Fund of funds / Analyst role - exit opps

For those that currently work or have previously worked in the fund of funds space, what are/were the pros/cons to the analyst role, and what were/are the exit opportunities (really) ?

I have 2 offers right now and am looking at it as an opportunity to get my feet in the water. But my long term goal is to work in venture capital. The interviewers say you can pivot to the gp side; however, I don't know if that's authentic or just lip service. 
 

For context, the angle of wanting to get in VC comes from having interned at 2 VC firms during my undergrad. So I'm wondering if I should take the FoF offers or pass them up and keep trying for VC
 

Thanks!

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Comments (14)

  • Analyst 2 in PE - Growth
Aug 10, 2021 - 10:00pm

I worked in the FoF space before moving into growth equity. It is frequently talked down on this forum because much of the role isn't direct investing and the comp is slightly less depending where you are but I really enjoyed my experience. I worked at a well-known firm but not a giant like Harbourvest, HL, Stepstone. The work life balance was excellent and because the firm was relatively small but with a growing aum, I was getting paid well (just below IB analyst roles but not a big discount) in a tier 1 city. Some of the cons were that the work could be slow at time doing primaries (fund investing) but I spent the majority of my time doing co-investments which is why I was able to make the transition.

The exit opps really depend on the work you do. I really only see people move to direct investing (less common roles mentioned below) if you're at a place and on a team that does co-investments or credit/lending or some other form of direct investing (I.e. alpinvest, Adams street, gold point, partners, etc.) The most common exits I've seen are to: other FoFs, endowments, B-school, family offices. Less common but moves that I have still seen are to growth equity, lmm pe, placement agents. Personally, I have never seen anyone leave a FoF and go into venture but I'm sure it's probably happened. Venture roles are hard to get even from banking positions because there are so few of them and they favor individuals with operating backgrounds since modeling skill and pure finance/accounting knowledge isn't a prerequisite to excel. I've never really understood the appeal of venture roles for several reasons, but with the right mindset and hustle I'm sure it's possible.

Despite it being looked down on but others in more direct buyside roles, senior positions at some firms like the ones I mentioned above still make great money (probably not fuck you money unless you start and grow a successful firm) and you'll have the time to live your life not in an office.

  • Associate 1 in IB - Cov
Aug 10, 2021 - 11:27pm

Worked at a FoF prior to business school and echo this post 100%, specifically the part about co-investment experience being beneficial.  For what it's worth I also found the job to be slow but it looks great on a resume.

Saw one person leave to go to a no-name VC firm and one to real estate.  FYI VC isn't like buyout firms where there are hundreds that are worth being at.  There are literally only 20-30 firms in the whole world that make any kind of consistent money, and only 5-10 that are really killing it.

Aug 11, 2021 - 7:21am

Thank you for the comprehensive answer. I am currently in a similar situation (FoF offer at one of the "giants" you mentioned but long-term aspirations to go into LMM / MM PE). 

As someone with just around year of experience in banking in a sub-optimal role for recruiting (e.g. ECM / DCM / FIG), could a few years at a FoF leave me with the same / only slightly reduced chances of eventually ending up in PE, rather than staying a year or 2 longer in banking (before considering other factors such as WLB)? How long did you stay at the FoF and what was your background before this? Was your epxperience in the US or in Europe (and do you have any views on how it might differ by geography)? 

Separately, WLB seems to be a selling point for a FoF - is this the same across all funds or generally the larger funds work more hours in this space as well?

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  • Analyst 2 in PE - Growth
Aug 11, 2021 - 9:10am

Generally, the hours are longer if you lean towards the co-investment/direct or secondaries side, as the work is much more qualitative for fund investing. From banking you'll probably have a much easier time recruiting but it can still definitely be done from a FoF, especially if you already have banking experience. I did not come from banking, I did quantitative research/trading at one of the large HF/asset managers and hated it and wanted to switch to something more fundamental research driven. I was at the FoF for 2 years and was in the US. But, I know plenty of people that choose firms like Adams street and alpinvest after banking because the lifestyle is better and the pay is still solid as an associate. Go look at LinkedIn but most people from those two places have banking backgrounds.

Aug 16, 2021 - 8:51pm

Well ya, some of their returns suck YoY: Pantheon, Abbott, older HarbourVest.

Adams Street and JPM are great but it's basically an index based on the hundreds of underlying GPs.

Comical that if you look at the co-invest and secondary allocations within these FoFs as the returns are often abyssmal.

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Aug 16, 2021 - 6:47pm

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