Hey all,
I just landed a venture partner role at a VC + growth capital firm.
How do you guys go about researching and investigating industries efficiently? What public (or private) sources do you find most helpful?
I don't have access to equity research reports or Capital IQ anymore.
And I think much of the role is going to hinge on my ability to rapidly turn out analysis on a company and its industry.
So how do you monkeys do that research thing?
Also does anyone have any books / papers / models on growth-capital valuation, cap tables, etc. ?
What is the track record of this firm? You should be able to find a lot of information internally based on your own deals.
Also, you really should have some sort of data provider like CapIQ/factset/etc, they're not that expensive and if you get several to bid you can negotiate the fees down. We went with a new competitor to one of the ones I mentioned and have liked it so far.
I'm personally focused on growth investing in one particular industry, so it helps to have that filter. I'm able to be intentional with the conferences I attend and the adviser reports that I subscribe to.
valuation: buy low, sell high? every industry will have different multiples used, but in reality its all derived from transaction comps and public multiples that will be applied upon exit. If you can build a model that hits your target return using reasonable exit valuation ambitions, then you can pay that amount.
cap tables: growth and venture are easy and just google around. Pre money + new cash on balance sheet = post money. Often there are preference rules that you put alongside the new money in a venture / "early growth" case.
The money made in VC/Growth isn't about finance, its about sourcing deals with a differentiated offering in a substantially sized, acquisitive market and helping steward the business.
can you please elaborate on
"The money made in VC/Growth isn't about finance, its about sourcing deals with a differentiated offering in a substantially sized, acquisitive market and helping steward the business." ?
Just saying that a core part of PE is levering up the deal based on a free cash flow generating business, improving some processes to boost gross margin and trimming the overhead.
In VC/Growth the businesses can’t take on much debt, don’t have much economies of scale, and the operations are already lean by nature. The stewardship usually means helping them grow top line (if it’s B2B in an industry you know, maybe even with your own network), professionalize the business, and make sure it stays lean as it grows.
What differentiates a quality early stage investor is the sourcing - and that has far more to do with identifying the right management team, understanding the competitive landscape, and ensuring there is a market for exits. You don’t juice IRRs by taking dividends like a PE fund would.
Track record is pretty good.
They have been doing VC for a while, but launched their growth fund 1.5 years ago. >50% IRR and several exits already, so DPIs should be good as well.
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