Leaving Investment Sales for Small/New RE fund - sound worth it?
WSO,
I have a pretty cushy analyst job on a decent investment sales team, working about 40-50 hours per week with a nice boss and making about $100k a few years into my analyst stint. I do not see myself staying in IS long term since I don’t want to be a broker, so I am at the point now where I am networking with clients to try and jump to the principal side.
I always assumed I would transition to a large firm and be an analyst on a large team and start from the bottom, which is totally fine with me as long as the learning experience and compensation are solid. However, I actually have an opportunity to join a new and young firm that just finished raising a pretty small fund (~$300mm). I would be in an aquisitions/asset management role and immediately in a Senior Associate/VP level position on a 4 person investment team (CIO, 2 directors, myself) and get a share of promote and be able to co-invest.
I am very intrigued by this opportunity as its seems like an exciting way to jump start my career but also pretty risky since its the first fund they've raised and the AUM isn't that high. The people seem nice and I'm sure we would all get along well working together. Any advice? Sounds like a good move or should I stick with more established "brand name" firms while gaining experience? Anything I should make sure I find out from them before accepting an offer?
Similar discussions live on this forum somewhere, but can't stress the importance of the team's exp enough. If the team is smart and top notch then the opp becomes that much more intriguing. It's also worth considering where we are in the cycle... A closed end fund with a non-flexible structure could end up being a burden. Investigate the details of the funds structure and the partners' track records.
On the surface it sounds like a good opportunity though
I wouldn't be afraid to ask them for intimate details about the firm. Not inappropriate to ask about fund size, who the LPs are, fund structure & terms (as someone mentioned above), founders track record etc. Not saying you need to share all or any of that with us, but they should understand that it's a little different that getting an offer from Starwood where all of that goes without asking. You're going to want to make sure that your investment philosophy lines up with theirs and that you believe in their thesis. You are taking a risk too, and your comp, reputation, career prospects, are going to be linked with theirs so you will want to know what you are getting in to. If you don't know the founders well, talk to other brokers in your network to get their take - if they are trying to do deals in your region or asset class, people should know them.
Generally, it's not easy to raise a first time fund, so unless half of the equity is committed by a family office that shares the principal's last name, the fact that they have raised 8-9 figures of discretionary capital is a good sign. Could be a great opportunity to get depth and breadth of experience that you wouldn't be able to in a silo at a big fund. As far as "point in the cycle," I'd caution against waiting for the right moment to make a move from a macro perspective As long as they are prudent with risk and you believe in the thesis the rest is just guess work. (Would brokerage be a much better place in a downturn?)
Just that your work on the GP side is going to be a lot deeper (especially from an asset management perspective, which you said this role will include). That could mean that you are meeting with brokers & tenants to lease-up your projects or architects, contractors, etc to design and build it. Not that you wouldn't be involved in leasing or redevelopment from the LP side, but your level of involvement would be a step back.
From the acquisitions side - deal structure is going to be important. As an LP you are going to have a bucket of money (or a few buckets at a big shop) that has specific risk, return and timing requirements and you are going to look for deals that fit those requirements. As a GP you might look at a variety of deals and you will need to understand your various LPs programs so you can structure the deals to fit with one or more of them. Partnership is going to be a little more nuanced, but essentially, you will have to sell them on the deal, rather than having a GP selling you on the deal.