IBD to VC to Growth Equity

Hi fellow monkeys, hope to get your advice on the following:

Previously did 2 years at a MM IBD and went to a VC role covering series A / B and some deals past series B (even up to pre-IPO)

For deals past Series B the ticket sizes we do are generally not large enough to lead the rounds.

I hope to have the option to do growth equity someday, but it seems that GE shops value Private equity skill sets more than that of a mid-late stage VC.

Hope to get the advice from my fellow monkeys whether my current gig is relevant for GE roles, and what I should do to position myself for such roles in the future.

Comments (25)

  • Intern in IB - Gen
May 10, 2021 - 8:11pm

Look at late stage venture funds (eg TCV) not growth equity (eg. JMI), potentially even a SWF or corporate VC doing direct. Could have luck at newer growth equity shops too. You did banking so you have the modelling skills (not much of it in growth anyway).

  • Prospect in IB - Gen
May 10, 2021 - 8:15pm

^^ Agree with above.. it doesn't make sense for you to transition into traditional mid-market GE or even some of the MF growth arms. They will generally invest expansion capital into established businesses, while your skillset in venture best applies to identifying promising opportunities, product-market fit..etc.  Many of the blue-chip venture funds (a16z, Sequoia, Bessemer, Menlo) all have growth arm that your skills probably best fit. 

May 10, 2021 - 8:22pm
MadmenMonkey, what's your opinion? Comment below:

Thank you both for the really good advice. If you don't mind me asking, it seems like the Growth arms set up by the MFs or even the likes of General Atlantic are investing heavily in tech, which is the sector I intend to focus on.

In this case, would my skill set be less relevant for these type of growth arms?

  • Intern in IB - Gen
May 10, 2021 - 11:26pm

Megafunds dont do VCs apart BCV (prob more so dont quote me) but I feel you are talking about BX and KKR (they are late stage growth equity/semi late stage venture). Look at the min investment criteria to give you a better idea.

Most Helpful
  • Prospect in IB - Gen
May 11, 2021 - 1:22am

Speaking out of personal/friend's experiences, there are few reasons why people want to move out venture related to the role (not comp).

1. Most juniors/associates struggle to provide real tangible value, especially to portcos. Let's compare MF PE where it's mostly financial restructuring whereas early-stage venture is all about sourcing new deals and supporting entrepreneurs. It's kinda hard to advise founders when you're a 25 year old associate that only has 1-2 years of IB experience and has never built a product before.

2. Long feedback cycles: suppose you source a deal and the firm invests, it can take upwards of 5-10 years for the firm to realize gains and it's hard to measure your performance, especially if you want to be promoted. Many funds don't hire associates to be on a partner-track. 

3. Most of the job is "intangibles"... trust me when I say sourcing and networking can get really old/tiring fast. Founders don't want to talk to you, they want to talk to the GPs (hence we see title inflation at a16z, sequoia where "everyone is a partner". For some people, including myself we are much more data oriented and you don't get that in early-stage venture. Half the time a fund will invest bc they see a Greylock or Benchmark on the cap table or the CEO is our Partner's neighbor.

Venture is something you should "retire into"... it's a lifestyle industry and while you do develop some great skillsets along the way. There are just many caveats to consider and it might be a lifelong career for everyone.

May 11, 2021 - 1:51am
MadmenMonkey, what's your opinion? Comment below:

I would guess if your background is in PE, it would be pretty easy to pivot to GE or VC.

My initial sense was that GE guys would consider VC experience as relevant (I do a lot more execution than sourcing), but at first glance people would not know that and would still prefer someone of a PE background.

Nonetheless, my main rationale is that GE would give the healthiest balance of looking at high growth tech companies while still maintaining a strong emphasis on quantitative analysis on financials

May 11, 2021 - 3:40pm
RockCapital, what's your opinion? Comment below:

Partner at a "venture growth" firm here. Your background is perfect - sourcing from your network at Seed/A funds + analysis/valuation ability that you hopefully got from IB should make you a more attractive candidate than most. In my opinion, challenge tends to be that many "venture growth" (think growth funds from traditional venture firms), as well as the most active crossovers, aren't great at digesting someone who is neither a GP nor new associate (given many firms don't have the typical ladder you see in PE). If you want to make the move now, would suggest being open to "starting over" at the junior level vs. trying to find a post-MBA-esque role that will exist at the JMIs of the world, but not the Andreesens. Some exceptions here (Insight, BVP, BCV + more) of course.

Would also say that if sourcing/networking gets old fast, not sure you'd love the job much at the growth stage either!!

May 12, 2021 - 12:47am
eaccap, what's your opinion? Comment below:

Interested in going into venture and growth investing. A few questions if you don't mind:

1. Curious to hear a bit about your path/experiences, how you became a partner at your firm (is this a Sequoia, Accel, Greylock, a16z, etc. type firm?)

2. Also, any advice on how to break in, do you recommend an IB stint (also any insight on the analyst roles at Insight, GA, etc.)?

3. Finally, curious to hear your thoughts on the crossovers (assuming Tiger, Coatue, Altimeter, Dragoneer, D1, etc.) - did you ever consider them and if you have any insight on how that experience might be different than traditional venture firms?

