Private Equity and Venture Capital Job Security

Unlike last year, job security is an issue. 43 percent of private equity and VC professionals stated they are somewhat concerned about their jobs and 16 percent said they are very concerned. The majority of these respondents said they were concerned about their firm’s ability to raise the next fund. With portfolio companies facing tough times ahead, it becomes harder to present investors with a plan that lays out a clear path for a successful exit strategy.

Cash is King. Cliché? Maybe. But never more true than today.

Those who are without concern for their jobs were pretty clear on the reasons why; either they were at the top of the firm’s totem pole, their firms had just completed raising a fund or their firm specializes in distressed investments – which presents more opportunity than concern for these firms in this financial environment. Some of the responses feel a bit overconfident – there may be an attitude adjustment in the coming year for some respondents who today feel insulated from the market turmoil.

Here is what some of the participants told us about their feeling of job security (direct quotes).

From those “Not Concerned”

• Being part of a group with large steady cash flows provides immunity to current crisis.
• We just raised a new fund, so we have a lot of capital to invest.
• Because the markets are driving angel investors to our group.
• We are rapidly growing and this financial turmoil is creating more opportunities for us than problems, since we do not highly leverage our companies anyway.
• We focus on distressed investing, it is a good time for us.
• I am initiating right-sizing of organization.
• I am one of the firms most productive professionals.
• The accounting function is not slowing down.

Those “Somewhat Concerned” primarily pointed to the ability to raise the next fund:

• Hey, it’s all about being able to raise the next fund …
• If a new fund is not raised, we will have less dealmaking activity.
• Need to raise a new fund and that will be more difficult than it should be.
• Never certain whether subsequent funds will be raised.
• Raise next fund?
• Trying to raise a new fund
• This economic meltdown goes beyond the financial markets. This could make the 2001 bubble look like a hiccup.
• Tough times ahead for portfolio companies.

Those “Very Concerned” also pointed to the ability to raise the next fund:

• Ability to raise a new fund.
• As a recent hire, I would likely be exposed should we reach the end our investment period without being able to raise another fund.
• Fundraising environment.
• New Fund’s Raising.
• Next fund may not get raised.
• Poor returns, inability to raise additional capital.
• Problems with raising new funds.
• Status of fund raising.

back to 2008 Private Equity and VC Compensation Report