An MBA degree in Private Equity and Venture Capital jobs is pretty much a standard. Over 50% of the respondents were MBA’s (or had an international equivalent post-graduate degree) and 82% in total have an advanced degree of some sort. It turns out the pay difference, however, is not all that significant. The survey indicates that MBA’s earn a base salary 19% higher than non-MBA’s. This gap is narrowed by the difference in bonus payout, where MBA’s receive a 6% smaller bonus. The vacation benefits for both MBA’s and non-MBA’s were found to be similar.

From the 2007 Private Equity and Venture Capital Compensation Report by Job Search Digest

In 2007, Job Search Digest conducted a survey of professionals who were involved with venture capital or private equity investment firms. There were hundreds of respondents from various parts of the world. Participation from firms both large and small such as: Credit Suisse, Labrador Ventures, Intel Capital, Mayfield, New Enterprise Associates, and SoftBank Capital.

The survey results address issues such as the compensation earned by professionals and their work satisfaction. The survey also aims to understand how these professionals perceive their work and what they expect from their employers.

Some notable findings include:

• The annual average compensation for professionals in the industry is $224,000 with an average 3.5 weeks of vacation benefit.
• Nearly ½ of respondents bring at least 10 years of work experience to the table and only 5 years of private equity or venture capital experience.
• Despite solid compensation packages and an optimistic view of future pay increases, there is overwhelming dissatisfaction among most of these professionals.
• Although common in the industry, an MBA doesn’t guarantee better compensation.
• The difference between the UK and US in terms of compensation and overall work and personal life balance is negligible.
• At the lower levels, there is very little difference in cash compensation between the US East and West coasts and even the Central states. The differences become significant in the higher level positions.

Job Search Digest is preparing the 2008 survey and will again invite industry insider to participate in the most comprehensive study in the Private Equity and Venture Capital industry. The results help private equity job and venture capital job seekers better manage their career and fund managers to differentiate the benefits of working for their particular firm.

Private Equity and Venture Capital compensation progression clearly follows the career path. The compensation survey shows that, on average, the compensation of associates and senior associates is less than 40% of what a managing director makes and about 65% of what a principal in the firm makes. Also the most senior team members realize 35% higher bonus percentages on average.

The real money starts at the Principal level and is found to nearly double at the Managing Director level. A surprising factor is that Associates earn nearly as much as Senior Associates. This may be an indication of the high demand for talent in the market even at the lower levels or a byproduct of varying responsibilities by title between firms.

In our Private Equity and Venture Capital Compensation Survey a large majority of the respondents stated that they were already partners or were on the partner track. 45% of the respondents said that they expected to become partner in only 3 years or less. 21% said that they 7 years away or more from becoming a partner in their firm.

This is especially interesting as 21% of all respondents have less than 2 years of experience in the industry and 42% have been with their current firm for less than 2 years. Also, an overall 53% of the respondents have less than 5 years of industry experience and 79% have less than 5 years with their current venture capital or private equity firm.

There is More to Life

Investment professionals all over the world struggle to achieve a balance between their personal and professional lives. Maintaining a good work and personal life balance is key to achieving a long, successful relationship between the employee and the firm.

Achieving a good balance starts with spending quality time away from work with family and friends. Therefore the respondents were asked to indicate how many weeks of a vacation they receive.

More than 54%  say they are entitled to 4 weeks or more of vacation time and 28% of state they get 3 weeks of vacation – indicating that there is plenty of vacation time across the board.  It is not clear, however, how much of this vacation time is actually taken each year.

With the majority of our Private Equity and Venture Capital Compensation Survey respondents receiving more than 4 weeks of vacation, there is little doubt that this factor is a major contributor to a relatively high rating of work and personal life balance.

The average total cash compensation is $224,000. 41% earn $100,000 - $200,000 and 21% earn more than $300,000. Just 2% of the respondents’ cash compensation was above $1 million with an average base salary of about $685,000.

Apart from base compensation, professionals are also given bonus packages based on their performance. Pay-for-performance is a well known standard in private equity and venture capital. The results clearly show the more the money earned, the more one relies on the bonus. As the graph below depicts, the bonus percentage increases with each earnings range.

In 2007, Job Search Search Digest conducted a survey of Private Equity and Venture Capital professionals who were involved with venture capital or private equity investment firms. There were a total of 387 respondents from various parts of the world. We had participation from firms both large and small such as: Credit Suisse, Labrador Ventures, Intel Capital, Mayfield, New Enterprise Associates, and SoftBank Capital.

The survey addresses issues such as the compensation earned by professionals and their work satisfaction. The survey also aims to understand how these professionals perceive their work and what they expect from their employers.

Our members could access our Compensation Comparison tool – giving them the opportunity to analyze the earnings data in an ad hoc manner. Here we summarize the results of the survey to include some of the earnings data and much more. Some notable findings include:

• The annual average compensation for professionals in the industry is $224,000 with an average 3.5 weeks of vacation benefit.
• Nearly ½ of respondents bring at least 10 years of work experience to the table and only 5 years of private equity or venture capital experience.
• Despite solid compensation packages and an optimistic view of future pay increases, there is overwhelming dissatisfaction among most of these professionals.
• Although common in the industry, an MBA doesn’t guarantee better compensation.
• The difference between the UK and US in terms of compensation and overall work and personal life balance is negligible.
• At the lower levels, there is very little difference in cash compensation between the US East and West coasts and even the Central states. The differences become significant in the higher level positions.

This helps PE and VC job seekers better manage their career and fund managers to differentiate the benefits of working for their particular firm.