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!
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
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!
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.
Why put "growth equity" into unprofitable software companies when you can put growth equity into your walk with Allah?