AM vs PE FoF for exits into Growth/VC or corp dev
I realize this topic seems to have been beaten to death, but I was wondering if anyone has experience (first hand or anecdotal) of people who started at a respectable AM (e.g. Putnam, Capital Group, AB) and subsequently moved on to do either some form of private investing (specifically growth or VC) or moved on to do corp dev at a company (I guess corp strategy might be more common)?
I currently have the opportunity to interview with long only shops such as the ones mentioned above, as well as a well known PE FoF where I will be heavily involved in co-investments and secondaries.
I am defintely worried about the long term prospects of long-only equity managers, which is why I don't plan on staying in the long run and am seeking the exit opps I mentioned. I also think the PE FoF experience would be very interesting and relevant, but I've heard mixed things on this forum about going that route, though I will be involved in at least co-investments.
Any input would be much appreciated!!
PE FoF is not really a good experience to do direct investments especially at junior level at least in my opinion.
If you worked on the TMT sector for AM, VC could be a easier switch but growth equity would be more difficult as you wouldn't have deal making experience.
Can someone explain why this is so? Is this because co-investors are not involved in doing the actual due diligence and structuring of the transaction?
Based on what I read in this forums, they still do financial modeling and carry out their own due diligence. So perhaps they lack experience in structuring? And perhaps deal sourcing?
Thank you
bump
Hey there,
While I agree that pure play FoF experience is not the best for transitioning to VC/Growth, do you have an opinion on the co-investment/secondaries side of things?
FoF is not an ideal way to break into direct investing. You'll get pigeon-holed. Avoid if possible.
Normally I'd say avoid FoF but if it's co-invest / secondaries and not pure fund investing it could be worth it. I know people who have jumped to PE (lower-mm / mm) from both.
Hi Hugh Myron,
What skill sets do you foresee are transferable between co-invest / secondaries to direct PE? And which skill sets would someone from such a background be lacking in?
Thank you.
In my experience, when a co-investor is invited to participate in a deal, the co-investor is looking at a deal that has already been packaged together by the PE firm, so you would not have any involvement with sourcing, structuring, or financing. You are also not doing diligence either because you will not be on the ground visiting the company's factories or driving a separate diligence process with management. PE firms also make co-investors feel as if it is a privilege to participate in a deal, so co-investors are usually on board even before they start their own diligence so the so-called diligence process is just to check the box.
Interesting perspective, what are people's opinions here on PE secondaries co-investments vs public investing? It looks like OP is trying to stay in private investing (growth), but I guess you might do more company specific analysis at an AM shop (unless you're on a pure co invest role)
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