Five Elms Capital 2022 Thoughts
Have not seen a thread on this for awhile. Looking for updates on Five Elms in 2022. Previous threads indicated they have great deal flow and are competitive in the GE/Pe space (even got on this list in 2020
https://growthcapadvisory.com/the-top-25-growth-e…)
Some of the negatives ive seen have been below street pay (no bonuses?)but they’re also in one of the lowest cost of living cities in the US. Some claimed the culture was a little toxic and political.
Would love to hear an update from anyone in the firm or on the street. Updated comp, exits, deal flow?
Bump
Pretty random, but got invited to an interview with them a few years back. Knew absolutely nothing about tech (Upstream O&G background) so wasn't prepared at all. It was one of those video submission interviews. First question is some complete softball like "Name 3 tech companies that you think have great business models and why." They give me 20 seconds to prepare an answer. Timer is up and I'm just staring at myself through my laptop camera for like 10 seconds pretending there is a technical error. Then I go "yeah I mean Facebook is pretty good because umm....." *Closes laptop*.
So obviously didn't hear back. That being said, the initial phone interview they seemed like a bunch of weirdos. "We're a family here" stuff like that. Major red flags.
“We’re a family” lmaoooo
They really push on culture but I’m not sure what it looks like besides their annual ski trip
Five Elms has a pretty good deal flow and is becoming more reputable in the Tech PE industry by the year. The negatives are, like you said, that the compensation is way below street pay and below other PE jobs in cities with a similar COL. Exit ops I have heard are mainly to portfolio companies but also other PE gigs as well. It's a typical midwest shop so they do really try to hit home on the Family values, for better or worst that's for you to decide, as a culture.
They had 100% turnover in their last analyst class
Source? I doubt 100% turnover rate amongst analyst I’ve followed for a sec and have seen familiar names persist.
Heard from an internal source that their pre-pandemic class all left by the end of 2021. LinkedIn confirmed this.
I kind of lump Five Elms in the bucket of "LMM Growth Equity" - basically growth equity firms that play in that $5-15mm revenue range, buying (generally bootstrapped) companies before they become the "platform assets" of a larger growth/tech PE firm. I'd include Mainsail, Luminate, and Frontier in this bucket as well. Maybe Serent and a few others too.
For what it's worth, as someone who works at a larger growth equity shop and has looked at a number of Five Elms portfolio companies, I do like this model. Any software business with $15m+ in ARR is going to be highly covered by the usual cohort of growth/tech PE firms, but when you get to sub-$10m that's where things start to get pretty interesting - fewer banked processes, fewer firms you are competing for deals against, less sophisticated management teams, etc.
Fund size seems to be growing quite nicely which I think sort of validates their approach and deal flow. Unfortunately I don't have many insights into pay, exits, analyst experience, etc., but if you can get comfortable with those things, it seems like a good place to start out.
As a former employee there, I can absolutely vouch for the deal flow. The deal sourcing engine they've built is genuinely one of the best out there, and only continues to improve.
I'd also say that while I was there, the pay certainly wasn't great. I know that some of the critical reviews that have floated around both here and Glassdoor have had some impact, but I just genuinely don't know whether that feedback has translated to better pay or not. In my case, was I heavily underpaid? Absolutely, but I was fresh out of college and didn't know any better.
Even so, I would do it again 10 times out of 10. I couldn't have asked for a better situation to learn in, especially fresh out of school, and if you're early in your career or just switching over to the buy-side for the first time this is a great place to spend a couple of years because the deal flow (and the learning that comes from seeing so many deals) is real there.
Hope this helps.
I have an interview with them tomorrow, do you mind if I message you?
From what I know about the firm, lots of growth. Saw rumors on WSO about the pay, but I don't know if anyone can confirm them or if it is a perpetuating rumor.
Fund has been growing YoY, heard they turned down capital and could have had a larger fund.
The people I have interacted with all seem nice and friendly.
I am still trying to figure out where it places when comparing it to other GE shops. Someone else pointed it out, but in 2020 they made the top 25 list on growthcap which is pretty impressive and makes me want to rank them as a solid Tier B GE shop, mainly hindered by retaining talent due to their HQ being in KC.
I think if you don't mind living in KC, then this is a top notch shop to jump into. Of course, do your own research and feel them out during interviews.
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