Growth Equity Outlook
Is growth equity still an appealing career path given the concentration in overvalued software assets that are ripe for AI-driven obsolescence? How do you see the industry evolving?
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Growth equity remains an appealing career path, but the landscape is evolving, and professionals need to adapt to the challenges and opportunities ahead. Here's a breakdown based on the most helpful WSO content:
Challenges in Growth Equity:
Opportunities and Evolution:
Career Outlook:
In summary, while growth equity faces challenges like overvalued assets and technological disruption, it remains an appealing career path for those who can navigate its evolving dynamics and capitalize on emerging opportunities.
Sources: Troubled fundraising processes, https://www.wallstreetoasis.com/forum/private-equity/where-is-the-industry-going-for-young-professionals?customgpt=1, PE long-term attractivity: Is the trodden path "broken"? Quo vadis gen Y?, Is value investing dead?
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Cooked - but nothing of value was lost it wasn't a real asset class anyway.
This guy😭😭
Industry is cooked unless you work at a firm who has been around long enough for LPs to see past 1-2 bad vintages or the fund can offset a bad vintage with an Anthropic style home run. So 80% of East Coast Growth is screwed.
Couldn’t happen to a better group of people. Sayonara suckers
Work in venture and have worked in growth previously, I think everyone on this post is very wrong. The big fact of venture and growth these days, unlike traditional PE, is that there is more capital chasing the top companies than the other way around. If you are a reputable firm in venture, you simply can invest in companies that smaller firms cannot. This should also apply to growth as there are many cases of early and mid-stage companies turning away investors these days. So if you are a reputable growth investor like ICONIQ or Insight or TA with a strong track record, you have a huge differentiation by the basis of your reputation.
TA's covid vintage is completely sizzled (though great track beforehand) with heavy software exposure - they will rebound after a flat/down round, Insight close to halved fund size and performance was shit for several funds in a row, this looks really bad and isn't the end of the ordeal for them. ICONIQ idk.
Growth funds are trash across the board, the only ones that will survive is the guys doing earlier stage stuff as they have the mandate to invest in AI. The more later stage you are the more useless and challenged your position.
Past performance is not indicative of future results. They will still benefit from their reputation and be able to invest in businesses others are not able to because of their history. These days, startups ask you for track record and how you can be value additive not just if you can provide capital. Your analysis is extremely shallow and not at all forward looking. Yes they have had bad funds, as has everyone in venture and growth outside of those who got into the LLMs, but they are structurally advantaged in a way PE is not. To put it in a very PE analysis lens, top VC and GE firms have a much stronger and differentiated moat than PE firms.
There is an important distinction here. When you say “growth equity”, there are 2 buckets that look vastly different in terms of appeal and trajectory. The “PE growth” shops (TA, GA, Summit, Insight to a degree, that mostly invest in SaaS) are cooked. The “VC growth” shops (tier 1 VC funds with growth teams that almost exclusively invest in AI) are arguably the best seats in investing right now.
Do any of these VC growth shops have a real NYC presence?
Thrive, Bessemer, Greycroft, Coatue, Tiger to name a few. They all have late-stage VC / growth investing
You beat me to this. Thank you
Ignore title, VP in VC. I'd actually say it's 3 buckets of "growth equity." You have the (a) venture growth guys you mentioned like GC, A16Z, the general multi-stage funds, (b) the traditional growth equity shops that look for vertical software businesses that have raised less than $20mn and are growing at a steady clip and (c) the growth buyout shops like TA, Summit, Bregal Sagemount, etc
A is hot right now. B is dead. C is fine but kind of a different beast and closer to traditional MM PE buyouts.
Agree. Work in C.) currently and portfolios across the board are ehh but not necessarily 0s. Lots of interesting AI names out there but most of them won’t fall in our strike zone (either too small or would never agree to majority buyout construct if they have the scale). Would not suspect significant deal activity for a few years until these AI native names achieve meaningful scale. Also there needs to become enough of AI native assets coming to market that folks no longer feel compelled to overpay… but who knows if that’ll ever change
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