What to expect from Software Growth Equity take home case study?

So I'm interviewing for a NYC based fund, they are recruiting for an immediate start - they do most/all stages of investments in terms of size but this strategy is growth to majority oriented.

I have previously studied the standard PF types of LBOs but given the nature of the fund have been much more focused around customer cube / retention (net/gross/punitive gross), and sales efficiency metrics. They aren't a standard buyout/LBO shop so I kind of doubt that's where the primary of their study will be but has anyone else found otherwise? I am in late stages of the process now / have had 4-5 very positive chats leading up to this point.

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WSO Monkey Bot

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Based on the most helpful WSO content, here's what you need to know about what to expect from a software growth equity take-home case study:

Focus Areas:
- Customer Metrics: Given the nature of the fund, expect a significant focus on customer-related metrics such as customer cube, retention (net/gross/punitive gross), and sales efficiency metrics. These are crucial for understanding the growth potential and sustainability of a software company.
- Market Analysis: You might be asked to analyze whether the company has the potential to scale from $10M to $100M. This involves understanding the unit economics, retention/churn rates, and validating the CEO/founders' growth projections.
- Valuation: Be prepared to work on valuation exercises, possibly focusing on revenue multiples vs. EBITDA multiples, especially relevant for software companies.
Case Study Components:
- Company Analysis: You may need to dive deep into a specific company's business model, funding history, investment highlights, risks, and competitive landscape.
- Financial Modeling: Expect to build or analyze financial models, including projections and scenario analysis. This could involve working with deferred revenue and understanding its importance to software companies.
- Investment Thesis: You might be required to develop an investment thesis, justifying why the fund should invest in the company. This includes identifying key growth drivers and potential risks.
Preparation Tips:
- Know the Portfolio: Familiarize yourself with the fund's portfolio companies, especially those in areas of your interest or proficiency. Understand their business models, funding history, and competitive landscape.
- Technical Skills: Brush up on your financial modeling skills, particularly those relevant to growth equity and software companies. This includes understanding cap table math, distribution waterfalls, and dilution.
- Industry Knowledge: Stay updated on the latest trends and developments in the software industry, particularly in HCIT and B2B SaaS sectors.

By focusing on these areas, you'll be well-prepared to tackle the take-home case study and demonstrate your fit for the growth equity role. Good luck!

Sources: Advice Please! Growth Equity Interview Questions?, Why Growth Equity vs Buyout?, Tech Growth Equity vs Tech Leveraged Buyout Firms, Growth Equity Interview - Question

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Associate 1 in PE - Growth

21d

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