SAN DIEGO, CA, January 14, 2010 — A report released by JobSearchDigest.com, publishers of Private Equity Jobs Digest, reveals that private equity and venture capital firms take very different approaches to compensation based on the size of their funds.
The report indicates that professionals in private equity jobs, continue to receive lucrative compensation, with the average cash earnings coming in at $208,000 USD — down from last year’s reported average. But the averages do not tell the whole story.
The report confirmed that, in terms of fund size, bigger is better, as larger funds have a significant management fee with which to work. Funds with over $500 million in assets paid their team members 40 percent more than smaller funds.
“Given industry concerns, public scrutiny of financial pay programs, and proposed bank bailout fees, we looked deeper into how compensation varied, especially bonus payouts,” says David Kochanek, publisher of Private Equity Jobs Digest, a research service focused on private equity jobs. “What we found was that smaller funds increased base compensation by 5 percent, while the larger funds tended to keep base flat. When we looked at bonuses, however, small funds were paying much smaller bonuses than last year while professionals with large funds expected to see double digit percentage increases.”
As seen in last year’s report, job security continues to be a widespread issue. 40 percent of private equity and venture capital professionals stated they are somewhat concerned about their jobs and 13 percent said they are very concerned.
Those who were concerned, commented on the firm’s fund raising ability, the risk of being downsized, and the future of the VC industry. “Upside is usually tied to a successful exit event. As portfolio companies continue to tackle market challenges and patient institutional investors enter the venture capital game, the exit timeline extends,” says Kochanek.
Those not concerned with job security said their firm recently secured the next round of funding, they were in the right market (often reported as Asia), they could easily find a new job if necessary, or they were key to running the fund and saw little risk of being let go.
The report also uncovered that satisfaction with pay was 30 percent higher for venture capitalists than the rest of the industry. Why? Because, despite getting paid less than at other firms in 2009, venture capital employees enjoyed a bigger increase in base compensation and an increase in their bonus payout as well.
About The Report
The 2010 Private Equity Compensation Report is based on a survey conducted in October and November 2009. Data was collected directly from hundreds of private equity and venture capital partners and employees from firms, both large and small. Some of the participating firms include: 3i, Actis, American Capital, Babson Capital Management, Bain Capital, BlackRock, Clairvest, CPPInvestment Board, Deutsche Bank, EDC Equity, EdgeStone Capital Partners, Highland Capital Partners, Kaiser Permanente Ventures, North Atlantic Capital, RBS, Safeguard Scientifics, SV Life Sciences, and Time Warner Investments.
The full report can be found at www.PrivateEquityCompensation.com
About Job Search Digest
Since 2002, Job Search Digest has provided web-based career services, catering to professionals in the private equity, venture capital, investment banking and hedge fund industries worldwide.Private Equity Jobs Digest is a research service that tracks hiring in the industry, maintains a current database of venture capital and private equity jobs, and provides its members with daily job listing updates and proprietary research.
For more information contact
David Kochanek, publisher, Job Search Digest