Transitioning from Growth Equity to the Public Side

Hi all - I’m currently a first year associate at a well known growth equity firm focusing on software. Came here last summer after two years of tech banking at GS/MS.

To be completely honest, I didn’t really know what to do after banking but a bunch of my colleagues were doing software buyout or growth, so I just mindlessly followed down that path during on-cycle.

I’ve been self-reflecting a ton over the past couple months figuring out what exactly I want to do, and I’d like to transition to the public side (have good reasons, can discuss later).

My question is - is it even possible to transition from growth equity to hedge funds / Long-only shops or is it too late for me now and I should’ve done this while I was still in banking? For reference on the type of work I currently do, my current shop typically writes $75-$100m checks in series C/D rounds, but also do growth buyouts as well for larger deals.

Would appreciate any advice on how to best approach the transition and the type of funds that would be most open for a person with my background.

 
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Depends, are you talking GA/TA or Insight/Iconiq? Former, easily, latter, more difficult, i.e. not really a well worn path but I'm sure still possible. Have seen plenty of comps for the former. Don't want to name specific names but can think of some at GA for sure, I have to imagine TA does fine, Summit might be harder just purely guesswork here.

As a return favor, can you describe the modeling for Series C/D in excruciating detail? I don't want to ever balance a balance sheet again, just want to do simple P&L into cash flow with no B/S projections, and want to invest as late as I can in Series X deals without having to really do any deep modeling (just want to project key operating metrics and get an idea of how they turn NI into cash).

 

Since they didn’t respond, did you ever find this out? I feel the same way. Did you make the transition to growth too?

 

I'm only a 27 year old intern but can tell you there is not much detail to describe. When considering within your team you would do the typical P&L modelling to get to your hypothetical valuation metric on exit.. Much more based on consulting-style market size, a market share assumption, and unit economics to model the cost of getting there. Presentation to IC will probably include a simple 3-statement model just to model any additional raises and potential cash spun off.

This really isn't a numerical game, given that growth and exit assumptions are pure conjecture (ie 'the market will grow to 10bn in these 7 countries and we will have x% in each'), and that success will be negatively impacted by roadbumps (unanticipated competition / market developments, difficulties in execution, fit with marginal customers) and also lucky breaks (ie competitor struggles due to breakdown in negotiations with supplier or botched M&A, product appears in a famous tv show..).

So the investment process tends to be super simple, you just estimate the size of the opportunity, map out company's path to achieving it, estimate the cash required to scale, and assess the execution and strategic risks including competency of the founders and any competitive pitfalls (ie big tech copies what you built in a month when they see it's growing).

I would recommend if you like VC and but to do more quantitative / tangible work - this is NOT a financial analysis / traditional investment field. I guess the grass is always greener smh.

 

Mention the comment above that if its a top shop, transferability/optionality is probably still there after a year.

Curious - what parts of growth equity do you not like? What of your day to day do you not like

 

Just speculating but might be easier to go to LO vs L/S from this position?

 

Feel free to DM me - have been on the public side for ~3 years now post banking in a role where we also screen late-stage opps. Honestly I think you are making the wrong move unless you have a passion for public markets but the answer you are looking for is this - public markets investing tends to be the most 'open' of all the various buy side paths. Of course YMMV and you'll need to discern whether you want LO, SM HF, pod shop, crossover etc. but public market roles tend to be far more common and open to taking people from different backgrounds.  

 

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