Up and Coming Funds
What are some funds that are fairly new (semi-recent first or recent second fund) with reputable partners and clear room to grow? For example, Nonantum Capital in Boston is a bunch of former Charlesbank and raised a ~$450MM first fund.
I forget the name but a former Senior MD at CD&R split off and raised a $900mm first time technology fund (don't think it's announced yet but if I remember the name I'll post it so you can see search for the form D)
+SB, please do post the name if you figure it out, would love to look into them
Think it’s called Recognize Partners
Good thread, will be excited to see what names we come up with. Just want to point out for any future monkeys Nonantum is mostly former Charlesbank. I actually don't see any former Berkshire guys on the team page. Agreed it's a up-and-comer though
Stupid mistake on my end, just updated that to avoid any confusion
Interested also
Some interesting earlyish funds in my opinion:
- Arcline
- Stellex
- Cove Hill
- Baypine
- Cornell I think is on fund II or III
- Gamut
- Searchlight
- BGH in Aus
Can you say more? What do you find interesting about each fund?
All of these funds are spinouts from good platforms that spun out without fully intact teams. Faster advancement with assumed good deal sourcing.
While some (Cornell Capital) are pretty institutionalized since they have been around 7 years, most you would have the ability to grow with the firm, to make it to the next step rather than being pushed out after your two year associate stint.
You want to be on the ground floor of say the next Clearlake, because you are then the mid-late 30s partner who has 4-6% of the total carry pool of say a 10b fund. (2x return payout is 80m - 120m). You aren't really getting those shots on goal at institutionalized platforms.
Interested to hear your thoughts on BGH
Interesting - BGH is already the biggest buyout fund in Australia. Founders are Robin Bishop (was next in line CEO of Macquarie but left prior to Shemara taking the role), Ben Gray (ex co-head of Asia for TPG), and Simon Harle (ex TPG).
Gamut is definitely interesting. Ex-APO senior guys who are employing similar strategy to lower/middle-market situations. Recently expanded office size too from what I heard from someone there at end 2019/beginning 2020 to accommodate increased headcount.
Also 1bn premier fund (2017 I believe) which they've had a lot of traction in deploying in last two years. Seems like they had a slower start but are offsetting that
On the MM/LMM tech side:
Great list - avenue is targeting $75M
Avenue looks more like a VC firm as opposed to MM/LM, based on the backgrounds of the founding team.
+1 on Cove Hill
What's special about Cove Hill?
++1 for Cove Hill and they are currently hiring interns for summer ‘21
Abc
On the infra side Glenfarne is making waves, ex-MIRA guys with top tier blue-chip backing (Apollo, Partners). Wouldn't be surprised to see them raise a $1bn+ Fund I soon.
SER Capital Partners is another new infra/cleantech fund. ECP spin out. Not sure how much they have raised, but HH reached out so they are hiring associates.
Looks like they have made some battery investments. News — SER Capital Partners.
CSC Generation puts associates into C-level positions at companies like Z-Gallerie and DirectBuy. I haven't seen anywhere else with more very very clear opportunity. They've grown ridiculously fast too.
Founder has a top-tier watch collection as well.
Isn't that your thing? It's not really a fund though is it?
No I have no relation to them and they do have a fund.
Following
Hunter Point Capital
Great leaders at the helm but very new. Have yet to raise a fund.
Diversis fund is performing well and they have some ex-Gores at the helm
The firm mentioned in the very first comment is Recognize. In addition to David Wasserman, the guy you mentioned from CD&R, the other two are Frank D’ Souza (co-founded Cognizant) and Josh Miller (co-founded Atomic, the incubator that now has a fund attached and launched companies like Hims/Hers).
Agree with several other mentions.
Stellex is deep value, operationally-intensive turnaround stuff. Distressed-for-control is not for the faint of heart. Ray is one of the few senior Black people in this business and you love to see how well he's grown the firm. They raised $870m in a one-and-done close on a $750m target for Fund I, and a touch over three years later raised Fund II at $1.775b on $1.25b target.
