Difference between a venture capital consultancy and management consultants
The difference between a venture capital consultancy and management consultants
The VC and management consultant sectors are quite alike but in some ways its chalk and cheese so let’s take a look at some of the differences
#1: Partner size
Management consultants are usually hired by large, established companies like Vodafone or Shell while VC naturally are much more likely to deal with small scale ups and startups. Of course, there’s crossover but in general, the financial figures involved, organisation structures and product complexity are usually worlds apart.
This difference means that VC consultancies deal with much less bureaucracy than Management consultants do with everything happening more quickly because with fewer decision-makers and leadership more accessible.
In the VC world, everything is about hype, disruption, bleeding edge teach, innovation, and scaling. In the management consultancy world, clients now use those same words, but in reality, they are simply trying to stop the bleeding or pushing water uphill
VC consultancies are generally brought in by VC pre acquisition or when there’s a struggle or turnaround needed.
#3: Client-is-always-right mentality
Not only are the size and growth trajectories of the counterpart companies very different, but the working relationship power dynamics are opposite. While a VC is an investor in a startup, and sometimes even holds a board seat, an MC is hired by the client, and therefore answers to their direction.
#4: Relationships matter, but more so for a Venture Capital consultancy
A VC consultant must network to find VC’s to participate in their funds to creates demand for their skills and to find attractive startups to work with. A Management consultant must network to find big ticket clients to hire them to creating their demand for their deeper higher value consulting services.
Management consultancy makes money by sending literally armies of consulting teams into clients for as many project s as possible and then bills their clients based on the time involved (it should be results, but that’s for a different article…). A Venture Capital Consultancy, in contrast, makes money by finding the best VC firms (or startups) to work with, and charges fees to investors.
#6 Both pay well, but management consultant is better
If you receive an offer from a consulting or VC consultant, you’re in a good place. Both these industries offer competitive renumeration but the management consultancy pays better for less because quite simply their clients have bigger projects and bigger pockets.
#7: Being a VC advisor is likely to be a better balance
VC advisors operate in a world where people tend to be both more diverse, bigger risk takers and more passionate about their ideas. Of course most startups flop into dead weight and hubris and that many management consultancies love their industries, but on average, working with VC’s and startup founders is more rewarding and you are less likely to hear highly paid talented people complain about throwing away their life.
The Conclusion: Both are great, but working with startups is better
This is very opinionated but you’ve got a more defined career at a management consultancy with better chance of making a partner position but why not start with working at a venture capital consultancy with VCs and startups if you get the chance? You probably will never work with so much energy apart from actually working for a startup. 100% give it a go if you get the chance!