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

 

 

 

  Summit Partners
Associate Base: 125,000 Bonus: 100,000 Total: 225,000

 

 

from certified user @CaptK"

most growth equity shops are both cold calling centers AND well regarded names. All of the above shops will look great on a resume and have good exit opportunities. You can get some decent exposure to the senior guys and the opportunity to source and actually execute some deals if you're good (and depending on the shops model), but also be prepared to smile and dial...

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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

 

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.

 
PostMBA__FORMERMONKEY:
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"?

People tend to think life is a race with other people. They don't realize that every moment they spend sprinting towards the finish line is a moment they lose permanently, and a moment closer to their death.
 
rickyross:
PostMBA__FORMERMONKEY:
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?

SanityCheck:

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.

 
Hernandez:

SanityCheck would you mind giving some examples of hybrid firms that do minimal sourcing and have good cultures?

SanityCheck:

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.

Lots of MM firms are what you would consider hybrids, particularly on the lower end (target EBITDA $1-$10 million).

 

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?

 

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.

 

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".

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. See my Blog & AMA
 
couchy:
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

 

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.

 
  1. 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.

  2. Huge yes, walk through sourcing and closing, as well as follow-up due diligence.

  3. No, they know you're used to steep learning curves, lbo's wont be so steep.

  4. Screen phone, 1 follow-up, flag VP/MD, 1 more follow-up, source to VP/MD.

 

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