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Based on the most helpful WSO content, the outlook for tech growth equity returns in the near future appears challenging. Here are some key points to consider:

  • Current Valuations: Tech valuations are significantly down today. If interest rate hikes continue, there is a possibility that valuations could drop even further.
  • Fundraising Difficulties: Anything related to tech (growth, VC, digital infrastructure like data centers, fiber, etc.) is currently experiencing a lot of difficulties in raising money and closing deals.
  • Long-term Potential: While the current environment is tough, the next few vintages could potentially be attractive investments for these asset classes if valuations drop further and stabilize.

Given these factors, the realization of carry in tech growth equity funds may be uncertain and could take longer than expected. It is important to consider these risks when applying to funds and to have a long-term perspective on potential returns.

Sources: Confused about carry at PE Fund, Actually Realizing Carry, Troubled fundraising processes, Data: Average Private Equity Compensation and Carry from Associate to Managing Partner, THEN and NOW: @CompBanker

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
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A few thoughts on this:

1. Do diligence in the interview process. Don’t push it to far but ask about performance of current and past funds. This is also when networking with any LPs or other VCs comes in handy, as they can give you advice without disclosing anything material. Having friends that work in an endowment / other allocation role is underrated.

2. Firms will have bad funds. The 1999 and 2000 vintages are bad across the board and so will the 2021 vintage funds.

3. Be picky about the firm you join. Look at their portfolio and think about if those are investments you would have made / think will succeed.

4. Bonus / carry is a huge part of comp and, assuming you stay in the industry, a massive contributor to your net worth. If you don’t believe in the firm’s vision, don’t work there.

 

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