Moving from co investing to direct PE?
Is it possible to move from a co-investing firm to a direct (traditional) PE firm?
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Possible? Yes. Likely? No. In this market in particular? No chance. Too many good candidates that have traveled the "correct" path, so unless you have a unique personal angle you networked for or it's a startup fund looking for cheap talent w/ nontraditional background there's almost no shot.
In your opinion, is it worth taking a role like this? As a stepping stone to moving into a large-cap PE fund further down the line.
I would evaluate the opportunity on its own. The likelihood you are able to move from a no name startup fund with a non traditional background to a large cap fund are essentially zero.
No, because it's not a stepping stone (that's frankly a terrible way to think about it) and you more than likely will never have the opportunity to make such a move so you either stay and scale with that startup fund or leave PE entirely. The odds that you move upmarket in general are low e.g. from LMM -> MM -> UMM. The odds of moving from a small startup to large cap PE (UMM/MF) might as well be 0. You have to just think about it from their perspective - they'll get 100s of applications every cycle from top banking groups, MBAs w/ pre-MBA PE experience from top MM/UMM/MF funds, etc. and have their pick of the litter. Why would you matter? There are little to no transferrable skills from doing smaller to much larger deals when we're talking $10m-100m to $1b+ EV size, so there's not added benefit to considering you for the role vs just keeping to the tried and true on cycle pipelines. The fact that you aren't coming from those top banking groups or UMM/MF PE already to them signals you're subpar talent-wise - not always true in practice, but they're dealing with so many applicants they have to draw a line in the sand somewhere to make a judgement call.
Not sure if this is true, I've seen VPs/Principals at the largest active SWFs move from direct to SWF back to direct. Generally pretty pedigreed backgrounds though.
But coinvest has a pretty broad meaning to be fair. I've never seen anyone who does any fund investing, or who hasn't done pure PE at some point, move to direct investing.
It is 100% true. The largest most active SWFs are themselves an outlier and you even said yourself those folks moved as VP/Principal from direct to SWF back to direct, so they're not making just the singular move from co-investing to direct and already had experience in the latter. Not to mention many of those big SWFs also have their own direct investing arms so even if they were doing mostly co-investing there, odds are they were also getting to do some direct deal reps as well.
Agreed on your last point. Never seen anyone make the move unless they had prior direct experience.
Curious if the same logic here applies to Canadian pensions. I'm assuming you could do OTPP to direct, but could you do something like PSP/BCI to direct PE?
I've seen a few people move from co-invests to directs. Certainly the exception and not the norm (although part of it is self selection), and seems to be more common when the move happens earlier in somebody's career.
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