Start up PE

Not me but seeing this scenario playout half a dozen times at the Associate/VP level, I would not want to join a debut fund until I was at least a director level.

The ideal scenario is to join a debut fund, quickly ascend the ranks, and secure substantial carry economics, especially considering your role as one of the founding IPs of the fund (loyalty should be rewarded right?). Unfortunately, the reality is generally the opposite such as subpar cash compensation, and political dynamics like new hiring of directors and MDs (from established UMM/MF), which can affect your promotion opportunities, and the performance of the fund itself.

8/10 times it will be better to stay at an established MM shop (and of course, UMM/MF will be better) for career earnings potential before making that jump at a much more senior level

The other take is that people can rarely scale appropriately as the business scales.

Running a company with say, $10m in revenue, is very different and requires different people than a company with $100m of revenue.

Very interesting... surprised they could only raise $50m

finstreet2658

Know someone, who was a Director level at a MM firm, follow his group’s MD to start a new credit shop. The guy who was a Director is a Partner in the new firm. They are raising their debut fund right now and said it’s been really difficult to fundraise, even for credit, because they are a new fund. They were fundraising for about 9 months before they got a $50M commitment from a pension fund.

As someone on the LP side I think it's highly underdiscussed how bad a lot of GPs are at fundraising if they've never really done it before. Many come from larger shops who have IR people and maybe they tag along to some meetings but aren't scouring the earth for LPs. The result is many new funds grab placement agents who are all over the map in terms of quality, especially on the small end. If a first/early fund is wise enough to have an IR person (or at least someone who has some background in truly fundraising even if they're in an investor role technically) it makes me think they know how to run their business and the IPs can spend all of their time doing what they do best (investing). While they may have to lob some carry to this person it can be peanuts in the grand scheme of things if they can truly help you scale/raise.

When you say only just getting market comp is this just salary and bonus or including carry? Would've assumed joining a first time fund higher carry would be incentive?

Pretty much exactly same trajectory for me. Then I left as we really started to struggle with fundraise. Not sure if I would do it again given how intense it was vs. total comp. The uncertainty was also crushing e.g. during covid, but boy do you learn and do a ton of deals. Did +10 investments in 4 years while my more sensible MF peers did 1-2 and also got full LP exposure from day 1. Would know how to start my own fund from scratch now. Experience-wise A++, Stress/Comp-wise C-