I've heard that LPs will want to see that name brand. I've also heard that it could be easier at a mm due to more facetime with LPs. Others have said it doesn't matter either way. What matters is what deals you lead and the return rate on them. What's the truth? Should you go to a MF or solid MM??
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When considering the importance of working at a megafund (MF) versus an upper-middle-market (UMM) or middle-market (MM) fund for the purpose of eventually raising your own fund, several factors come into play:
Brand Recognition and Track Record: Working at a well-known MF can provide significant brand recognition, which can be appealing to limited partners (LPs) when you're looking to raise your own fund. The prestige associated with MFs often carries weight in the industry.
Experience and Deal Exposure: At a MM or UMM, you might have the opportunity for more hands-on experience and closer interactions with LPs, which can be beneficial for building relationships and understanding the intricacies of fund management. This experience can be crucial when you start your own fund.
Performance Metrics: Ultimately, the success of previous deals you've led and the returns you've generated are critical. LPs will look closely at your track record to assess your capability in managing a fund and generating returns. This factor is often seen as more important than the size of the fund you previously worked with.
Personal Network and Reputation: Building a strong personal network within the industry and a solid reputation for your investment acumen and ethical standards can also play a significant role in successfully raising a fund, regardless of whether you come from a MF, UMM, or MM.
In conclusion, while the prestige of a MF can provide initial credibility, the experience gained at a MM or UMM, along with a strong track record and personal industry connections, are equally, if not more, important. Your decision should align with where you believe you can gain the best experience, grow your network, and showcase your investment skills effectively.
Sources: William Blair Reputation/Top Groups/Exit Ops?, https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1, Q&A 2.0: 3rd Year BA/A/AC At MBB Going To UMM/MF This Summer, LO to MM HF?, Q&A: UMM PE VP
Bump
It probably depends on how much you want to raise, your strategy and check size. If you want to raise a 1.5b first time fund that invest in 500m companies like some Apollo spin off do then thats going to be hard from a 3.0b AUM MM firm. If you want to raise a 500mm fund that invests in 100-200m EV portCos and then scale it, coming from a well performing and reputable MM won't hurt you much.
Most important is the returns on your past investment, how you differentiate your strategy, and if your past fund is reputable/known. Also I don't really know what i am taking about, I've just thought about it a bit aswell.
You see this is exactly what I think and I have a feeling we are right. But we both want the approval of someone who's farther up the chain. I feel like it's 60% my track record 30% my LP relationship and 10% my previous employment/educational record. If any people higher up in Finance could confirm this would be extremely thankfull.
How much do LPs care about your own capital commitment to new fund? Assume easier to raise money if you are putting in $100mm after crushing it at Apollo or a big UMM that hits it big
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