EB -> Startup -> VC or GE Investing
leaving banking after a year as an analyst bc of insane burnout to join a startup and actually see what it takes to execute operationally and drive growth
i think we all recognize the learning curve flattens significantly at the analyst level in the 2nd year, but obviously 2 years of experience in banking is viewed much more favorable than 1.
given the perception here (quitting banking early) and non traditional path, how possible could it be to pivot back to an investing role, if that’s something I want to do in 2-3 years? Either VC or GE
NP VC, harder for GE.
yep and i think i gravitate more to VC anyway if i had to pick. GE is too close to buyout for me
Everyone here says "growth equity" on this forum but really that could mean two things (and have seen people use the term interchangeably for these two different topics);
The former is not really that much like buyout
right that makes sense, i guess the operational experience referenced above would be more so the former as well, later stage venture / C+. Feels like I need to do some digging on the typical backgrounds of Associate / VP level hires at these types of shops
Which firms fall into the category of the latter? Looking to do something similar in the future
Besides the obvious crossover public investors (Tiger, Coatue, etc.), what firms fall into the former category?
I agree with this statement -- I'm a former buy-side equity research analyst that moved to an early stage VC, then to a late-stage VC where I am currently a Jr Partner.
There seems to be some vagueness around the use of the term "Growth Equity", because in addition to the Growth-Stage buy-out Private Equity shops, some "Growth Equity" practices/strategies are actually doing "Growth-Stage Private Equity", which has a lot of overlap with late-stage Venture Capital. For example, KKR did the Series D of PropertyGuru (https://techcrunch.com/2018/10/31/propertyguru-kkr-144-million/) in 2018, and invested in the Series F and Series I of Go-Jek (https://emerhub.com/indonesia/shareholders-of-go-jek/). Warburg Pincus actually joined KKR in the Go-Jek Series F and Series I rounds.
The ForgeRock Series E (https://www.forgerock.com/about-us/press-releases/forgerock-surpasses-1…) was also interesting, because it was run like a traditional venture round -- meaning there was an investor syndicate rather than a single investor taking the whole round -- and it included a mix of "Private Equity" (Riverwood Capital the lead investor, and KKR Growth participated) and "Venture Capital" firms (Accel, Meritech and Foundation Capital).
I can't speak much for the "Growth Private Equity" stuff, because I've never worked at a "Private Equity" firm, but I can definitively say that this type of background (IB + Startup) would be very welcome for a Senior Associate/Associate Director-level hire in a Late-Stage Venture Capital fund. The only portion of the skill set that you would need to ramp up quickly is the Venture Capital-specific "deal" stuff, such as familiarity with current VC deal terms, market practices, familiarity with the names/markets of your "coverage". In late-stage VC, there's a bit more "hunting" involved, because the companies' founders generally don't do the types of pitching that a Series Seed to Series C company would do. Access is one of the most important skills at this stage because the best companies' rounds are often multiple times oversubscribed given the pro-rata/super pro-rata by existing investors on top of new interest. Having some startup/tech industry work experience may also help because you would be able to develop relationships with people at the operational level that the VC's often don't interact with -- "diasporas" are very important here. Just like how PayPal created the PayPal mafia, there are great companies being formed by alumni of exited companies (even beyond FAANG). Further, your co-workers may eventually go on to roles at companies you may see the rounds of/see secondaries of, and they are often amazing resources to learn about the company and their competitors -- these are insights you often don't get from a dataroom. A single reference check call is often much more helpful than hours of excel jockeying, as your diligence process usually gets pointed in the right direction when you speak to people in the target company, their competitors, suppliers, clients, etc. As a former equity research analyst, I grew up doing Channel Checks almost on a daily basis -- for some reason, this is something that's done to a much lesser extent in VC, but a number of my most profitable insights have come from Channel Checks. References are difficult for me to come by because of my background and I often struggle to get phone calls or coffee chats set up within the very tight timelines of late-stage deals right now. This has been compounded with the difficulty of meeting people during the last year and a half -- Unfortunately meeting at Blue Bottle had not been an option over most of the pandemic. I also find that pure finance people are sometimes at a disadvantage to those who have worked in tech, because even equity research analysts like myself who grew up understanding companies and sectors in "depth", still have a shallow understanding of how companies operate, what their value chain looks like, and especially for technology -- what the market segment actually looks like. Judging the market standing of a tech company's product is much easier for someone with actual work experience, than it is for someone with a pure finance background -- I often struggle to figure out if a company truly is a market leader in its entire vertical or market segment, which is really important in the Late-Stage, where IPO is one of the primary paths to exit.
Someone in the thread above asked about what kind of firms would fit in this definition. Let me first caveat by saying that even the term "Late-Stage", when used by many people, is very broad, and depending on who you speak to, encompasses "Growth-Stage Venture Capital" (Series C-F), what practitioners specifically refer to as "Late-Stage Venture Capital" (very very late rounds like Series F-onwards and Pre-IPO rounds), and the nebulous term of "Crossover", which can mean either buying into the last/penultimate round before the IPO (as long as it's 1-2 yrs from IPO) or buying secondaries from early investors/employees/whomever right before the company goes public. Some of the best firms who are generally focused on specific stages are the following:
You also have a lot of firms who invest across the gamut:
I'd also like to point out that Late-Stage Venture also involves quite a bit of Secondaries -- meaning buying shares from early investors, employees, founders seeking some liquidity, service providers who received stock as payment, venture funds with specific funds reaching their end of life and other natural sellers. Secondaries are often a fantastic asset class, and some of my best returns have been from Secondaries -- our Secondaries investments are actually currently outperforming the Primary investments. Having some work experience at tech companies gives you a network that could include some of these natural sellers. Firms like Tiger and Coatue sometimes have vehicles specifically dedicated to buying Secondaries of certain companies as they pop up. I'll give you an example of some Secondaries deals that I've done, which illustrate the value of this:
Long story short, get that operational work experience, and you'll have a massive advantage over pure finance people in Venture, no matter what the stage!
What % range is classed as lowish leverage out of curiosity?
How early is the startup and what role will you have? If the company has success, and you were an early enough employee, you'll have a strong case for VC and early growth funds. However, great VC spots are few and far between so networking is crucial.
Series C joining ops/finance at a point where revenue exists but is low - seems like a good way to develop reference experience on how to scale. may not be a direct translation to early venture, but perhaps applicable to late stage venture, if i’m reading the rest of the info on this thread correctly?
B
Which role would be best at a startup for a move into VC? PM? Finance & Op?
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