Growth Equity Comp and Fund Perspective

When evaluating compensation and assessing a role at a $500M-$600M first-time growth equity fund, here’s what you need to know based on the most helpful WSO content:

Compensation Expectations

1. Base Salary and Bonus:

   • For a first-time fund in NYC, compensation might be slightly below market compared to established funds.
   • Associate-level roles typically range from $200K-$300K (base + bonus), depending on experience and fund size.
   • VP-level roles could range from $300K-$400K+.
   • First-time funds may offer lower cash comp but try to make up for it with carry potential.

2. Carry (Profit Sharing):

   • Carry is a critical component of comp in growth equity. For a first-time fund, carry allocations might be smaller due to limited fund size and unproven track record.
   • Typical carry for associates might range from 0.1%-0.5%, while VPs could see 0.5%-1%. However, this varies widely based on fund structure and seniority.

3. Other Factors:

   • NYC location suggests higher base comp to offset cost of living.
   • First-time funds often have more variability in comp due to fundraising challenges and unproven performance.

Key Diligence Points

When assessing this opportunity, focus on these areas:

1. Fundraising and Track Record:

   • How successful was the first fundraise? Is the second fund on track to close, and what’s the target size?
   • What is the team’s track record? Are the founders from reputable firms with a history of strong returns?

2. Carry Structure:

   • Ask for clarity on the carry pool size and your allocation. Understand the vesting schedule and payout timeline.
   • Confirm if carry is tied to fund performance or specific deals.

3. Investment Strategy:

   • What’s the fund’s focus (e.g., sectors, stage of growth)? Does it align with your expertise and interests?
   • How competitive is the fund in sourcing deals in its target market?

4. Team Dynamics and Culture:

   • What’s the team size, and how collaborative is the environment?
   • Are there clear paths for promotion and professional growth?

5. Operational Stability:

   • Does the fund have sufficient management fees to cover operational costs and salaries?
   • What’s the runway if the second fundraise takes longer than expected?

6. Exit Opportunities:

   • First-time funds can be riskier, but they often provide significant learning opportunities. Consider how this role positions you for future moves (e.g., larger funds, VC, or HF).

Actionable Advice

• Push the recruiter for at least a compensation range. While they may not disclose specifics, you can frame it as needing to understand market alignment.
• During interviews, tactfully ask about carry structure, fund performance, and team dynamics.
• Use WSO’s compensation reports and threads to benchmark your expectations and negotiate effectively.

This opportunity could be a great stepping stone, but diligence is key to ensure it aligns with your career goals and financial expectations.

Sources: PE associate comp, Growth PE Comp Progression, Megafund PE -> Impact Investing (IFC World Bank)? Am I Crazy?, Which Hedge Funds pay the best?, Data: Average Private Equity Compensation and Carry from Associate to Managing Partner