On the Matter of Foundation of a Growth/Private Equity Fund - Question of the Development
I wrote the first part of this as a response to another question but it got so long I expanded into its own post.
I detail here a question I have in regards to an overall idea of mine, pertaining to the establishment of my own growth/private equity fund in the future. It is quite long, so I put the question just below in bold and also again at the end. This is a matter that has been with me for years now, so I am interested to see what insights others can lend upon it.
Initial Question and Context
By my nature I am most inclined to aspects of deal sourcing/sales heavy roles, as my strengths lie in effective communication and an audaciousness of ambition that is almost blind to the negative consequences of rejection. For many reasons (of specifics that don't matter in this discussion) I am unswervingly obsessed with a more entrepreneurial pathway for my career - I am resolute to establish my own firm/fund as soon as possible. Of growth equity, this has reaffirmed that this is the correct pathway given the speed of which is far more congruent to my skills, capabilities and inclinations.
I have heavy ties to a specific emerging market through my family, which I intend to move back to after finishing college and a few years of work to save money required. I am in contact with a growth equity firm in the region for these very reasons, though being abroad I have not the money to return for the internship yet. It is here where I wish to begin my own firm one day, ideally within the next ten years. I am currently 19.
Given the context of this ambition, is there a specific way one can engage within this field of growth equity within the concerns of deal sourcing, investor relations, sales etc. for the express purpose of the amalgamation of a skillset requisite for the establishment of a growth equity firm?
On the Matter of the Foundation of a Private Equity/Growth Equity Fund
Obviously the lifeblood of any PE/GE/VC firm lays in the deal flow, no matter how good one is at modelling it matters not if there is nothing to model, therefore I assume this task as my primary one as the founder and the means by which I must exemplify my competitive advantages over others.
My intention is to operate within these emerging markets where growth equity is essentially non-existent, including markets further afield such as Central Africa. I therefore find the presented opportunities - those most commonly espoused on this website as ideal and “prestigious” etc. - to be utterly unappealing as the deal reps experienced are within the context of particular job functions, incongruent with that which is required to run a firm - my ultimate goal. There’s a reason they say junior IB and PE is a completely different job to senior IB and PE. I genuinely respect all of you in the financial fields, I know I could not do what many of you go through with recruitment, SA, internships and the hell of 80 hour weeks. Like college, I would just get distracted and work on my own thing. And unfortunately I will not be good enough to bullshit my way through those junior years like I can through college. I know myself, and literally years of lurking around here has taught me enough to know that “the right path” is just not the right path for me.
Note - I’m not trying to skip the “hard work”, I want to work even harder, I am just trying to make sure it will take me in the right direction. I’m only 19, incredibly ambitious and laser-focused on my vision for this world, I am compelled by the zealous compunction of my dreams to ensure I am making the fastest progress towards this ambition. I genuinely start to lose my mind if I am not working fanatically to this end, hence why I am writing so much now on it. I am seriously trying to gain all possible knowledge to ensure that the most expeditious and prudent use of my future is to this end. It could be said such work in the junior roles is a necessary evil to the attainment of such a position whereby I may be qualified to spin off my firm, that I need pedigree, YOE, deal experience (which I do, but not the sort you gain in most sectors of the industry on a specialized aspect of the deal. I want to be across all aspects, and jump around like an owner , ADHD goblin to gain a broad understanding to supplement and inform my genuine competitive advantages running the firm and outsource the rest) etc.
Now to this, I state the following.
Aspects such as years of experience - whilst vital in some respects - I understand to be essentially a proxy for capabilities in the eyes of LP's and investors in order to garner funding and investment. Given that in its purest (and deeply simplified) form all a PE firm is is the collection of investment capital and its execution of sourced investments - all else falls secondary to this skillset; persuasion to attract capital and the sourcing of deals with all this entails is primary before matters of execution. Alas, both college and "the path", presented skillsets following conclusion of college that are vital to destinations other than that I ceaselessly spurn for.
I believe these matters commonly stated as barriers to foundations of firms (YOE, pedigree, deal experience) to be no more vital than truth is in a discussion and debate, but a tool to convince the audience of the merits of the idea. A metric of due diligence for investors in an oversaturated market. A differentiating factor (even then barely) in today’s market overloaded with too many funds with too little differentiating them from too many competitors, passing around the same overinflated assets in a bubble economy of growth predicated not on genuine value creation but on debt and faith, almost an element of FOMO. Here, if you just start another fund in NYC or LA or wherever, you shall run into deep difficulties in capital attraction and deal inflow without such requirements as the competition is just too great, and the capital pools - exacerbated by the denominator effect and an overall struggling economy with high interest rates making debt more expensive etc. as well as the oversupply of PE/GE firms seeking to invest (leading to higher multiples of purchase, overpaying in bidding wars just to engage capital and resultant unfeasible pressure to perform upon the company in recompense for poor investment decisions) - are too hesitant otherwise no matter the opportunity. Debt is the main propellant of returns here, rather than growth. This is an expansion opportunity. Going somewhere where growth can once again be the catalyst for returns and valuations due to lack of ridiculous competition, this is a very promising source of opportunities.
