With the rise of startups and entrepreneurship, more investment bankers are considering making the switch to startup jobs. Though startup salaries can be quite attractive, especially with stock options, there are also greater risks involved. When comparing investment banking and startup salaries, bankers should consider total compensation, job security, work-life balance, and career development opportunities.
Startup salaries higher at senior levels but lower at junior levels
For junior roles like analysts, investment banks tend to offer higher base salaries of $85-100K. Startup salaries for similar roles are often $65-85K. However, at more senior levels like VP and above, startup salaries can exceed investment banking, with base salaries of $150-250K plus equity. Startups offer more upside through stock options, allowing experienced hires to share in the potential growth.
Investment banking has predictable bonuses, startups have variable equity
Bonuses at investment banks are fairly fixed based on position – analysts get 10-20% of base, associates 50-100%, VPs 100-200%, and MDs 200%+. Startup equity is highly variable based on company growth and exit outcomes. While startup equity offers huge upside, it has higher risk than banking bonuses.
Startups have higher risk of job loss but offer more learning opportunities
Investment banking jobs are relatively stable and secure. Startups carry significantly higher business risk, with three-quarters failing entirely. However, startups offer tremendous learning experiences and opportunities to take on leadership roles early in one’s career.
Work hours are intense at both investment banks and startups
The workload and stress levels at investment banks and startups are quite similar. Analysts/junior employees work 60-90 hour weeks at both. Work-life balance tends to improve more quickly at startups for those who advance into leadership roles.
Startups offer more career progression but lower job security
Career advancement at investment banks is quite structured and promotions are time-based. Startups provide the opportunity to take on more responsibility and leadership much faster. However, startups have more volatility in their growth trajectory.
While startup salaries can exceed investment banking compensation, particularly in equity upside, startups also involve much greater risk and volatility. Bankers should weigh these factors carefully when considering a switch to the startup world.