May 12, 2021 - 12:51am
eaccap, what's your opinion? Comment below:

Had the chance to speak with a partner at Sequoia, his advice for breaking into VC was to just start doing it with the idea of compounding career it seems (not doing IB or startup to break in). Thoughts on this?

May 12, 2021 - 5:13pm
RockCapital, what's your opinion? Comment below:

@Eaccap - don't mind at all!

1. IB -> PE -> Growth at the very bottom of the totem pole and lots of work from there! Yes, that genre of fund.

2. Definitely recommend IB. Teaches you how to work hard (if nothing else), plus basic technical ability and attention to detail. Only better path might be analyst programs at Insight/Summit/TA/JMI etc. where you get the same skillset (hard work + excel) and learn how to source/manage a pipeline - which is really just another version of learning how to work hard - and start to think like an investor. PE analyst programs also good options. Lots of people recommend getting startup experience - which admittedly would be super useful in hindsight - but IMO it's not something firms really care about when hiring for associates, unless you're early-enough at somewhere like Stripe/Figma and can pitch your network...but if you really have the network, you're better off doing what Lachy did instead of joining a fund as a junior! With a longer tenure as an operator, can become a great partner candidate, but requires a real tour of duty - not the two year stints I read people suggesting on here. Best advice I have - COLD EMAIL. It's not hard to find peoples' work e-mails, and given a huge part of the associate job is writing effective cold e-mails to convince founders to take a meeting, good opportunity to show off those traits proactively. Take 5 minutes to read up on the strategy, team and portfolio. Take another 5 minutes to write "I was really interested in your investment in X, as I've been doing a lot of research on Y, and I think it's a good bet because Z." You'll probably have a ~25% response rate, but that means you can get 5 great Zooms on the calendar by sending only 20 e-mails - not even a full weekend project! Thoughtful cold e-mails have the best risk/reward skew in the world - worst case no response, best case can change your life. Hiring at venture funds tends to be relatively sporadic (people leave, larger fund gets raised, etc.) - so #1 goal needs to be staying on people's minds for when a role opens up. Best way to do that is to be in their inbox showing you're willing to hustle + be thoughtful.

3. The crossovers who were active back when I started in the industry were a much smaller subset than those who are active today, and they tended to only stick to much later-stage consumer. Was mainly Tiger, Coatue, DST. That's changed a lot - more firms now, all doing all sectors (and almost all deals in all sectors for one in particular!) and all going much earlier. Have many friends at these firms. Work is more or less the same, except get access to much broader third-party resources (consultants, credit card panels, and more), which is useful, and tend to do higher volume of deals, so take less active role with companies post-investment (i.e. don't ask for board seats, as need to free up time for new deal activity). Depending on the week, that last point either sounds miserable or amazing. If I was trying to get into the space today, I would definitely consider those firms.

Apologies as none of this is super insightful, but hopefully somewhat helpful!

  • Analyst 1 in IB - Gen
May 11, 2021 - 7:36pm

Huh... how do you see the difference between late stage VC and GE ..? Like in terms of skill set, there might be a different aversion to risk In terms of product risk, but I'm pretty sure late stage VC shops would perform all the analyses when putting in $50-100m+ on the table ... 

May 12, 2021 - 11:06am
TechBanking, what's your opinion? Comment below:

Huh... how do you see the difference between late stage VC and GE ..? Like in terms of skill set, there might be a different aversion to risk In terms of product risk, but I'm pretty sure late stage VC shops would perform all the analyses when putting in $50-100m+ on the table ... 

As a CEO and founder, it's the difference between revenue multiples and ebitda multiples from my perspective. 

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  • Analyst 1 in IB - Gen
May 12, 2021 - 1:18pm

Good point, but do you really think most GE shops value firms on EBITDA ? I mean, even a lot of public SaaS companies are valued primarily on revenue / gross profit 

Don't think growth shops only invest in highly profitable companies, for me it's more like about scaling and taking less product risk, but still looking for 30%+ top line growth even if it means burning loads of cash on S&M. or am I wrong on my definition of GE?

  • Associate 1 in PE - Other
May 11, 2021 - 9:21pm

True 'growth equity' in the sense of the word is almost like PE these days. Think a TA or Summit that often does minority growth rounds into soon-to-be profitable, often bootstrapped businesses. MF growth funds will also play here occasionally, and you'll see these GE shops play with debt, minority recaps, growth buyouts, etc. more and more. 

Late-stage venture can also play here, but they're more likely to chase the 'hot, grow revenue at all costs' type businesses, i.e. Uber as the tried and true example. In theory, diligence can be the same, but they really look for very different traits among businesses / founders / markets. Hence you'll actually see a good number of ex-operating / product guys at these venture funds (as with early-stage), but growth equity will for the most part be littered with ex-bankers and buyout professionals.

  • Prospect in IB - Gen
May 12, 2021 - 1:55pm

Look at BXG, KKR NGT or even TPG Growth -> their portfolio is very different venture-growth (IVP/TCV) or the growth arms of traditional venture funds. MF PE firms focus on more established, generally upper mid-market for growth/expansion capital investments to generate their 3-5x in a couple years... Most won't in high-flying vc-backed startups (i.e Databricks, Flexport, Chime)

May 12, 2021 - 8:23pm
MadmenMonkey, what's your opinion? Comment below:

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  • Analyst 1 in IB-M&A
May 13, 2021 - 12:23am

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