BB ER -> VC -> Micro-PE: Q&A. Happy to try and answer questions regarding creating narratives around alternative career paths, transferable skills in ER, breaking into VC.
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What was the process like making the jump to VC? Did you attend business school and use the available network to your advantage, or did you not go to business school and hustle a little more to make your way in?
The latter. Although i considered attending B-school, which is definitely a good option. I put more elbow-grease in setting a quota for myself in sending out emails and reaching out to people in my peripheral network every week. There were obviously a plethora of "this will never work / go to b-school" but I found an interesting opportunity with perseverance and good timing. Additionally, I really do believe that the valuation skills that you learn in ER are a great preparation for a VC analyst position.
That's awesome to hear, congrats on the success after the hard work. I hope to do the same post graduation.
Thanks for doing this ! What constitutes a Micro PE firm? What types of deals are you doing, size, industry, business type etc. Thanks in advance!
I see anything from $1mm to $50mm in EBITDA as a Micro-PE target; however I would imagine that's subjective and can differ from firm to firm. Usually staying away from innovative technology or life-science businesses. The usual suspects in terms of industry - service businesses, manufacturing, financial services, distribution.
What is "micro" about the PE firm that you work for? It's not a common term, hence the question above.
Are you guys busy lately? I actually cover micro-mid cap, seem to be seeing more interest from PE lately.
Interesting. Nothing out of the ordinary on our end.
PM'd you
Did you cover tech while in ER? How were you able to convince your PE firm that you had the appropriate transaction experience to do your job well?
I covered Small-Mid Cap Biotech. When covering the newly IPO'ed companies you really build an investment thesis from the ground up and need to understand valuation (although it's always abstract). Once you can build merger models, DCF and find time to take a course or two on LBO models you definitely have a shot at smaller shops - it's all about finding someone that is willing to take a chance on you. Its not the usual path, agreed.
What about your VC experience made you want to do PE? How'd you pitch yourself as a PE professional coming from VC? Were these opportunities gotten through networking/recruiting? How was that experience?
bump
Thanks for doing this! Did you go into ER with the goal of breaking into the buyside, and you saw ER as a great way to get there either for recruiting, skillsets built, or both? Or did you love ER and saw it potentially as a longer term career/goal of something other than the buyside?
Thanks for hosting. Similar to others i'm curious if you could share more color about your transition from ER to VC. How did those conversations go and how did you convince a VC that you were a fit with a public equities background? Once you made the shift, how different was the lifestyle?
Is there a strategic edge in an industry or sub industry you invest in or is your main focus “strong cash flow generating asset-light scalable service businesses resistant to economic downturns with recurring revenue"?
Holy fuck. Saved lol
Good question tbh. I think there’s a slight edge in strategy thinking about add on acquisitions etc and in control investments there’s definitely capacity there. At the end of the day though this space of “1-50MM” can range from no CFO to needing a VP of Sales, etc. and simple things like that but holds the same investment deterrent like a restructuring or turnaround where there is naturally less people who invest because of ‘process’ and that just opens up margins for those in the space. Thoughts?
sounds like the move is to start a firm targeting weak cash flow generating asset heavy non scalable businssess non resistant to economic downturns with non recurring revenue
Specific question, but what do you think about Riverside MicroCap? Have you heard of it? Recently got knowledge of it (and just general microcap PE space) and am starting to think there’s actually a really great opportunity in the space even through recessions (because investments still 4-10x in the years after). Would love to know your thoughts.
Also is being in Micro PE only good at VP+ with the compensations structures generally?
Are you a search fund? Never heard of micro-PE before. This is a first
What's a LP base typically look like for a Micro-PE fund?
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