I am pretty far in the process with two newly formed PE funds that have around $400MM. One is a completely new fund and the other is part of a larger fund that has $1.5BB (they just raised $400MM, but have been around for 15-20 years). At both places the partners have prior VC/PE experience at large funds.
So far I'm impressed with the energy and drive that these guys have displayed, but I want to know the pitfalls of joining a new fund?
I understand that the process might not be as structured and that I'd need to take on a broader set of responsibilities, which is fine with me, but how might that negatively impact my experience over the next 2-4 years?
I'm attracted to these places because of the flat structure, oppt'y to drive the process and actually interact/learn from the partners.
Any substantive input is appreciated.
I am in a very similar position as I joined a small PE fund that was a consortium partner with one of the major PE firms on the West Coast. I have been in my current analyst role for about 1.5 years and have learned a great deal about every aspect of business. One of the benefits of being in a small firm is that everyone is involved in the deal process from the time you sign off on CA's and receive OM's to data site review, due diligence, management presentations, financing, modeling, to receiving your deal block (grave stone).
One of the dangers for your (that does not necessarily apply to me as I plan on b-school matriculation in 08') is that as the market becomes more volatile and cheap debt dries up the smaller firms will be hard pressed to compete. Nevertheless, a middle market PE firm will broaden your contact base, sharpen your modeling/deal making skills, and teach you why being on the sell-side is miserable.
I joined a small start-up fund 1.5 years ago and we're currently raising another fund. Here's my experience:
Pros: not a sweatshop, involved in every aspect of the deal and investment process, work closely w/ all senior people on everything, flat hierarchy, entrepreneurial
Cons: compensation, things get stalled and you are sometimes very "not busy" (can be a pro too depending), less deal-flow, sometimes doing start-up administrative type tasks, growing pains
There are definitely pitfalls to joining a new fund vs. an established one. No track record equals riskier for reputation/resume purposes. You'll have to be more patient w/ comp, realizing carry will take a while. On the other hand, you might get more equity, and that at an earlier stage of your career.
Feel free to PM me if you want more info.
Many thanks for the offer. I'll ping you later this week as I get closer to the finish.
Joining Startup MM PE Shop (Originally Posted: 03/25/2013)
Anyone have any thoughts on joining a new startup PE shop? It just got funded from a reputable capital source (think mid to large pension fund) and the partners came from a respected MM shop. Is there something to gain from being employee #3/4 in what they hope to build into a 15-20 person shop in a year or two? I think it could be fun to be apart of building something from the ground up and get see the entrepreneurial side of things. Any personal experiences one way or the other?
Sure, you have more upward mobility than most shops. Definitely expect an uphill battle though. Way too many MM PE firms right now for current deal flow levels.
Where are you located? The deal flows in Asia is fantastic for MM PE right now, growth equity level specifically.
I think it really depends on your Managing Partner/MD/whoever runs the show and how much does he value you. I have seen a case where an associate joins a start-up fund (handling both analyst and associate level work) and new experienced hires stream in, taking up the more senior positions.
Can you elaborate on this a bit? I thought that things in Asia were slowing down? I have no idea from a PE perspective, though.
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