to H/S/W.

deowl, that was very encouraging to hear, thank you for sharing!

PE possibly. Though I have heard people getting into PE easier with a Yale name too (spoke with many admits saying they chose Yale because of the "brand name" of the parent school and how it will help them get into PE).

But VC is a different beast altogether. I think location and parent school strength will factor in. For example, Haas does quite well for a school of its size and not being in the "M7" in getting people into VC internships and jobs. The key factor there is the Berkeley name, the close proximity to Sand Hill Road, and the high-tech/bio-tech industry sucking in a lot of VC money in the region (and Berkeley being a top engineering and top life-sciences school, with connections to a top medical school, UCSF).

I'm pretty sure MIT has similar ties into any tech VCs in the Boston area... but I'm not an expert in that school or region, so I'll let someone wiser to enlighten us.

Please define "nice PE internship." In terms of PE, I'm sure if you were persistent enough as an MBA out of Wharton with zero applicable experience you could convince some small shop to take you on for the summer. But in terms of the well-respected larger PE funds (in the US at least), I still believe that experience rules the day. I have no insight into either UK or VC hiring, so everything you say could very well be true. But, remember that H/S/W are placing at much higher rates, by a considerable margin, than the other top schools, so your experience definitely doesn't apply to the majority of MBA students.

I define a nice PE internship as an offer my friends were extremity pleased with. I don't know what the actual sizes of the firms are or the amount of money they have under management in each and every case, though.

School brand does matter a lot for these industries indeed. My friends from PE told me that you seem to meet people from hsw only on these interviews. In VC you almost never see any other candidates so I can't tell from my own experiences.

PE at a top notch firm like blackstone is incredible. A friend of mine from HS was the only undergrad hired at blackstone one year (from a decent but def not ivey school, although im guessing he was top in his entire class). At age 22 he had a personal driver to get him around NYC. He did work like crazy though.

I just started at UNC and attended the Carolina Venture Fellows presentation. This is very similar to the Kaufman fellows program. You apply to the program via an essay and your resume. Over half are selected as finalists. The finalists then get to interview with VC firms for a summer and second year gig. Over 50% of the finalists get selected for a VC internship. Im totally gung ho for a VC gig and the presentation was kind of odd, they were almost like, look if you get a VC internship you need to take it b/c its such a great deal. Apparently last year a couple of people who got offers refused as they were holding out for a google job I think it was. Anyway, if youre not quite lucky enough to get into HSW and are interested in VC, you should check out UNC, they have a great entrepreneurship program, founded the Venture Capital Investment Competition , and are right next to the Research Triangle Park...lots of VC's and tech start ups. I'll let you guys know if I secure a VC internship and how the process worked.

I agree that you definitely have to distinguish between some of the smaller shops and the bigger blue-chip type PE shops. Just as a comparison, most people at bulge bracket banks would jump at the opportunity to join a Blackstone, TPG or KKR, but might not be enticed by many of the smaller shops out (of course, this year, with banks in the crapper, who knows). As others have pointed out, PE/HF/VC profits are largely dependant on the the size of the pile of cash they have under management. As everyone knows, the top firms manage really big piles and dole out boatloads in compensation, but people seem not to realize that the smaller firms often pay substantially less than bulge bracket banks (again, this year may be an anomoly). Pay is only one factor, but it does reflect the relative difficulty of landing such jobs. work load can vary a lot as well. Jr. level folks at top PE shops often work as hard as their counterparts at big bank. Associates at smaller firms might work less, but that's also true of associates at many middle market banks (can vary a lot in both cases).

Absolutely. No doubt about it. But don't forget, we are talking here about getting one's foot in the door of the VC/PE industry rather then lending a job at KKR. What I am trying to say is that the first is perfectly doable. That's all.

Hmm. I'm not sure if I fully understand this, but here's what I've heard/know. I fully agree with you for small funds, i.e. $500M assets under management. However, I believe there is definitely a large middle ground between these funds and BX/TPG/KKR/etc. If you can get into a fund that has, say $3-6 billion assets under management and you get to come in at a vice president level with carried interest as part of your comp package - I think theres a high potential that you'll make quite a bit more than you would at a bulge bracket IBD as an associate/VP. This would really depend obviously on how your deals go. If you work on a bunch of deals that end up being blockbusters in your firm's portfolio and your firm overall is earning excellent returns - you'll make a ton of money. In IBD, regardless of the how the deals go for your clients - you still collect your fee.

I'm a bit late coming to this thread, but wanted to ask a few questions regarding PE. I've perused some of the top PE companies' websites to get a feel for employee backgrounds. My findings were largely consistent with those you all shared: H/S (and to a lesser extent, W) MBAs, and in most cases, top 10 private undergraduate education.

With that said, I'm wondering where that leaves me. I didn't apply to a top undergraduate school, but rather excelled at a state school. Can a person with a comparatively no-name undergraduate experience, a Booth MBA, and BB IB experience have a shot at getting a chance at one of the top firms like KKR or Blackstone? Would I even have a shot if I tried transitioning from IB to a mid-size PE firm to one of the top ones? I have no doubts that I can perform the work well, but it seems that pedigree is a huge factor in even getting a shot to showcase one's abilities.

I think the biggest thing about breaking into a mid-size PE/VC firm that no one is discussing is the financial knowledge and ability you need on day one. That I would say is the toughest hurdle to get over. In PE/VC, there are no training classes or firm orientation to teach you how to build LBO models like there are at BB banks for associates. You have to know that $hit cold from the first time you interview. That is why they prefer people with BB experience - they can model like crazy and know corporate finance/valuation cold. With those people there is no on the job training, which these firms don't have time for.

If you are really serious about PE/VC, then I would start studying corporate finance/valuation now, especially if you haven't ever built models or worked in IB. Take the self-service Training the Street course this spring so you can get ahead. Build your own models and learn why a company makes a good LBO candidate. What levels of debt are you looking for? How much senior, subordinate, and mezannine debt can the company's cash flows support? What is the maximum IRR with varying levels of equity? Build a sensitivity analysis to analyze various deal structures. Study previous LBO deals and run the numbers. Then, when you know the numbers and accounting cold, spend this fall learning about the firms and the industries they invest in - not figuring out how to value a company and build a model.

That is just my advice. I'm also starting to think about the McCombs Venture Fellows program at Texas. There are a few good firms that have internship partnerships with the university - Centennial Ventures ($340 million), CenterPoint Ventures ($300 million), Blue Sage Capital ($400 million), and Austin Ventures ($3.9 billion). I think any of those would be great places to end up - especially Austin Ventures. Of course there is also the possibility of networking into HM Capital or Hicks Holdings!!

deowl - how many of them got full time offers? I got the impression that a lot of them offered a summer, but with very negligible chances of a FT offer.