Careers in Finance
Venture Capital
What is venture capital? Venture capital is a form of private equity financing geared towards startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.
What is the basic structure of a VC firm? General Partner invests money into portfolio companies from Limited Partners in the firm. (same as PE)
How is VC different from other types of PE? VC is a type of private equity, but VC usually makes direct investments into a firm for a portion of the equity (rather than buying the company out in an LBO)
What are the different types of VC? Seed, Early-stage, Late-stage, and accelerators. Firms vary in fund size and some specialize in certain industries. (healthcare, tech, etc)
How can I get involved/what are some entry tracks? Most common entry track is to work in IB for 2 years
Example firms: Sequoia Capital
Courses to take at berkeley: Intro to Buyside Financial Modeling (decal), VC decal, and UGBA 137 (Alternative Investments)
Private Equity
What is PE? Private equity firms raise capital from institutional investors, and deploy this
capital (held in funds with lifespan of 8-10 years) through investments in private companies (95% of companies out there)
Structure of PE firm: General Partner invests money into portfolio companies from Limited Partners in the firm.
How is this different from VC? This is different from VC because the purpose is to outright acquire a company using a combination of debt and equity (debt is used as leverage to gain higher returns). VC is not financed through debt. The types of companies that VC firms invest in are also different; PE firms focus on a company that can be improved and resold/IPO but VC focuses on companies in growing industries.
Types of PE firms: Firms that vary in fund size (megafund, MM, boutique), some focus on earlier stage (first time being bought) while others are later stage where the company may have already been acquired 1 or more times. Firms also specialize by industry. Firms hold onto portfolio companies for 3-5 years and then either resell or IPO.(This is called an exit)
How can I get involved/entry tracks: Most PE recruiting is aimed at first year investment bankers because skills learned as an analyst at an investment bank are very relevant to being in PE (technical skills like valuation and excel as well as time management and a vetted track record/performance). Though some smaller firms also recruit straight out of undergrad like Altamont capital.
Example firms: KKR, Blackrock
Courses to take at berkeley: Intro to Buyside Financial Modeling (decal) and UGBA 137
Investment Banking
What is IB? Investment Banks are intermediaries and help companies with M&A (mergers and acquisitions) and underwriting (raising debt and equity)
Within IB, there are 2 types of groups: Coverage groups and Product Groups. Coverage groups work with specific industries like healthcare, technology media and telecom (TMT), industrials, real estate, etc. Product groups work with specific types of transactions across various industries including M&A, equity capital markets, debt capital markets, restructuring, and more (more of a focus on technical skills not limited by industry).
What does an investment banker do? Typically staffed on multiple transactions at the same time building pitchbooks, models, benchmarking, general client service, and transaction facilitation.
Different types of Investment banks: Boutique, Middle Market, and Bulge Bracket
Recruiting tracks: Info sessions, networking, online application, first round interview, superday, and offer (starts end of sophomore year for junior summer)
Also optional diversity events freshman and sophomore year
Example firms/deals: Boutique: Raine Group, Middle Market: Moelis & Co, Bulge Bracket: MS, GS, big deal was the acquisition of postmates by uber eats (TMT deal)
Courses to take at berkeley: Intro to IB decal, UGBA 103, UGBA 133 (investments), UGBA 131 (Financial Statement Analysis), many of the 130 series could be relevant
Wealth Management
What is wealth management?Asset and wealth managers invest out individuals’ money. Clients could be some very high net worth clients (endowments, family offices, etc.) depending on the fund.
What does a wealth manager do? Investment managers help clients build holistic & diversified portfolios
Types of wealth managers: You can work as a part of a small business or a larger firm
Recruiting: Recruiting can be out of undergrad, banking, or other positions
Examples firms: Many major banks have a wealth management division, also ICONIQ, BAML
Courses to take: UGBA 133 investments, UGBA 135 Personal Finance, UGBA 103 Finance
Corporate Finance
Working in the finance division of any business
Purpose? Dealing with funding sources, capital structuring, and making investment decisions to maximize shareholder value
○What do you actually do? budgeting & planning, preparing financial statements (like in a 10k), securing financing
○Pros: good hours (almost a 9-to-5 role,
Not high-intensity like WallStreet), decent pay, skills are transferable to many types of companies
○Cons: You’re a cost center, not a rain-maker
Hedge Funds
Hedge funds invest out pools of capital across asset classes (investing in public firms) and collect fees in a limited partnership structure
Different strategies at each firm
Long-short: pursue long and short investments
Activist: make large investments and effect change
Credit: focus on investing in debt
Quant: use quantitative trading strategies to deploy capital
Global Macro: make large bets on economies/currencies
Recruiting for these is always happening, Managers held accountable by the market for results (read: it’s stressful)