Clarity on the Growth Equity Landscape
Hey monkeys, seems to be a severe lack of talk about growth equity on this forum. Was wondering if yall could shed some light on the growth equity landscape (ie. what are the top firms? how are traditional PE firms growth arms viewed in comparison? how many spots do these groups take? do they have analyst spots or only associate? do people commonly transition from IB into GE? PE into GE? if so what groups in IB/PE are good for doing so? what headhunters do these firms use? average comp compared to IB/PE? what is work like at analyst level? what is work like at associate level?)
I've never seen a complete list of firms to research - have only loosely heard of firms like General Atlantic, Insight Partners, CapitalG, ICONIQ which do pure growth and have heard that TPG, KKR, BX, etc. have growth arms but don't know much about them - so any more clarity on the industry and how to break in would be much appreciated.
Hope everyone is staying healthy out there!
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bruh it's been 44 minutes
There are really two types of growth equity firms. The classic growth equity firm (TA, Summit, etc) likes to buy secondary in growing, profitable companies. The late stage VC version (Iconiq, Sequoia, etc) provides mostly primary capital to high growth mainly tech businesses that are unprofitable but have product-market fit. I think a lot of people don’t understand the difference between the two. Of course the line has blurred a lot.
Major GE firms: the largest and most established -TA: pioneered growth equity and has $8.5b fund now. Really strong performance but they are basically a PE fund and call themselves that (check their website) -GA: another pioneer, massive AUM now and very well regarded and global. They do everything from PE to classic late stage VC. They chase some brand names and pay stupid prices sometimes -Summit: $5b fund and like TA performance has been excellent. They also do a range of deals from straight PE to late stage VC (this is rare) -Insight: $9.5b fund now and they are amazing software investors. I expect a lot of their new fund will be in large scale buyouts even though they still do classic VC and growth equity deals. Weird dynamic in that they could have a $15m check and a $500m check out of the same fund -Warburg: do a ton of growth deals out of their fund. Crowd Strike was an amazing deal -Sequoia: I think they have an $8B growth fund now. All late stage VC
Mid Sized: $1-$3b -Spectrum: just raised $1.5b despite coronavirus. Great track record -JMI: another great fund -Providence Strategic Growth: these guys have rocketed in size recently as performance has been great. They basically do software buy+builds -KKR NGT: they have some good names in their portfolio and don’t know how they doing. I’m sure they will continue to grow fund size -TPG Growth: have heard that a lot of their deals come in through the main fund. Performance has been solid and the best reputation among the MF GE arms. Not sure how Bill McGlashan scandal has affected them -AKKR: $2.5b fund. They are classic GE investors focused on profitable businesses based on what I know -Great Hill: $2.5b fund. More on the classic GE side. Do well across consumer, tech and HC -Iconiq: tends more towards late stage VC. Has done very well -Accel: second best VC in the world behind Sequoia. They also do classic GE deals (bootstrapped, profitable businesses) with great success.
A bunch of new funds that have been launched by MFs (apax, permira, Bain, BX coming) that it’s too early to say how they will do. Also didn’t touch on the late stage VC funds (IVP, meritech, Lightspeed, Battery). There are also a ton of smaller funds that are up and coming (Silversmith, Level, Lead Edge, etc). Hope that was helpful and I’m sure I forgot a bunch writing this quickly
Great post, very informative. Thank you very much What are your thoughts on NEA?
They are the largest traditional VC fund which hurts their performance a bit, but they have done well. A cut below Accel/Sequoia/Benchmark and a few others. Believe they are one of the only premier VC funds with an analyst program
Also realized I left out TCV on my first comment. Another excellent growth equity fund. Mainly do late stage VC deals but have done more PE style ones like Sportradar
Thanks for that great info! I've spent some time going through all these companies associates bios - are any likely to hire non MBB consultants? Using your framework: Major GE: no way (summit, nea, insight possible for mbb) Mid-sized: not possible for MF GE arms, what about Providence/JMI/Spectrum/Battery/lead edge/silversmith? Any way you can rank these?
Most firms tend to hire associates from banking or their own analyst programs. I don’t know of any firms that prefer consultants to bankers. I think TA does take a decent number. If you are really interested I would try to network. All these places are sourcing shops are respect perseverance and true interest in the associate role.
Very helpful - would also appreciate any perspective on traditional growth equity firms as listed here vs. hedge funds that do a lot of growth investing (Tiger Global, Dragoneer, etc.). How do the two sets of firms differ in terms of strategy, track record, career prospects, etc.?
Usually those are separate investment vehicles and teams are typically separated so the only difference logistically would be who the parent org is. Kind of like if an MF started a hedge fund business. Would still be a hedge fund just under the MF’s corporate parent.
Are you basing this off of a specific return profile? For a specific fund size? A specific stage? All time periods? Is this from an LP's perspective? Is this just referring to the fund that did FB?
Just wondering what the basis for the statement is as these would be fightin' words in the Valley, especially with Breyer gone
Any thoughts on CapitalG?
this is super helpful, thank you. does anyone here have any intel on Great Hill in terms of culture? doesn't seem to be much recent info on them on this site.
Thanks for the great response. If you have heard of True Wind Capital, could you please share some inputs?
Thank you, do you know how the comp progression and years at each level are?
Traditional PE funds now looking at early stage investing and putting it on balance sheet in absence of institutional pools of capital. I'm working with several.
