What is the state of growth equity / crossover funds?
Would love to hear from current members of the growth / crossover community on the state of their funds, capital deployment, if places are still hiring, etc
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Thanks in advance - trying to get a pulse on whats going on given market downturn
Bump
If you were truly doing classic growth equity deals (control or large minority positions in sustainable, proven businesses), you shouldn't really be underwater right now. Maybe your time horizon got extended a bit, but your fund definitely isn't going to blow up.
If you were late-stage venture and paying 100x ARR for bullshit companies, your hair is probably on fire and you are drowning in red ink. Tiger was at one point so far in the hole that they needed assets to appreciate 3-4x from current marks before they even cleared the fund's hurdle rate.
In both cases, deployment paces and hiring have materially slowed since 2021. I think a lot of the venture tourists that you saw, inclusive of crossover funds, will probably retreat a bit from this space after getting bitten like this (and thank goodness for that)
How do you think insight is doing?
They're in a weird spot because they don't really do the classic growth equity deals any more (even though they basically invented the category)... just doing a mix of seed/early deals and giant buyouts. I expect the former are disastrously bad right now. Aware of multiple instances where they invested >$50M in $1M ARR businesses. The buyouts are probably doing okay, so it's really dependent on what the ratio is within the fund.
Insight is underwater right now and are raising an extension on the fund so they can try to make some better investments and gamble that that will help them hit the current fund’s hurdle. Otherwise no carry on this one likely. Just gossip I’ve heard.
So crazy how fast sentiment changes around firms. Just a year ago, we saw so many posts of everyone wanting to work at Insight and I’m not sure if it’s still the same given tech valuations
Curious if crossover strategies at hedge fund will now retreat in favor of public markets. Likewise if late stage venture to no longer be a favored asset class
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