Smaller fund or Mega Fund?PrivateequitygeekSeptember 19, 2020 - 4:12am
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Hello,
So I am presented with two options here and I would like some insight from people on WSO. I could either go do a VP at a mega fund, total comp in the 750-1000k range. Second option, a small (10-15 member) fund, as a Director. One step from MD. The fund size is just north of 300mm and my base+bonus would be in the 600k~ range with a potential to receive a big carry. Now my thinking on this is that if I help the firm grow, and move to say MD in a couple years I could be earning way more than in a megafund. Am I thinking straight? Thanks!
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How is your network in the LMM and sourcing ability?
I would say it is definitely above average for my experience/position.
If you're confident you can source and close good deals, your path to partner and big carry is clearer at the smaller fund. That is provided you believe in the leadership team, the fund's trajectory and if there aren't already too many partners above you sharing the carry. Otherwise, life as a mega fund VP is pretty good risk reward.
Hi,
First of all I like to mention that I am not speaking from own experience as I am still a student. However I have spoken to alumni and members of my universities finance club who where I a similar situation as you are. (For them it was the decision between Associate and VP - if I am not mistaken).
They ended up at the larger fund arguing that there pretty young (end 20's, beginning 30's) and had better chances to change companies (VP/P at small fund vs AS/VP at mega fund - mega fund more prestigious). However they knew that they would be promoted to VP at the MF within the next year, whereas they had no certainty that they would be promoted at the SF within the foreseeable future.
Having said this, I think it's up to you. Obviously the chance of being promoted at a SF to MD is more favorable that at a MF. However your exit options are more limited (if not promoted to MD).
So the question you have to ask yourself IMHO is: do I want to stay a the company for the next few years or do I want to change to a new company within the next 3 years (for example).
Depends how quickly you want to be partner. Being a VP sucks and it’s more and more common for 4 years VP 4 years principal at MF.
whereas at your other fund you could feasibly be partner in theee years. Also consider lifestyle. I wouldn’t worry about comp. at your age, that’s enough money wherever you go. The extra cash won’t make you happier. Sorry for typos—mobile posting.
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