Private Equity vs Venture Capital: Which Career is Right for You? (2024)

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Private Equity vs Venture Capital: Which Career is Right for You? (2024)

FAQs

Is it better to work in private equity or venture capital? ›

Compensation: You'll earn significantly more in private equity at all levels because fund sizes are bigger, meaning the management fees are higher. The Founders of huge PE firms like Blackstone and KKR might earn in the hundreds of millions USD each year, but that would be unheard of at any venture capital firm.

What pays more, PE or VC? ›

Generally speaking, those who work in private equity earn more than venture capitalists. This is because the fund sizes are much larger in private equity.

How do I break into VC or private equity? ›

Tips for Aspiring VC or Angel Investors
  1. Develop Your Investment Point of View. ...
  2. Identify and Evaluate Quality Deal Flow. ...
  3. Avoid Common Investment Mistakes. ...
  4. Education and Continuous Learning. ...
  5. Build a Strong Personal Brand and Network. ...
  6. Embrace Diversity and Inclusion in Investment Decisions.

Can you move from PE to VC? ›

If you've been working in private equity for a while and you're ready for a change, transitioning to venture capital can be an exciting opportunity. While the two industries share a lot of similarities, the nuances between them must be understood before making the switch.

What is the disadvantage of working in private equity? ›

Drawbacks / Disadvantages:

Still fairly long hours and an intense work environment, and significant travel may be required, especially as you advance. There may not be a clear path to advancement at your firm, depending on the firm's size and policies and your level.

Is private equity a stressful career? ›

but nowhere near as much as in management consulting. While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.

Which is riskier VC or PE? ›

Private equity is typically considered less risky than venture capital. It involves investment in less volatile industries and focuses on later-stage businesses. However, both are still risky endeavors, and private equity requires significantly more money than venture capital.

Why PE is better than VC? ›

Another key difference between the two is venture capital “typically involves higher risk but offers the potential for substantial returns,” says Zhao. In comparison, private equity “usually involves lower risk compared to VC investments but may offer more modest returns.”

How much does a VP at a PE firm make? ›

Vice President Private Equity Salary
Annual SalaryMonthly Pay
Top Earners$244,500$20,375
75th Percentile$190,000$15,833
Average$157,532$13,127
25th Percentile$115,000$9,583

Do I need an MBA for venture capital? ›

Even though this has changed dramatically — many paths exist now — getting an MBA at a top school is still a great entry point into VC. Folks who land roles in this way typically have investment banking, private equity, management consulting, or startup/tech company experience before attending business school.

Does CFA help break into private equity? ›

But if you're aiming to break into investment banking, private equity, venture capital, or sales & trading, the CFA is marginally helpful at best. It won't hurt you, but there are better ways to spend your time.

How hard is it to break into private equity? ›

Yes! Private equity is one of the most competitive jobs to get – period. Not just in finance, but across the board. Private equity firms have very specific requirements for their hire candidates, both for entry-level analyst positions and for higher-level job openings.

Should I work in PE or VC? ›

If you would like to make money in the short term and work in transaction deals, then a PE job might suit you. On the other hand, if you ultimately want to start a company of your own or enjoy the startup space, then a VC job will suit you better.

What to do after 2 years in private equity? ›

After two years in private equity you can pursue a MBA and then return to private equity. A post MBA associate may return to their previous firm or move to another firm. Following that, the post MBA associate would seek a vice president position if the end goal is to stay in private equity and pursue the partner track.

How long are VC hours? ›

The hours worked vary by firm type and size, but the average is around 50-60 hours per week.

Is it better to work in private equity or investment banking? ›

So, if you're interested in finance and deal-making, investment banking is the way to go. If you're more interested in strategy and operations, private equity might be a better fit.

Is venture capital riskier than private equity? ›

Private equity is typically considered less risky than venture capital. It involves investment in less volatile industries and focuses on later-stage businesses. However, both are still risky endeavors, and private equity requires significantly more money than venture capital.

Is venture capital a good career path? ›

As you get more senior, the career becomes more financially rewarding because you start to get attractive ownership and economics in the fund. With each step, the stakes get higher and the potential rewards greater, making a career in venture capital one of the most exciting and rewarding paths out there.

Does private equity pay better than consulting? ›

PRIVATE EQUITY WINS. Compensation. The package is often designed to attract investment bankers, who are better paid than strategy consultants. As a consequence, you should expect a significant increase in your total compensation package, up to 100% in some cases.

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