EB to Tech PE / Growth Equity - possible ?
Hi all,
I am at a London EB and looking to exit to Growth Equity.
I am getting some (but not many) interviews from HH and the feedback is generally that there is a good fit but technicals / deal exp could be better. It also seems that some HH eg Kea are not sending me anything at all, others only send me the Tier 2 shops. Maybe I’m going wrong about this and should rely more on networking vs. relying on HH and LinkedIn jobs ?
One of the issues I have is that I don’t come from a top BB with super cool brand name deals nor from a lower midmarket boutique where I would have a high velocity of growth equity deals. I’ve worked on a bunch of deals but a lot of them were quite superficial (mostly project management and comps-based valuation) and/or not in tech (put simply I haven’t built a saas model myself - although I understand the technicals as I’m in a tech team)
People from my class have almost all left but mostly to generalist PE buyout shops or credit funds, we don’t have many tech exits (although 1-2 have done it).
Any advice ?
Ps: I am starting to think about VC as a segway (would actually be totally fine to do series A-B deals, but not seed) but am put off by the pay as the ones I’ve seen were offering sub-100k comp.
PM
It has way more to do with not knowing software than whether you work at an EB versus a BB. The modeling that they'll count on you to do is going to focus on a lot of software-specific KPIs and there's enough tech bankers out there that don't need on-the-job training.
In that sense I don't think going to a VC fund would be very helpful. The type of work / strategies will be so different that I doubt you get any "credit" for the time there toward seniority, and you will raise a lot more skeptical eyebrows in interviews. Exiting to a SaaS holdco or a new fund is probably the exit that's closer to your ultimate goal, although still less straightforward than just hanging around your bank.
I also wouldn't be surprised if hiring for software firms in general is down across the board given how many are struggling out of the 2021/2022 bubble. Maybe that doesn't affect juniors yet but it's 100% frozen the midlevel market for a couple years now.
TLDR, I think you're taking the path of most resistance right now based on your profile, and while tech is interesting it's by no means the only industry where you can make money or enjoy a career as an investment professional. If you're hell-bent on doing it, you need to get some software reps under your belt yesterday.
Thanks! To be clear, I am in a tech team and do have software deals under my belt but just haven’t done a software sellside so haven’t done a full saas model/sellside prep yet. I do agree that I need to get more saas reps asap and considering leaving my current firm over this to reset. The one thing I’m worried about is getting towards VP level in a year or so where I imagine it may be harder moving to the buyside. How would you think about seniority in this context ?
I am quite focused on tech indeed / my background aligns with it. I agree with VC investment style being different but my thought process was that you do get some of the same modelling / DD experience if the firm actually does some DD at series A/B or so (eg DN Capital). So if I could get a gig at the right firm, could it be better than becoming a VP in banking and trying to move at the VP level..?
I'd really discourage you from pursuing VC if your end goal is PE, especially as you continue to move up (and I'll note you're a touch more senior than I thought above). Since you're coming up on VP, you know that process management is the majority of the job at that level, and that's probably the biggest difference in type of work at these firms. Just to illustrate, in VC you aren't dealing with debt, don't have complex deal structuring since it's just cash on the balance sheet, probably doing de minimis accounting / legal DD, aren't using third-parties for commercial, aren't as valuation sensitive bc the companies are growing so fast, and so on.
You should consider generalist roles if it's a fund where you will have exposure to tech or the ability to switch to that team over time. I suspect that's higher probability than going from banking.
My end goal is growth / early growth, not really PE although I would be happy in a tech buyout fund too.
These points make a lot of sense but I have absolutely 0 interest in generalist MM PE if that doesn’t touch tech tbh. I would be ready to do it as a middle step, but it would be pretty boring to me being stuck in consumer / industrials buyout forever. I don’t know if I’m playing a losing battle but that’s how I feel regarding sector focus. Tbh, I don’t find the debt stuff or legal/accounting dd as interesting as analysing a market, a company potential & growth, etc. But I get your point and need to learn that stuff, a generalist fund with a tech angle would make sense. My only worry is getting into one and barely doing any tech and not getting the skills to move back to tech full time (why would you hire a generalist when you can get a tech profile ? Buying a supermarket doesn’t help you analyse customer cohorts or an ARR waterfall or create a network in the industry), guess I need to find the right balance
If you title is correct and you are an associate 3 - the tough reality is that most funds will be looking for more junior people or you’ll have to take a step back. The blue chip funds will either have an analyst pipeline or hire by class and most often they exclusively look at Analyst 2-Associate 1/2 candidates.
I then know some people that went to a mid-market growth equity firm before re-starting their associate role at a more established/brand name firm. It might be the way to go.
Unfortunately for you - the bigger HHs (i.e. KEA’s of the world) only have an incentive to keep on pushing as many good candidates that fit a mold more than someone a bit more experienced. Smaller head hunters won’t have the blue chip names but will certainly be more helpful.
Also the growth equity market is in a tough spot after peak hiring in 2021-2022 and is now rightsizing so you probably have a mix of people looking to join that space, people that are getting pushed out of their seat for minimal hiring which makes it very competitive.
I’m actually AS2 / will be AS3 next year so basically still have 1 year before VP.
How do you think going hard on networking would help to find a job, is it a good time investment or will most funds wait for a formal process and go through HH?
Certainly helps for earlier stage as it’s a core part of the skill. Less relevant for later stage / buyout but can help as long as you don’t start spamming people. Never hurts to grab a coffee here or there and if people like you they’ll refer you to the relevant people.
Vero odio eos qui. Debitis consequuntur ut repellat nam.
Quia alias sit ipsa tempora aut. Perspiciatis consectetur aliquam magni eos deserunt. Nesciunt deleniti sapiente voluptas fugiat. Qui aut molestias et nostrum natus totam. Repudiandae reiciendis et voluptas.
Molestiae ab necessitatibus corrupti soluta. Dolorum cumque occaecati dolorum temporibus ut. Unde sint pariatur provident recusandae.
Officiis repudiandae voluptatum sint et beatae. Rerum dolore neque perferendis sapiente eligendi consequatur quo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...