Growth Equity Firms
Does anyone have thoughts/info on growth equity firms such as TA, General Atlantic, NEA, Summit, etc? Any highly regarded names or are these places all cold calling centers? Thoughts on lifestyle / compensation?
Thanks
Quick Guide: Growth Equity Firms
Being part of a growth equity firm is similar to working at other private equity firms but there is an emphasis on sourcing.
There are more than a few well respected shops that require you to “smile and dial”. The duties usually involve
- Sourcing
- Modeling
- Diligence
- Deal Processes
Sourcing gets most of the attention in growth equity. However the process is simple. First, an email is sent. Second, after a few emails the initial call is made (it's a cold call if they don't respond). Third, warm calls help establish a working relationship. The last part of the process is of course getting the business.
Top 3 Growth Equity Firms
General Atlantic Associate Base:140,000 Bonus: 115,000 Total: 255,000
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Summit Partners | ||||
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Associate | Base: 125,000 | Bonus: 100,000 | Total: 225,000 |
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Agreed with CaptK except I wanted to point out that NEA is much more VC oriented than the rest of those shops. Though NEA has a significant late stage/growth practice, it is still very much a VC shop. NEA associates also don't source. I think thats the case with GA too but could be wrong. You will definitely be sourcing at TA and Summit though
Does general atlantic really belong on this list? Its one of the biggest PE firms in the world. I doubt their associates are cold calling companies.
No, GA does not belong on the list with TA and Summit. GA Associates do not source (have several business school friends there), however, they do client face a fair amount. No offense to the other two, but with respect to prestige, GA blows them out of the water...better track record and MUCH better reputation in the LP community (even though they have an Evergreen Model). The only reason you would hear GA mentioned in the same sentence as the other two is because they are growth equity focused.
I know I'm two years late to the party but can you clarify what you mean by "Evergreen Model"?
I had to look this up too
It is customary to make arrangements to receive venture capital funds upfront. With evergreen funding, however, investors supply the capital in incremental payments throughout the development phase of the company or product. Thus, the company receives money from its investors as the need for funds arises, and alike the evergreen tree, is never without the "green" the company needs to survive.
http://www.investopedia.com/ask/answers/08/evergreen-funding.asp#ixzz2E…
and I know I am late to the party too, but not sure where the postmba dude got his facts from. I have worked with one of the largest LPs in the world and I know TA pretty much blows every other fund out there with a 30%+ return over a 40 year period. GA is a great shop no doubt but i think some kids here tend to correlate prestige/fund size with actual fund performance. LPs dont have that luxury
Yeah I don't think GA is THAT much better than TA. Both however, are better from a prestige+returns perspective than a Summit.
Another trend in the industry recently is hybrid growth/buyout funds (the one I work at). We put leverage on deals and require positive FCF and a minimum EV size but every single deal we do has some kind of growth story to it (even buyouts). Also there's minimal sourcing on our end.
SanityCheck would you mind giving some examples of hybrid firms that do minimal sourcing and have good cultures?
Lots of MM firms are what you would consider hybrids, particularly on the lower end (target EBITDA $1-$10 million).
PE Growth Equity / Sourcing Fit (Originally Posted: 03/17/2012)
By and large the consensus here seems to be that working for a PE firm with an analyst / associate sourcing business model is miserable, but certain aspects of it seem positive. I think the work to identify potential attractive targets (doing industry research, going to tradeshows, learning about companies' technology and offerings, etc.) could be pretty interesting, and being the first point of contact for a target management team to your firm could help build relationships that would be hard to get until much later in a career otherwise.
Also, given my non-traditional background (sell-side equity research), it seems that this business model could be a better fit for my experience. My understanding is that more of the focus of these firms is on fundamental research to find attractive candidates with inherently good prospects, rather than creating value through complex transactions and capital structures. There's a limit to how much I can learn about transactions from doing self-study programs and talking to people, but I'd happily put myself up against any banking monkeys in terms of fundamental analysis of company / industry prospects.
It seems like the specifics of the process vary a lot firm to firm, with some places just giving you a list and having you cold call day and night, while others involve you more in the preliminary research to find targets as well as in the due diligence / transaction / monitoring side of things. Just cold calling all day would be a waste of time, but if I was able to find a firm that offered a broader experience it seems like it could be a good way to break into the industry.
Just wanted to get anyone's perspective on whether my line of thinking is reasonable and if it would it be worthwhile to pursue this path.
Thanks
I think it's very reasonable depending on your situation and personality. Feel free to PM me.