Idiosyncratic Observations Pertaining to my Reasonings - Overdeveloped vs Underdeveloped Markets
So as stated, I go further afield. An analogy that could be used is Europe of the 15th-17th centuries. Europe is parcelled, established ruling families duke it out over the old world in royal intrigues, overt and covert warfare, few are players and most are pawns, but none are any others. There is an increasing stratification in society (and today in the financial world) where those on top have ever greater control on the way “things are” and newcomers like me - a reckless, audacious, ambitious, fly-by-night dreamer - have no place to upset the order, or even to try to. This is not the dark ages or early middle ages, where much was still wild and uncertain, and power and rule was much less certain. Anything could happen back then, less so now.
I am as the younger son of minor nobility, there is no real place for me in this landscape. Great dreams are meaningless without the arena to fight for them. The market is overdeveloped, the big corporations have a stranglehold over the dynamics of business, creation and entrepreneurship. Beyond that even, tempers are cooled and conservative, and no one wants to facilitate the risk that I would entail. Not here. And this is understandable in many respects. Given the state of maturity of Western markets, the factors that determine success here are completely different than abroad.
This is not the dark ages of the 80s, when PE wasn’t even called PE yet, when cowboys innovated a brand new frontier of finance and made fortunes. Since those early days of wall street, finance and private equity, the market has changed so fundamentally and dramatically it is bizarre. Steve Schwarzmann said himself of Blackrock, “my own firm probably wouldn’t hire me today”.
(funnily enough for many of the same reasons they would never hire me, grades included). These early types of pioneers - who I would count myself one of given the striking similarities I read in their stories and my own inclinations and tendencies of my personality - have been outgrown by their companies. Now you get these companies ingeniously tapping into the cream of the academic crop through the systems they have put in place as the titans of industry: https://www.vox.com/2014/5/15/5720596/how-wall-street-recruits-so-many-insecure-ivy-league-grads. If you can’t beat them, join them.
So what did the predecessors of my kind do? They went forth to adventure in pioneering new frontiers. Hernan Cortez, virtually all the conquistadors (especially from Extremadura), crusaders, Normans, adventurers, Christopher Columbus, even the Vikings and many countless others, they all went off to new frontiers instead. Often younger sons would go either into the clergy or the military as their lives were seen as less pressing to the continuation of the household. Many died, ships sunk with all aboard never to be seen again on passage to the East Indies. Fortunes and lives were lost in the early days of the great East India Companies. But then, many were also made. Essentially, the die was cast, the stage was set, the old world was established. Either you had a place in it or you did not, and if you did not it was almost impossible to climb higher. This is what we are seeing today, and I refuse to accept it.
The Value Proposition and Purpose of my Fund
My value proposition is in essence my shouldering of all risk involved in the exploration of these markets, identifying promising deals and opportunities and on a deal by deal basis and utilizing networks, connections and my my natural intensity of convictions in my ambitions to acquire the funds to invest in these businesses in countries with an enormous nascent but also latent economic potential. I want to formulate an overall portfolio I can leverage against that can sort of function as a consortium to further accelerate growth and exponentially expand into other businesses across a range of fields such as agriculture, construction, resources, utilities or other highly inherently valuable output businesses. This is where I would surmount the issue of undeveloped capital markets, and genuinely begin to develop them myself. I’d rather be an industrialist than a tech investor. Thankfully, that’s where the opportunities are in this world. There is also high levels of corruption, violence and unpredictability; there is a high likelihood I don’t just fail but get killed. But this is reasonable to me given the potential returns in discussion. I also don’t see any other pathway I’d rather do in life at all. I’d rather try this than work all my life in a prestigious company - even if doing so would guarantee me being a partner in some MF in 20 years. I have no interest in that.
The best part is no one invests here so there is no competition (certainly not in the market scale I’ll be, with ultra-LMM investments in the most dangerous parts of the third world hardly ). The worst part is no one invests here so exit opportunities may be hard to come by initially, but I am incredibly capable in persuasion and ultra-intrepid in finding pathways. It is also highly risky, hence why no one invests here. But that risk is appealing to me, the thrill of losing it all is worryingly attractive to me. I crave such risk, it is romantic.
I also have my own theoretical conceptions of financial plays I’d be eager to undertake. Highly risky strategies that really would only work in the untapped environments abroad with less developed capital markets. I don’t really want to get into them too much here, and frankly it doesn’t matter, but what does is that my mind seems more conducive to the chaos present abroad - and the risk of getting killed there exhilarates me almost as much as the potential financial upside.
Conclusion and Final Question
I am beyond certain I am capable of this, I just need to source such connections and idiosyncratic skillsets through a few years of bespoke experience within deal sourcing growth equity in such markets. I am fixated on this pathway, though I need more information on how such skills can be sought (e.g. what sorts of firms to look for, what sorts of roles and experiences specifically I need to get the skills that cannot be outsourced, places that give the opportunity to come across potential network connections etc.).
I could write so much more but it has already been too long. I feel looking back I didn't even add enough information, such are these dreams an all-pervasive torrential monsoon in my mind I can ramble endlessly. The burden of their manifestation possesses me beyond all recourse.
It goes without saying there is far more to my overall plan and conceived-of means towards its manifestation, but this is already too long so I will end it here. I will obviously move to this region as soon as I can afford it and am ready to begin my journey, until then I continue my plannings, studying and saving. Have anyone insight upon my earlier question, or any other comments, I await your responses eagerly.
TLDR; Given the context of this ambition, is there a specific way one can engage within this field of growth equity within the field of deal sourcing, investor relations, sales etc. for the express purpose of the amalgamation of a skillset requisite for the establishment of a growth equity firm?
