Crossover Fund Comp
While not a new concept, crossover funds have performed well over recent years and are, unsurprisingly, becoming more common with new launches under existing asset management platforms as well as new standalone funds. Given the small team size / limited quantity of funds with this strategy, there isn’t much data out there on comp for crossovers specifically so it would be helpful to crowdsource any datapoints or general ranges people have heard - also would be good to specify what type of background the comp would tie to (post 2 years IB v. 2+2 IB/PE v. something else).
Also interested in any guidance on how comp is structured as you progress to more senior levels at these funds since it’s a bit more complicated than other funds depending on structure (ex. is the fund set up as an open-ended fund like other HFs or does it also have a side-car structure for the private investments than makes it more similar to growth equity funds where there is an need to continue raising new capital).
Thanks!
any firms in particular that you're referencing?
Historically would think of firms like Greenoaks and Dragoneer where the investment team is the same for public and private (v. a place like Coatue where there is a distinction as far as I am aware)
Dragoneer, Whale Rock, and Altimeter are all crossovers, and each have >1bn per IP. There are maybe 12-15 funds out there with these kinds of economics, and the comp probably reflects that. Has anyone heard any numbers? Also curious
As far as I understand, Altimeter does split its investment team internally between public / private (at least based on a job description I’ve seen from a HH) which I would think plays into comp differences but definitely a large scale crossover at the fund level like you mention
$1 to $50mm depending on seniority is my guess?
Dragoneer has a pretty dedicated private team that doesn’t do much public, e.g they handoff at an S-1. But their public team is more hybrid and works on private deals depending on the Co / Geo (think like 70/30 or 80/20 depending on IP). So it’s kind of an interesting mix. Still a low number of IPs, so anyway you look at it, they aren’t siloed and all work together on a lot of investments.
Economics are incredible and it shows. Junior ranks are standardized like most places but once you’re past two years I’ve heard of multiple IPs getting fat comp numbers w/o many YOE.
Super helpful, thank you! I can imagine as you progress the economics really kick in given the AUM / IP like you mention. Do you have any sense for:
1) Is there a meaningful difference in comp between private only v. “hybrid” IPs (not just Dragoneer, but in general)?
2) What would you expect comp to compare to for a more junior IP at one of these funds? Would you expect someone from a 2+2 IB / PE program to be in the $400-500k range?
1) I don’t think there’s any material difference between comp in private vs hybrid
2) yes that’s a very attainable range for that background.
Can you share some data points (ballpark)? Also I'm assuming same goes for Altimeter comp wise? L/S book is ~7.5bn I think, and VC makes up the rest -- were those comp stories on the equities side or vc?
Do you have any qualitative feedback on Dragoneer / Altimeter hiring?
I've already checked LinkedIn and see the backgrounds, I'm looking for any anecdotal experience, word-of-mouth, inside baseball type stuff.
I don’t think there is anything unique about their hiring practices compared to other crossover funds / investment firms. They want smart, driven individuals that have a passion for growth investing and tech. Dragoneer is covered by Gold Coast and Altimeter is covered by Oxbridge. They will reach out if your background is a fit. Nothing complicated here.
What constitutes fat comp numbers? Could you share some data points?
Can you share the numbers you’ve heard for dragoneer (for relatively sr analysts)? Thanks
Sr Analyst / Non Partner w/ 7 YOE - LSD
Analyst w/ 5 YOE - $1-1.5M
Is this total YOE? Or YOE in HF? (i.e., do your YOE count the banking/pe years?)
Seems a bit low for a tech focused fund that's crushed it over past 5 years, and has >1bn / IP, no? Thought you were going to say $2-3mm for analyst and $5mm+ for sr analyst -- that's what guys with comparable experience are making at comparable funds with comparable economics / performance
Their Analyst role is 24 year olds with 18 months of experience. No Associate title.
26-27 yo being at the firm for 3-4 years making $1-1.5M is pretty solid basically anyway you look at it.
I see what your saying, it is a lot, it's just the economics should imply way higher numbers than those: Ignore VC part -- L/S book is ~7.5bn, tech has crushed it thus their book has crushed it. Say that book is up 25%, 20% perf fee, so $375mm to go around. Even if sr analysts get just 100 bps of pool, which isn't a lot given Dragoneer has 17 IPs, that's $3.75mm. Plus 25% is low when all you own is cloud. Is altimeter similar numbers (it's even leaner than dragoneer)?
For reference -- I know guys at similar sized shops here in NYC, same YOE, but making $2mm and $5mm, both under the age of 30 (those numbers reflect the math).
Totally hear you. Probably should’ve said both of these are YE 2019 numbers when they were much smaller, like $10-12bn total aum. It’s probably increased significantly in the last two years.
Fwiw I know the partners (who are all super young) are $15-25M easily.
How "hard" is it to become partner at a crossover shop like dragoneer / altimeter? Is it a function of "good performing analyst for 5-7 years becomes a partner", or is it more political / not every great analyst moves up? $15mm-25 is a lot, especially since these guys are like early 30s
Wow @ those numbers...
Just curious, are those partner numbers like confirmed?
Where are you getting $15-25mm for a 30-35 year old partner lol? Would appreciate some sanity check math
Can vouch for the numbers above, close friend of mine works there.
Ex 2022 they put up top decile returns a number of years. Made like $1bn on SNOW, $800mm on Slack. Charge more than 20% carry in some funds.
this is pretty in line with my thinking / what ive heard similarly at other funds.
What is the interview process like at these crossover funds? Are they more like Growth/PE interviews or more Hedge fund style (investment pitch)?
Based on my convos with people at those firms, the jr numbers are way too high
You get paid to own risk. Nobody is getting $5M to pitch long fang like everyone else. Sellside can do that for a lot less money
These pitch fang takes are so goddam awful
you are paid to make $
if you want to pitch some garbage saas company at 40x revs or stupid shitco spinoff go ahead, but a huge part of this business is judgment and understanding that hey maybe Amazon is a better stock than some $10m adtv “artisanal alpha” business that will cut earnings and go down 40% in two quarters
this is why people hate HFs because they try to be smart and then lose $
I'm not saying don't buy fang. I'm saying PMs don't pay their analysts $5M to pitch them what they already know
My fund (tmt focused) weights analyst’s bonus towards non-fang p&l and alpha generated on shorts. The PM and tmt sector head trade fang on their own
I feel like I walked in on a conversation here that I'm not elite enough to hear
1.5MM at age 27?????
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