Insight Partners fundraising
Interesting FT article saying that Insight has only raised $2bn for their new flagship fund vs. $20bn target and lowering their target now to $15bn. Some parallels drawn to Tiger Global. Apparently aggressively laying off senior people. Anyone knows what’s happening inside there…? What about other growth funds? If these guys can’t raise more than $2bn it must be pretty bad for others too
Yeah, saw that..difficult to say where they stand solely based on hitting the fundraising targets esp in this market, where everyone is struggling… but yeah looks like they deployed too much too fast without too much thought…shit the bed on returns so to say…not sure about senior exits though…
if I were an analyst recruiting, wud go with other options
Insight paid insane multiples throughout 2021 which works fine if your companies grow at insane rate consistently, but with the slowdown of software economy and multiple compression they are holdings a lot of duds. Sources say less promos less hiring
Per Pitchbook data, its $20bn flagship fund (Insight Venture Partners XII) is doing negative IRR of (21.51%). Similar story for most of its smaller funds, with lower-mid ranking performance relative to competitors.
The model of not being returns focused in a bull market made sense when it was about deploying capital, accumulating AUM and raising the largest funds possible to collect a 2% management fee on that, irrespective of the performance element.
Fund XII will probably go onto be a historically bad fund. Have heard some LPs are trying to sell their stakes for as low as 30 cents on the dollar in the secondary market.
For as much "credit" as Tiger got for building a sort of private market index, Insight was right there alongside them. Back in 2021 we signed a term sheet to co-lead a deal alongside them and asked how they wanted to split up confirmatory diligence... the response was "oh we're good, we're going to start drafting docs." Btw we ended up dramatically overpaying for that asset and will probably be underwater on it for years.
If you look at all Insight's new investments YTD they have pretty much only been buyout deals. The firm intentionally hit pause on new minority deals in an attempt to salvage what they can from Fund XII.
They have a long track record of past success and will probably be able to say "it's too early in the fund lifecycle to tell" on the fundraising trail and raise a respectable Fund XIII (which will almost certainly be below targets). That said it's not a happy place over there by any means.
Do you know anything about the internal compensation structure for people in buyout vs. public vs. traditional growth?
Do you have any information on the quality of their buyout fund?
Thank you.
Insight does all deals (minority and buyout) out of the same fund. There have been rumors for years they would split them but it hasn't materialized yet to my knowledge. In the same vein the distinction between teams can be somewhat loose... there are definitely people who skew more buyout-y and others who skew more venture-y but more often the swim lanes are by vertical. Many of their positions start off as minority and then later evolve into control ones, so in a lot of situations it's more synergistic to have a team that can execute both. Based on that I assume comp isn't materially different.
Public segment was a science project / low-interest rate phenomenon that I'm assuming has been / will be killed.
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I'm glad the chickens are coming home to roost on them and other players who were just bidding stupid prices the last couple of years. All the best to the founders who fleeced guys like them and Tiger but it made it such a pain in the ass to try and source when every Tom, Dick and Harry with a software biz thinks they're suddenly worth 10x and gets offended when you break the news they're barely half that.
Meanwhile TA crushing it $16.5bn latest raise.. esp in this market
How will this impact junior level recruiting? Would Insight still be a good place for someone interested in PE/Growth out of college?
My exposure to Insight has been second-hand, but I've been in the industry for a bit and I catch up with peers at other firms on a regular basis so consider myself decently well-informed. Assuming one thought junior roles at Insight were attractive before these headlines, I'd guess that, yes, it's still a great place to end up. Insight is a well-respected, brand-name institution for a reason: they have a long and immensely successful track record, which spans multiple cycles and different market environments. They (very visibly) fell victim to the riskiest temptations in the latest bull market, hence the recent news, but it's not as though that completely overshadows everything they accomplished before. So, if your primary concern is how Insight would impact your resume (as a first/second job out of college), then I'd argue there's nothing to worry about. Brand perception lags actual performance anyways, but firms like Insight typically get the benefit of the doubt from LPs/third-parties. Also, it's not as though they were the only ones tossing money around, they just happened to be one of the most high-profile ones to do so. A stint at Insight will continue to be viewed as impressive.
Relatedly, if your top priority is around the quality of the learning experience and building a strong foundation for a career in investing, experience at Insight will continue to be valuable (perhaps more than before, given the following). Again, Insight's track record speaks for itself; assuming a generational turnover hasn't taken place, the folks who contributed to that track record are very much still around and possess the same investing acumen that drove Insight's previous success. I'd be willing to bet that Insight's decision-makers will be more intentional/judicious going forward, and will likely try to get back to the practices/approach/philosophy that allowed the firm to rise to its current position (vs. those that resulted in the current situation). Some of the MFs that are highly admired on this forum had to "right the ship" following the Great Recession and some very public black eyes, basically the same situation we're seeing today with Insight, and every one of those firms was able to recover and continue to raise funds on the back of some combination of historical track record and promising early returns post-crisis. Junior folks at Insight will continue to get good reps, and the senior folks are still talented and worth learning from.
Will LPs trust Insight with another $20B pool of capital? That would be shocking if so. However, it's not crazy to suggest that Insight's most recent fund was inappropriately large given their strategy. Until the returns on their post-bull market investments become credible, for a period of time Insight will need to work harder to raise money which shouldn't surprise anyone (and is a low bar considering how easily they could raise before). They'll be just fine in the end. I would be excited to receive an offer from Insight.
Imo, I don’t think Insight’s going bust anytime soon …. So if you are a junior with offer from Insight, take it , expect no bonus and leverage it to something else.. if you have choices obviously go to a better place eg. vista or TA etc
Agree with this, made the same point in an exceptionally long-winded way in my reply to a previous comment...
Morale is low at the firm with layoffs happening
source?
also any information on layoffs?
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