Curious about the industry opinion on these guys. They just closed a $1B fund (their sixth) and currently have $3B AUM. Sounds like they are increasing their analyst pay packages and seem to have a positive outlook. They are in a T2 city (Kansas City) and specialize in software, which might make laterals difficult.
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Based on the most helpful WSO content, here's what you need to know about Five Elms Capital:
Reputation and Strategy: Five Elms Capital is known for hiring out of undergrad and grooming their talent internally. They have a large team relative to their fund size and are recognized for a unique and effective sourcing strategy, particularly in the software space.
Compensation: Historically, Five Elms Capital has been criticized for underpaying employees, reportedly offering compensation significantly below market rates (e.g., $75K for investment professionals). However, if they are increasing analyst pay packages as you mentioned, this could signal a shift in their approach.
Workload and Culture: Employees reportedly work 80+ hours consistently, and the firm has experienced high turnover. The culture has been described as "inner circle" oriented, which may not appeal to everyone.
Exit Opportunities: While most roles at Five Elms Capital are operationally focused, some employees have successfully transitioned to venture capital (VC) or private equity (PE) roles elsewhere. However, being based in Kansas City and specializing in software could make lateral moves more challenging compared to firms in Tier 1 cities.
Growth and Outlook: Closing a $1B fund and managing $3B AUM reflects growth and a positive trajectory for the firm. Their focus on software aligns with a high-growth sector, which could provide stability and opportunities for those looking to build expertise in this niche.
If you're considering joining, weigh the pros of their growth and niche focus against the cons of compensation, workload, and potential lateral challenges.
Sources: Five Elms Capital - Reputation, Comp, Exit opps, etc?, Eric Mindich’s Eton Park Hedge Fund to Close Down and Who's Next ?, Former PE associate's perspective on these "megafunds", Clarity on the Growth Equity Landscape, Experience with Siris Capital?
Not sure if this post was made for a potential lateral, but I have heard good things about Five Elms. They have definitely just increased their analyst pay a decent bit. The clear downside is being in a T2 city and potentially lower exit opps, but if you’re okay with dealing with those it could be a good option.
Five Elms has been a good performer historically. A lot of the industry buzz right now is that they've grown and shifted strategy a bit too fast -- gone from a lot of minority deals in low-mid single digit ARR businesses to more control deals at the $10M+ ARR threshold. You move up a weight class in competition (and entry valuation) when you do that, so time will tell if they can sustain it.
I'm personally a bit bearish on the above. Know their assets and think a lot of the returns to date were arbitrage-y (i.e. lowball some Midwest founder that's scared of NYC investors, do a recap with the NYC investor at a full price three years later). I also haven't found the people I know there to be quite as sharp as their peers at other funds.
FYI they index HARD on KC connections in their hiring, so don't expect to get an interview without a good reason for wanting to be there. Being from a comparable city e.g. St Louis might be enough. Don't have pay info for junior roles but VPs are at ~$250-300k all-in which is a solid living in the Midwest.
Do you think those arbitrage-y opportunities are going away? Or is there a structural advantage being in KC - ie can play on that midwestern charm to win more deals in flyover country. Genuinely curious, as LMM software PE is only getting more competitive ime.
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