Currently doing PE recruiting. One of the firms I am the process with (have final round in a couple of weeks) has the model you described (broad experience, including some cold calling). I think your analysis is pretty spot on. Although I was completely against the idea at first, after thinking about it, I came to the same conclusions as you did -- what better way to learn about a company / industry than to call up a company and speak to them yourself?
do you have to complete lbo models at pe firms with a sourcing model (i dont understand what would be the point if you wont be utilizing it since you;'re sourcing all day anyway)
bump
i work at a pe shop where sourcing is not required for associates. it is a great intellectual experience, but there are many times when I am out at a conference/meeting/casual setting that i know if i did more sourcing, i would have more effective/prepared conversations.
if you are at a firm where you can TRULY work on the deals you bring in, then it is a great model. being able to source is a valuable characteristic long term. think of it this way, if you can't effectively source a deal as a VP, your track record/deal experience/career trajectory will be completely dependent on the MD above you. If you can, at least you have some say in the deals you work on.
Opinions on growth equity shops? (Originally Posted: 08/27/2013)
Seems like growth equity is gaining alot of momentum these days...
Besides the all-star shops like GA, TA, Summit, JMI, and TCV, are there other growth equity shops that seem to stand out and have impressive returns?
Some other growth equity shops that come to mind are IVP, NVP, Spectrum, North Bridge, Battery, General Catalyst, Volition, and Polaris.
Thanks!
There are probably plenty more, but I would also throw in the entire spectrum of Search Funds that are out there. They are basically also "one firm growth private equity shops".
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What are the qualities of growth equity Associates that make them attractive MBA candidates?
Growth Equity Firms - Less Sourcing (Originally Posted: 09/21/2015)
As an IB analyst, I'm interested in learning more about growth equity firms. From previous internships, I have learned I am not interested in a focus on sourcing. Certain firms (TA, Summit, etc.) have a sourcing model and others such as GA do not. A quick search gave me a few more names to draw on. http://www.wallstreetoasis.com/forums/growth-equity-shops-associate-sou…
Does anyone have an idea of additional firms which require less sourcing from their associates? Hopefully this post can become a resource for others in the future.
Thanks
bump. interested as well.
So no matter where you go there's going to be some sourcing, but JMI does less than your traditional growth equity shop.
Growth Equity PE Experience (Originally Posted: 12/20/2011)
How easy do you guys think it will be to break into megafund PE after working for 2-3 years at a growth equity shop like General Atlantic? I'm deciding whether to go to a well-known growth equity shop or a BB IBD after college.
Would it be relatively easier since I'll already be in "PE/buyside," or difficult considering that I won't have experience working on complicated deals/get familiar with the details of debt financing?
BB IBD imo. Growth PE is not megafund PE. yes they're both PE but thats like saying long short is the same as risk arb....
This is really wrong, I'd go growth equity every time....a lot of the mega fund deals are actually growth deals at the moment anyway - BB IBD does not give you a free pass into PE, Growth Equity is PE and someone like GA are highly regarded...simples
^^ what samoanboy said. Growth PE is PE! And most deals are growth equity deals anyway these days. GA is one of the best on the street and very well respected. Ask yourself why you'd want to reject a PE offer to go back into it anyway.lol
If you are unsure if you really want to do PE, go BB IBD and get your ticket punched there. Good prestige and you can go pretty much go anywhere else.
I tend to believe that a job in PE (growth or late stage) at a reputable shop, which GA very much is, gives you all of the same options as banking with less of the headache. If you land a PE job straight out of undergrad, people will realize that you are a top candidate because there aren't a lot of those jobs to go around.
Thanks for the helpful information!
Inquiries about Growth Equity shops w/ sourcing (Originally Posted: 09/04/2014)
I currently work a lower middle market investment bank, and as an associate, I do quite a bit of the business development/sourcing. I don't have the modeling skills of BB/solid MMs, but I have quite a pretty good "business" network and sourcing experience.
Would this help me in recruiting with firms like Summit/TA? Or would it be better to just talk about deal experience?
If one of the deals I worked on was sourced by me, I'm assuming that is good to mention (or could that come off as cocky)?
Estimated cold call requirements per day?
Do associates also do their own email campaigns for targeted companies?
What is the travel like? Can associates go to industry conferences?
For some of the big sourcing growth equity firms, how much of the modelling does the associates do?
Will it hurt if I haven't professionally done an lbo model? I understand the basics and have self-taught/done some sample models.
What is the process like if a prospect is potentially interested? Do you do a basic screen of them via phone, then set them up with your MD/team?
I am pretty sure the answer is no, but are there any good certificates/licenses you would recommend for growth equity shops?
bump.
Summit loves sourcing skills, I've spoken with 4 people at the firm from all levels, and that's what they prefer from the "entry"-level people. They prefer guys who can cold call and build relationships, most of their models they'll run through with you, and if you have experience like you do, that's even better. Their deal sizes are lower MM $'s anyway.
Huge yes, walk through sourcing and closing, as well as follow-up due diligence.
No, they know you're used to steep learning curves, lbo's wont be so steep.
Screen phone, 1 follow-up, flag VP/MD, 1 more follow-up, source to VP/MD.
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