Crossover Fund Comp

While not a new concept, crossover funds have performed well over recent years and are, unsurprisingly, becoming more common with new launches under existing asset management platforms as well as new standalone funds. Given the small team size / limited quantity of funds with this strategy, there isn't much data out there on comp for crossovers specifically so it would be helpful to crowdsource any datapoints or general ranges people have heard - also would be good to specify what type of background the comp would tie to (post 2 years IB v. 2+2 IB/PE v. something else).

Also interested in any guidance on how comp is structured as you progress to more senior levels at these funds since it's a bit more complicated than other funds depending on structure (ex. is the fund set up as an open-ended fund like other HFs or does it also have a side-car structure for the private investments than makes it more similar to growth equity funds where there is an need to continue raising new capital).

Thanks!

Comments (27)

  • Associate 1 in PE - LBOs
Jan 11, 2022 - 3:09pm

Dragoneer, Whale Rock, and Altimeter are all crossovers, and each have >1bn per IP. There are maybe 12-15 funds out there with these kinds of economics, and the comp probably reflects that. Has anyone heard any numbers? Also curious

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  • Managing Director in VC
Jan 13, 2022 - 4:10am

Dragoneer has a pretty dedicated private team that doesn't do much public, e.g they handoff at an S-1. But their public team is more hybrid and works on private deals depending on the Co / Geo (think like 70/30 or 80/20 depending on IP). So it's kind of an interesting mix. Still a low number of IPs, so anyway you look at it, they aren't siloed and all work together on a lot of investments.

Economics are incredible and it shows. Junior ranks are standardized like most places but once you're past two years I've heard of multiple IPs getting fat comp numbers w/o many YOE.

  • Associate 2 in PE - LBOs
Jan 13, 2022 - 10:56am

Super helpful, thank you! I can imagine as you progress the economics really kick in given the AUM / IP like you mention. Do you have any sense for:

1) Is there a meaningful difference in comp between private only v. "hybrid" IPs (not just Dragoneer, but in general)?

2) What would you expect comp to compare to for a more junior IP at one of these funds? Would you expect someone from a 2+2 IB / PE program to be in the $400-500k range?

  • Research Analyst in HF - EquityHedge
Jan 13, 2022 - 11:42am

Can you share some data points (ballpark)? Also I'm assuming same goes for Altimeter comp wise? L/S book is ~7.5bn I think, and VC makes up the rest -- were those comp stories on the equities side or vc?

  • Associate 2 in PE - LBOs
Jan 13, 2022 - 1:20pm

Do you have any qualitative feedback on Dragoneer / Altimeter hiring?

I've already checked LinkedIn and see the backgrounds, I'm looking for any anecdotal experience, word-of-mouth, inside baseball type stuff.

  • Associate 1 in PE - LBOs
Jan 13, 2022 - 2:15pm

I don't think there is anything unique about their hiring practices compared to other crossover funds / investment firms. They want smart, driven individuals that have a passion for growth investing and tech. Dragoneer is covered by Gold Coast and Altimeter is covered by Oxbridge. They will reach out if your background is a fit. Nothing complicated here. 

  • Research Analyst in HF - Event
Jan 15, 2022 - 11:47am

What constitutes fat comp numbers? Could you share some data points?

  • Investment Analyst in HF - Other
Jan 21, 2022 - 8:06pm

Seems a bit low for a tech focused fund that's crushed it over past 5 years, and has >1bn / IP, no? Thought you were going to say $2-3mm for analyst and $5mm+ for sr analyst -- that's what guys with comparable experience are making at comparable funds with comparable economics / performance

  • Investment Analyst in HF - Other
Jan 21, 2022 - 8:46pm

I see what your saying, it is a lot, it's just the economics should imply way higher numbers than those: Ignore VC part -- L/S book is  ~7.5bn, tech has crushed it thus their book has crushed it. Say that book is up 25%, 20% perf fee, so $375mm to go around. Even if sr analysts get just 100 bps of pool, which isn't a lot given Dragoneer has 17 IPs, that's $3.75mm. Plus 25% is low when all you own is cloud. Is altimeter similar numbers (it's even leaner than dragoneer)?

For reference -- I know guys at similar sized shops here in NYC, same YOE, but making $2mm and $5mm, both under the age of 30 (those numbers reflect the math). 

  • Intern in PE - Growth
Jan 21, 2022 - 9:18pm

How "hard" is it to become partner at a crossover shop like dragoneer / altimeter? Is it a function of "good performing analyst for 5-7 years becomes a partner", or is it more political / not every great analyst moves up? $15mm-25 is a lot, especially since these guys are like early 30s

Jan 22, 2022 - 8:28am

Just to clarify ..what does a partner title at dragoneer even mean? Do these guys actually own equity in the firm? Or are they just senior analysts that get a portion of the carry pool? I think the terminology here is important because different hedge funds use the partner title to mean different things

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  • PM in HF - RelVal
Jan 22, 2022 - 3:06pm

Ur saying these 30 year olds are getting paid more than professional athletes to be levered long tech? Pretty unreal

  • Investment Analyst in HF - EquityHedge
Jan 22, 2022 - 10:28pm

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