Arcline, Gamut, and Cove Hill are all similar to each other. (a) Small core founding team, usually around a primary personality, (b) background at a large, well-respected platform, (c) significant critical mass in their first fund, (d) attractive pace of deployment to date.
Another one not mentioned is Brightstar. Andrew has a really cool thing with his operational role during his time at Lindsay Goldberg.
"Associate 3" hit the nail on the head with his 1:22 comment. If you can get into one of these places during their first or second fund, you have decent odds at getting a favorable carry position and long-term seat in a firm that raises successive billion/multibillion-dollar funds.
Second BCP. Definitely seem to be doing a good job and have liked their deployments to date in most recent fund and their sector focus
When you say first or second fund, at what level does that have to be? Associate? VP? I wonder if you get in at Associate, you miss the boat.
But probably a higher chance of making VP if you are on ground floor as an associate and being a VP on fund 2 you can still get some juicy base carry economics.
Thanks for the insightful post as always.
In another thread on Greycroft, you mentioned the importance of investing as an apprenticeship, specifically "how to evaluate markets, businesses, and the teams that run them". Was curious if you could provide some more detail or an example of a "good" evaluation vs. an average or generic one, especially in the case of folks who run distress for control strategies.
If you were an analyst currently recruiting, how would you judge this ability from the outside looking in?
Could you elaborate on the Brightstar operational focus and specifically Andrew's role at Lindsay?
Is search light still new/up and coming? Feel like it’s quite mature?
Following
Following..
Following. Not sure how "up and coming" this is but Sidewalk is an interesting name for infra
Newlight Partners, spun out of the Soros family office, seems pretty exciting
I would look at the clients of any top tier PE placement agent or Private Funds Group. They only take on clients who can raise relatively quickly/painlessly, meaning high quality groups that are usually spin-offs with accomplished management teams that are looking to scale to the next level. Ability to raise successive scalable funds is another large criteria for who they take on, meaning that their clients (aka PE managers) are growing in fund size and likely expanding both their investment teams and supporting cast
Examples of those?
The pfg's at banks such as UBS, Credit Suisse, etc tend to focus on the huge multi-b funds, but groups at Lazard, Moelis are probably more in the category I'm talking about. And then of course the good boutique players like Eaton, MVision, Campell Luytens, Park Hill (since bought out by PJT), etc are all solid groups and probably your best bet for finding these kind of funds as their service is a little more bespoke than pure distribution
If you want to dig just google the top PE placement agent lists and then check the clients they announce on their website/linkedin. You can probably find funds they're currently working on (unannounced) by checking linkedin likes and things like that
Very helpful insights thus far, thanks. Any names on the infra side other than Sidewalk?
Interested as well
bump
ARK Invest
ARKK bagholder gang rise up
Durable Capital Partners - legendary team from T.Rowe
Vertica Capital Partners - Insight & Renaissance / Blackstone
would you mind to share more insights regarding vertica?
Equality Asset Management: ex summit managing partner ~$500m
Center Rock: $600M spun out of Wynnchurch
Incline Equity: not new by any means but they are crushing it. Targeted $700 I believe and raised $1.2 for their 5th fund.
Am familiar with Equality, Managing Partner is an absolute beast.
Do you know what's going on there? Heard fundraising stalled and possible rifts at the top, but haven't been able to verify.
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Any info on them? Website is not helpful at all and there is not much info online...
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Could you shed some more light on these guys if you don’t mind? Not really any info out there on them.
yeah - very interested as well. Are they hiring?
Ascend Partners - ex-Warburg Pincus, Healthcare-focused PE
Any insight on how they're performing?
Following
Following
At what point does a firm start getting too institutionalized, diminishing the long-term career upside of joining a new fund? For example, would joining a firm after its third fundraise be too late to get in on good carry and a decent chance of making partner? Of course, it's case-specific - just looking to get some insight
I interviewed at Align Capital Partners in DAL about a year ago and was really impressed. raised $325mm in 2016 for Fund I and $450mm for fund II in 2020, despite no exits from fund I. 3 ex-Riverside guys.
