Software Eng to Growth Equity Feedback

I'm a Software Engineer trying to break into technology growth equity. I've found that I'd like to be around the Series A - D side of things where interesting technology companies are still growing but they're starting to think more about unit economics and scale and less about product-market fit.

While a technical background is useful in identifying companies that some firms might not look at, I've been given feedback from two Superdays saying that I have the technical chops (pass LBO test which dealt with a few debt instruments, reorganizing a cap table post-acquisition, and calculating unit economics of the business) but didn't have an intuition of what makes a good business.

This is the primary reason why I wanted to work in growth equity - to learn what makes durable technology businesses. Some frameworks I've utilized are Hamilton Helmer's 7 Powers or Bill Gurley's 10 Factors To Consider When Evaluating Digital Marketplaces

However, I'm not sure where to get more reps. Do I do more cases? Since I'm not coming from a banking or consulting background, I'm learning this on my own while coding and sitting in tech meetings all day, which has been hard to balance.

Any help would be greatly appreciated! 

 
Most Helpful

You're likely better off trying to carve a niche out in the early stage, Series A type of funds and sell yourself as someone with good product/engineering experience, rather than try and compete in the later stage growth space, where the value add for Associates is more around modeling, analysis, and running a process. There's no real way to get growth equity reps without doing the job or coming from banking. You're also an odd enough fit that no serious growth firm is going to hire a software engineer to do a Series C deal. Realistically, if yu wanted to go that route, your easiest path is to find a banking role, assuming you're young enough.

With that said, if you wanted to eventually get to growth, without going backgrounds or changing careers in a material way, here's what I'd do. At your tech company, I'd switch into a Product Management role as soon as possible. That will help you with some softer skills as well as more of a product/growth lens versus a technical one. Do that for a year or so, ship some features/products and at the same time, keep interviewing/networking with VC funds. An earlier stage fund would 100% give you a look, especially if you have a good product/eng background from a good company. And good company is key, I'm talking FAANG, top startup ,etc. If you don't have that background, it'll be much tougher. At the same time, start making some angel investments. Sign up for AngelList, get on the syndicate list, and toss in a few thousand bucks into a handful of deals. Maybe write a mini memo on each, now you've established some credibility that you want to be an investor. From here, get a job at a VC fund, do a year or two there, and then start trying to laterla to a later stage VC/growth fund. If you have good Series A/B experience, eventually a slightly later stage fund will take a look at you. Pre-IPO growth will likely still be a challenge, but if you get senior enough, the analytical skills aren't as important as the network that you've hopefully built by this time.

So yea, it a nutshell, there's your 2-4 year plan to get into late stage growth. My guess is that it would be very difficult for you to get a job now at a place like General Atlantic, IVP, Insight, etc those places are almost all bankers.

 

Pretty hard, nearly impossible, to do PE/GE without doing it prior to B-school. Post-MBA buyside roles land you at VP or senior associate, they want you to have deal experience and be able to lead deals end to end quickly. and if you take IB associate job, it's tricky to move to buyside being more senior than analyst. I wouldn't say it's a great investment overall.

 

Agree with the other post. Even at H/S the best you could do would be a no-name growth shop and even then, you'd probably have to network and do in-semester internships. Outside of those two, chances are even slimmer. You really need some form of buyside experience, even if it's VC, before going back to B-School. Going into banking also gives you a really slim chance, I've seen a very small group of folks who have successfully done it, but they usually go to a top bank top group, so Goldman TMT as an Associate and honestly, I think they just get a little lucky with timing in order to move over to a good growth fund.

With all that said, there's plenty of decent growth shops out there, you kind of need to hone in more on why you actually want to do growth, what stage, what types of deals, etc. Do you really have a perspective as to why you want to be a Series D investor and not a Series A one? 

Last thing, the growth equity market, especially late stage, is pretty much dead now. All the top "growth" shops have gotten crushed with the tech downturn. There's even fewer seats than before. Good time for you to try to get into the industry in any way possible and work your way up. 

 

I was an engineer, went to Harvard, and literally 3 months later was sitting in the office of some of the top PE people in the world 

my advice to op: just be excellent at what you do.  Most of these analyst/associates on this forum have no idea how to access true deal makers or what it takes to reach the upper echelon.  2 years in IB is not it.  That’s just the most direct path; but ceerainly not the only path to get there 

 

Echo the above feedback that if you're averse to doing true early-stage investing, Series A/B is the right place to look. 

Another area I would consider is funds with a focus on infrastructure software or with a strong brand in devops / dev tools investing... as an engineer, I see that as one of the thematic areas in which you can shine as the bar to entry is much higher for non-technical folks unless they've consciously chosen it as a domain area. It's relatively easy to grasp what an education software or consumer marketplace does through a bit of research. Much harder to really comprehend what Kubernetes is, why containerization even matters... and then a level deeper, what are some interesting growth-stage companies that the rise of containerization / microservices architecture will catalyze?

 

Do you know of some firms that I should target, large and small, that might specialize in this type of thing? I got dinged at CapitaG despite their focus on this sort of technology. 

 

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