It's tough to speak about how many spots these groups take without context on the firms. I would say the average is going to be two or four spots on each team but it really depends on how big the fund size is.
As mentioned above, it's tough to say whether they take Analysts/Associates without content. Out of the firms you mentioned, I know General Atlantic and Insight Partners have a formal two year Analyst program for undergraduates to join. ICONIQ is mostly Associate hires from investment banks.
Going from IB to GE is definitely the normal path. I would say the most common paths are going to be either doing a couple years in investment banking and joining a growth fund or joining a venture/growth fund after undergrad and then pivoting. The latter is tougher to do because it is easier to get into a bank out of undergrad.
PE to GE is somewhat unconventional but could be done if your story checks out. Both are investing but the way you seek to add value to the companies you invest in are going to be different. Also, the types of companies you look at are going to be very different. I don't think it's impossible to transition but you will have to create a more compelling story versus somebody who just joined an IB Analyst program to get skills or somebody who has direct experience as an Analyst in the industry already.
Best groups for IB to break into growth equity are going to be TMT and sometimes Consumer.
Top headhunter is probably Glocap. Although some funds use different ones every year.
Analyst/Associate level work will vary by fund. Typically, Analysts are mostly sourcing and researching. Associates do the same but more due diligence is involved and modeling if there is anything to model.
Insight has a very good program - have a friend there who loves it. Would add Warburg and KKR both recruit analysts for what are growth equity - Warburg for their TMT group in the core fund (did Crowdstrike as mentioned above), and KKR for NGT (more questionable but need some time to see how this performs).
How much sourcing is Warburg TMT? Have heard KKR NGT is a brutal 100% sourcing shop, wondering if WP gets to work on deals
Appreciate the post. What is the value add “model” under growth equity like vs. traditional LBO? This question has been answered before on the forum but it’s always interesting to get other people’s takes.
There are definitely a range of answers going all the way from providing connections, trade show opportunities, sub-sector expertise (cloud infrastructure, etc..) to deploying in-house AI and ML experts to augment revenue and scale KPIs and business metrics. Check out this thesis-driven GE firm called Georgian Partners (investors in Shopify, TopHat, Ritual, etc..) that focuses on providing their deep tech expertise (in-house researchers) as a value-add strategy. Their website resources are also very interesting in case you're interested in learning more about the SaaS industry, the same can be said for Updata Partners that shares resources (even a SaaS metrics excel template) on their website. https://georgianpartners.com/ https://updata.com/
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Hi, Does anyone have a list of Growth Equity investors or new funds focusing on deals in Europe? Alternatively, can recommend any newsletters or news sources to follow latest info re Growth Equity in Europe/US/Asia?
Thank you!
Also curious about GE in Europe.
As an aside to anyone who knows about the space, currently an undergrad at target in the US but am considering to move to Europe after - ideally working in PE/GE. Any idea of any firms that would even consider giving me a look, despite my not being fluent in any local languages (tiny bit of Spanish). Really appreciate it!
What are some good resources for an undergrad to read to keep up with the GE space? Im at a target school for banking/consulting but not a place like penn or princeton that firms like GA use to fill their analyst programs. are the analyst programs at top GE firms (TCV, TA, GA) totally closed off to people not at wharton and the likes or do you think its realistic for someone with the right resume from a school that hasn't traditionally placed anybody in these analyst programs to make it? If GE is my long term goal, is banking or consulting better for after undergrad? How important is your group (TMT, consumer, healthcare vs industrials etc) if you are coming from IB?
same boat here, interested in how to get into the process
Current intern at one of the major growth firms previously mentioned.
Resources would be a mix of financial and tech; treat it like you're learning about vc. There's a ton of stuff out there like Techcrunch, newsletters (axios pro rata, stratechery, VentureBeat, pitchbook, etc), podcasts (20 minute vc, a16z, etc), books (venture deals, The business of vc). Currently working with people from schools far from being considered a target. So yes, the right resume can do it. But more importantly, growth/vc highly value persistence so try to network as much as you can. Looking at the people on my team and firm in general, I would say banking looks like a better bet to break into growth later on as the skills translate a little bit better than consulting. TMT seems to be the way to go, at least from the bankers I have met who made the transition, as it aligns much more closely with growth and I imagine it makes answering interview questions about your interest in tech somewhat easier (consumer and healthcare for some firms too). But like I said previously, persistence/networking carry a lot of weight in this space.
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Excellent Thread Thanks
how should one best prepare for GE interviews?
Also wondering! Also how do interviews differ across firms with more established analyst programs vs. smaller firms?
anybody know what insight interviews are like?
Would anyone possibly have insight as to the compensation in top GE vs PE (UMM/MF)?
Alternatively, would it be possible if someone could give some color on exit opportunities (MBA programs) in GE vs PE? Thanks!
Do people have any thoughts on the new funds that have been launched by MFs (apax, permira, Bain, BX)? How are they seen? Obviously new but thinking in terms of exit opps, reputation, day to day life etc
Why put "growth equity" into unprofitable software companies when you can put growth equity into your walk with Allah?
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Any idea on pay and promotion time frames for the growth shops mentioned above? Is it similar to PE?
Saving for great GE information
Wondering people’s thoughts on the “growth equity” late-stage, pre-IPO investing arms of the larger AMs like Wellington and T Rowe?
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What are some roles that would allow for an easier transition into a Growth Equity Analyst role? If in IB, what product/coverage groups are better to be in to move into GE? Also which skills are top for being a GE Analyst?
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