Private Equity or Investment Banking for Entrepreneurship?
In a boutique IB firm's UK office, I'll be interning off-cycle for around 10 months, possibly longer if things go well. The firm mainly advises on deals involving small to medium-sized entrepreneurial businesses. They have strong connections with LMM/MM PE firms around the country, and some former employees have moved on to reputable MM PE firms in the UK from some Linkedin searches I have done as Assoc/Analysts.
I chose to intern at a LMM/MM IB shop because I want direct exposure to entrepreneurs and CEOs, witness the capital raising process, and gain insights into various businesses and industries. Initially, I considered consulting for these experiences, but I believe IB will offer more relevant skills for my future goals of starting my own thing up. I did not get any VC roles despite connections with people in the scene. Bad luck I guess.
I do have some experience in the startup scene and am working on one now with some guys from university and have spoken to VCs who want us to redo our MVP but like the buisness idea and what we have put together. Not banking on this startup to get VC funding due to how hard it is but I think it is useful experience none-the-less.
My ultimate aim is to start my own venture and learning firsthand how to pitch and sell a business would be useful for funding rounds etc. Would you advise pursuing a stint in LMM/MM PE given my aspirations? Or should I dive straight into my startup? If the former, how should I approach securing a position in these LMM/MM PE funds as an off-cycle intern?
I understand the conventional route into PE involves starting at Big4/IB => MM/MF/UMM PE. But will my off-cycle internship experience suffice for a PE role, provided I can articulate deal insights effectively?
PS - What would be some PE firms you would recommend if PE is the way to go? I had a look and Mercia Asset Management looks pretty dope? Any thoughts or advice is greatly appreciated as always.
Cheers Monkeys!
Based on the WSO threads and discussions, your path towards entrepreneurship can be effectively supported by both Investment Banking (IB) and Private Equity (PE), especially in the lower middle market (LMM) or middle market (MM) sectors. Here’s a breakdown of how each could serve your entrepreneurial goals:
Investment Banking Experience:
Transitioning to Private Equity:
Approaching LMM/MM PE Funds:
Regarding PE Firms:
Decision Making:
In conclusion, both paths offer valuable experiences that can contribute to your ultimate goal of starting your own venture. Your choice might depend on where you feel you have the most to learn and which environment will challenge you the most at this stage of your career.
Sources: Is it dumb to exit to LMM PE rather than starting in bigger (MF/UMM) opportunities first?, LMM PE or MBA better for Search Fund / Entrepreneurship?, Can someone break down PE Associate exit opportunities?, Selling Company to join a private equity fund, Q&A: My journey, from the lab to MMPE
I recommend that you work at the smallest startup possible if you want to start and scale your own venture. If you want to operate businesses and are between IB + PE, find an operational PE role where you get seat time in a/the portcos while also understanding as much as you can about the industry(s), competitors, operating model, short + long-term strategy, funding, decision-making philosophy, etc. . Nothing prepares you for operating a business more than operating a business, the closer you can get to either the decision or the mind of the decision makers (the best ones you can find), the better off you'll be. Pitching is only a small activity in the venture life.
Thank you for your advice, I'll aim to get into the LMM/MM tech/fintech space hopefully at a portco.
Would you recommend working on my startup during my internship? My hours at the IB are really good due to the firm being boutique and being well-staffed (think 50 hours-60 hours max) or would time be better spent absorbing as much as I can about different industries, verticals etc that are relevant to my startup ?
Are your cofounders in the startup going to be working on it full-time during the summer? Answer somewhat depends on what they are doing as you'll all want to be as insync and feeding off each other's energy as much as possible. It will likely be hard to balance the energy between both but the experience will show if you really enjoy/believe in the startup and the idea that you're working on. I suggest finding a system where you prioritize the internship during the week and maybe put a very focused hour or two into the startup daily with extended sessions on the weekend. That should allow you to keep making progress without burning yourself out.
My cofounder over the summer will be working on the startup with me during the week, albeit it won't be 9-5. It will be more him and me doing tasks whenever no matter how long it takes.
He will be doing a master's degree from September 2024 so we will both be pretty busy after. I do most of the leg work for the startup on the day-to-day ie) pitches, working on MVP etc. He is networking on our behalf and getting contacts in what we want to do and he's done a good job on it so far - we have met with tons of people who have given us loads of advice and industry knowledge and it's helped a lot. Also he has capital that he's willing to put in if we require it which I cannot do.
We have a good circle of mates that help us with technical support ie) coding, website development and do it free of cost / minimal cost and don't want money unless we get funded by a VC. I manage them as I have a bit of tech background but it's not very strong.
A lot of the successful entrepreneurial speakers that came to my MBA campus to chat often came from various backgrounds (military, tech marketing, etc). There is no one size fits all.
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