The Two Routes to Working in Venture Capital, Private Equity, or Hedge Funds

Route I — an uphill battle

The most traditional and common route by far. Here are the four simple steps to get you there:

  1. Complete several unpaid internships during your undergraduate to get a good first job
  2. Work 60 — 90 hours a week as an Analyst for 2–3 years to “put in your time”
  3. Spend at minimum ~$1,000 for a prep course, study 3 months (while somehow supporting yourself/family) to get a good enough score on the GMAT to get into an Ivy League School
  4. Actually get in to a 2 year Ivy League MBA Program, which will cost you~$220,000

Congrats! You are now eligible to work at a fund!

So here is where you’re at:

Cost of College Stats | Cost of Living Stats

Start saving your shekels! $650k — $1.2M will be your estimated cost. Is it worth it? Almost always! Your starting salary will be $80,000 — $150,000… and it grows exponentially from there. After 10 more years of insane hours you have made it to Partner.

The average total annual cash compensations for a private equity Managing Directors is $668K! and that is conservative from what I hear.If you are on the mom and dad scholarship — good for you. Take advantage of it… but try not to burn out!

Unfortunately, most people who do end up making it into a fund, burn out after a few years because they are so tired of working insane hours and feel they are missing out on so many other aspects of life- So best of luck!

Before telling you about Route II(which is much more appealing in my opinion), I wanted to walk you through my story a little bit.

My path?

I was well on my way down the traditional route from a nontraditional background. I was raised in an upper-middle class home, but my parents believed strongly in the concept of independence. I had to pay for everything as a kid.

Me (age 12): “Can I play on the football team?”

Parents: “Yes, but you have to pay for half of it.”

Where the hell is a 12-year-old supposed to get that kind of money?! Definitely didn’t have a mom and dad scholarship.

I was raised in Shelley, Idaho and got my first legit job the summer before the 6th grade. I worked on a potato farm from then, up until I graduated high school… yea… that’s 7 years.

I wish my parents’ “We’ll pay half rule” applied to my college tuition as well, but it didn’t. I was on my own for that one. I remember thinking as a 11-year-old that I needed to get a scholarship to pay for college. Through hard work and a lot of luck, I was fortunate enough to land a tuition scholarship at Utah State University.

In my sophomore year of college, I learned about Venture Capital and I wanted in. I landed an unpaid internship a student venture fund for the next year. I drove 3 hours (there and back) every Friday to get to the meetings and put in a stupid amount of hours.

Why would a college kids work 40 unpaid hours a week (while going to school) putting together 15-page memo’s on start-ups? You do it for the experience.

That internship, along with several others I did through college, landed me an internship at one of the nation’s largest banks in San Francisco. I completed the internship and received a return offer to come back. I had committed to come back and work — at a minimum- 60 hours a week. Why?

Working at a prominent and reputable company gives you the BEST chance to get into an Ivy League School. I was in it for the long run.

Shortly before graduating college, I started spending every second of spare time studying for the GMAT. The GMAT score is good for 5 years. Remember in Route I, 3 years as an Analyst and then your Ivy League MBA.

I scheduled the GMAT about a week before starting my full-time job at this behemoth of a banking institution.

Well, one week before taking the GMAT and two weeks before starting my full-time job, I received a phone call. It was some guy from HR of the bank I was so eager to work for calling to inform me that my offer had been rescinded.

My world turned upside down. There I was, on this 9-year plan to get into the world of funds…. And I was told to turn around and go home. Being recently married, my stress started devouring me.

The stress provoked weeks of sleepless nights which forced me to forfeit taking the GMAT, because at that point, I was begging for a bad test day.

Route II

Elon Musk said that too many of the world’s smartest individuals get stuck in the traditional ruts of Law or Finance in their early years and waste all their energy climbing the corporate latter. What if you want to work in high finance, but don’t want to spend near $1,000,000 and 9 years to just start?

The alternative option? Be an outlier. Take the non-traditional route.

My good friend Bridger Pennington was one of those people. He took control of his life by launching his first fund at the age of 21. He wanted to work in the industry but didn’t want to waste all of his time and energy on the traditional route. He has now since launched two very successful funds and is working on launching his third!

He started by interviewing successful fund managers on how they started their funds. He documented everything on his podcast. The more he learned about it, the more he realized that it really wasn’t that difficult. Yes, there were some blatant “Do’s and Do Not’s” of launching a fund that he learned, but it was simpler than he had anticipated.

After successfully launching his first fund and providing a 63% return to his investors, rather than keeping everything he learned and using it for himself, he decided he wanted to help others start their own funds. He launched a video series called Investment Fund Secrets to teach others about what he did.

What will you do? 

I ended up taking Route II, not by choice, but I am so happy and grateful I did. I have never been so invested & excited about what I am doing in life. The traditional route is long, hard, and costly- but I am sure you can get there if you have the time and money to do so.

I took Bridger’s course and I am well on my way to launching my first fund. I know it isn’t going to be an easy road, but for the first time in my life — I am happy and excited to go to work every day.

By Lincoln Archibald- Editor

Leave a Reply