Jumping from Late Stage Startup to PE?
Hi all,
I’m in a finance / corporate development role at a late-stage startup and am considering attempting to jump to PE – does anyone have insight into how feasible this would be and / or how my experience would be perceived?
For context, I’ve been at the start-up for two years and worked at a MM IB for two years prior. While in banking I never felt that I was able to dig into the companies we worked with at a deep enough level, and as such decided to pursue a role where I’d gain broader finance / operations / strategy exposure as opposed to the traditional buy-side exit. After a pretty awesome two years from both a company ($30M to $100M+ revenue) and professional growth standpoint, I’m starting to get the itch to take what I’ve learned and apply it to investing.
In case it’s helpful, here’s some high-level information about my current role:
- Corporate Development: Closely involved in capital raising / M&A / investor relations; raised $60M+ across three rounds (equity + debt from well known VCs and strategics) and closed one smaller acquisition
- FP&A: Built financial / operational planning model from scratch (fairly complex operating model); exposure to all facets of near / medium / long-term corporate planning
- Strategy: Evaluated and developed financial plans / models for new product and geographic expansion opportunities
- Operations / Project Management: Led numerous process improvement initiatives from inception to implementation; developed recurring performance management processes
Really appreciate any input.
Are you interest in traditional PE (buyout) or broader private market investing? I think your experience would be a lot more attractive to a growth equity or VC firm where I see a lot of people with a similar background. Not so much at buyout shops.
I second targeting later stage VC/growth equity funds in the more strict definition of growth equity, but also target funds that don't simply do LBO's but acquire companies with the goal of growing them rather than just leveraging them and playing financial engineering games. You'll have more success targeting funds that are in the space you're currently in but don't limit it to those, although I wouldn't waste too much time on things that are way off of your industry-for example, assuming you're in tech, don't go after nat. resources, and you'd probably have a harder time getting into old school industrial funds, but don't limit yourself to enterprise software focused funds just because that's what you're currently doing. You'll also have better luck not going after the huge names (mega funds and right below) because they tend to have more formal recruiting that will be harder to break into, although smaller funds also do today.
It's completely doable but it'll take a little time and legwork because you won't be coming from the typical IB or MBA to PE. Also, and it's cliche, but consider the grass is greener argument. I obviously like PE but it's not for everyone and the top of PE has gotten crowded so if you don't get yourself on a partner track you'll either stagnate or get pushed out and end up back where you are plus a few years experience, so probably at a slightly higher level. Whereas if you stay where you are you could either advance at your company or build a really good rep in the industry and be a few levels above where you could be after a PE re-entry. I'm not trying to dissuade you, just a little devil's advocate.
Good luck.
Thank you both for the feedback – very much appreciated.
“Target funds that don't simply do LBO's but acquire companies with the goal of growing them rather than just leveraging them and playing financial engineering games” is a good way of phrasing what I’m looking for. One of the reasons I’m initially more biased towards PE vs. growth equity is the lack of emphasis on sourcing at the Associate level, which isn't something I’m interested in at this point. In addition, I enjoy financial modeling and approaching things from a granular / bottom-up perspective, and get the sense that approach is more aligned with PE than VC (whereas VC is more top-down / market based). Are these characterizations correct or am I overgeneralizing things?
I think the devil’s advocate take is perfectly fair. Tell me if I’m being naive here, but I actually see myself in corporate development in the long-run, albeit in a more M&A focused role (as opposed to what I’m doing now, which is more organic growth focused). In order to better position myself, I’d like to get more investment / transaction exposure and think 2 – 3 years in PE would be a great way to achieve that (similar to how I’ve gotten a crash course in Ops / Strategy in current role). As such, I’m not overly concerned about PE being crowded at the top.
From a recruiting standpoint, do you have any thoughts on the effectiveness of engaging with headhunters vs. direct outreach for someone in my position?
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