Growth Equity recruiting undergrad
Hello,
I'm a current sophomore at a top target recruiting for summer internships, sophomore summer internship currently and junior summer internship next spring. Would like to join as a growth equity analyst after graduation.
My questions
-What are the technical questions/knowledge I need to prepare eg LBO modeling/valuation/ any growth equity specific things
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What industry knowledge should I know before eg Saas business models etc
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Key things to know or have prepared before interviews eg stock pitch (what kind of company they are? Their past investments, di they invest in private/public , small cap)?
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How to show fit with the job? I am a non tech finance major with a 3.6 GPA as a sophomore. Looking at places like General Atlantic and Insight Ventures etc etc
Thanks a lot for answering
Valuation-wise, don't waste too much time learning LBOs. Growth equity is largely minority , unlevered investments. Everything is really valued on EV/revenue. Be comfortable with concepts of EV/revenue and EV/EBITDA, as well as three-statement models, with a strong focus on the income statement. If you have the chance, learning waterfall models can also be valuable (shows payout on exit depending upon where you sit in the cap table).
Become comfortable with cap tables and vc funding terminology. Dig deep on one specific subsector of tech that you think is an attractive investment opportunity and become an expert in it (i.e. Insurtech, tech enabled services, etc.) Always be ready to pitch a company you think the firm you are interviewing with should invest in.
Understanding of SaaS business model is important - understand how revenue recognition works, churn, etc.
Most importantly, know whether or not you are skilled at sales - many growth equity firms count on analysts to largely do sourcing (i.e. cold calls). If you are good at sales, shout from the mountains during interviews about why you like combining sales with finance (they don't want people who are going to hate cold-calling). If you don't like it... consider a different space.
Learn the big firms in the space and the key companies. Understand where companies are trading in the specific sub-sectors (avg Ev/Rev multiples).
Best bet for Sophmore summer might be a boutique tech IB internship (linkedin folks who interned at IBs as sophmores, or cold call - makes for a good example of your salesmanship during interviews too), vc internship, or interning inside a tech startup on the strategy/finance side to develop industry expertise. There are junior-year internships of course at multiple growth equity shops, Really think about their culture/focus areas and find the ones that are a strong fit.
Know the portfolio cos of the company you are interviewing with inside and out. Also, get involved with some tech/entrepreneurship clubs at your school.
Hope this helps.
While it can't hurt understand how an LBO works, you definitely don't need to be able to do an LBO in 2 hours. With that said, growth equity firms like GA and Insight will definitely conduct growth buyouts and will use leverage to fund those deals. Lots of lenders these days will start lending off of annualized recurring revenue.
You should try to get a good understanding about SaaS metrics that growth equity firms care about: ARR, TCV/ACV bookings, LTV/CAC, gross dollar retention, etc.
Learn as much about the fund's portfolio as possible. Be ready to ask good questions about those deals. I.e what was the thesis, was XYZ a risk, how did we find that investment? etc.
Most GE analysts are expected to source. Intern728 is spot on. Be able to explain why your interested in sourcing.
Lastly, be able to explain why you want to be in growth equity specifically, and why you would prefer that over traditional buyout PE. Be able to explain why growth equity and not banking.
When it comes to sourcing, its not always as bad as it sounds. Sourcing as an equity sponsor (with a reputable track record) is kind of like needing a prom date as an attractive girl. People actually take your cold calls, you can just introduce yourself at a conference and let them ramble on, if you say "next time you come to xyz city, reach out and we can grab lunch" it actually happens.
That said, competition for deals is real and so having charisma is important. To stand out as an undergrad be sure to be a leader in extracurriculars. Like president of a well regarding business organization type of leader. Not easy, but you've set a challenging goal for yourself so it comes with the territory.
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