Following
Some other ones that come to mind
- Rubicon Technology Partners (Vista Spinout) - Boulder, CO
- Knox Lane (TPG Spinout) - SF
- Percheron Capital (Golden Gate spinout) - SF
- Emerald Lake Capital (Ares spinout) - LA
Any additional details on Percheron?
Starting there in summer 23. Everyone I met seemed super sharp
In growth equity, Addition
Definitely agree, Lee Fixel is a big hitter
Probably should include Bond as well.
Can anyone speak to performance and reputation of MiddleGround? Only NY PE firm I've ever seen headquartered out of Kentucky. Looks like one of their senior people used to work on Honda's factory floor. Seem unique to say the least.
Team is a spinout from Monomoy who are pretty legit distressed industrial investors. I guess they are a KPS grand-cub as Monomoy spun out of KPS.
They just raised another fund because they deployed a bunch during the pandemic.
Motive Partners - NY-based Fintech focus
Curious to learn more - saw they’re targeting a $2bn fund ii?
bump
On a Euro side, Archimed in HC PE had a pretty aggressive growth from where it actually started.
Some have been mentioned already, but what comes to mind for me:
BayPine (Boston-based, founded by a co-founder of Silver Lake and a Blackstone exec, focused on digitalization and already doing very big deals)
Brightstar (NY-based but offices all over, founded by the exec who built up Lindsay Goldberg, seem very operationally focused. rapidly growing and heard they have crazy returns so far)
Crosspoint (SF-based, cybersecurity experts with significant operating experience and just brought a senior Bain Cap exec over)
Gamut (NY-based, ex-Apollo and KPS people using the same playbook, so I expect them to do well)
Replying to save.
The Chernin Group (TCG) - LA-based, focused on Media
Lead Edge Capital is also doing well (NYC based $3B GE firm).
Already mentioned on this post - CoveHill and Arcline are your best bets. Cove Hill is a Bain spin out with a great team and track record. Arcline is a golden gate spin out with arguably the best track record in middle market private equity. Raised the largest fund 1 for a new fund in a decade and then raised a second 2.75B fund a year and a half later (likely after investing most of fund I). Their portfolio is incredible and they underwrite macro trends before anyone else sees them so have a reputation of paying up for businesses that others discount. We run into them a lot in pretty competitive auction processes, but they convert deals better than most other shops that are 10x larger/older. Think they have an analyst program if I’m remembering correctly. Not sure if Cove Hill still has one, but they used to when just getting started.
Would also add that both are recruiting some of the best junior/mid-level investors I’ve seen in PE. CoveHill’s team has an ex-Bain consulting leaning and all coming from Bains private equity diligence group - solid group in consulting. Arcline’s associates (“underwriting associate” is what they call it, but this is your typical deal-team associate) probably some of the best junior level folks in PE today. Don’t know of Cove Hills recruitment process, but Arcline’s is pretty intense (which probably explains the talent level). Have banking friends that are running sellsides that talk about Arcline’s junior investment team (associates/Senior associates) leading diligence calls with management and that they supposedly ask questions like they’ve spent 20 years in the industry/sector instead of 1 or 2. I get the sense Arcline recruits for very operationally-intense folks with a lot of sector specific knowledge, but they play in a lot of sectors (life science, aero and defense, cap equipment, med device, etc.) so not really sure how they do it.
Would be curious to hear how others think of newer funds’ junior teams. Looking at the junior team of the funds you’re interested in and their career trajectory is probably the best way to get a sense of your potential paths, but still imperfect. I’d try the cold email approach and reach out to associates at these various funds to get in the door - newer/smaller shops are much more likely to respond (speaking from experience at a sub-1B industrials focused shop)
following
This is a quality post, but wondering how you gauge the quality of the junior team for these funds if they haven't been around long enough yet to see exits / career trajectory. It looks to me like the junior team isn't anything majorly impressive (coming from MBB or mid-tier IBs for the most part), so although you have some interesting anecdotes, wondering if that reputation carries across the industry.
Following
Avance (Palladium spin) recently raised the cap for their inaugural fund to $1B. Does anyone know anything about them?
Bumping this thread - any notable funds launch in the past few months?
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