MF Growth Teams Comp

In the growth arms of MFs (think BX/KKR Growth), is comp at the Associate level on par with the other traditional PE teams, or will you be taking a cut? How is work/life balance? 

Thanks very much

Comments (21)

 
Most Helpful
  • Associate 1 in PE - Growth
Sep 23, 2020 - 6:28pm

Current associate at a growth arm within a MF (think bain, kkr, bx, apax, permira) and my all in comp is the exact same as associates on the buyout side

 
  • Associate 1 in PE - Growth
Sep 24, 2020 - 1:31pm

Lol not permira but re reading my comment that would make sense. I was an A2A promote. I would say about 50% of analysts get promoted at my shop but the analyst program is relatively new. Hours are a bit better than my buyout friends: 60-70 normal and 80-90 when I'm on a live deal. In terms of recruiting, yes we generally look at the same groups. the difference is that we're looking for those with a "growth investor mindset." you have to be able to model well but frankly tech growth equity modeling is not rocket science once you learn the ins and outs of retention, cohorts etc. we look for business model intuition and if you're personable over everything - case based interviews that test whether you know what an attractive company looks like in the space

 
  • Associate 1 in PE - Growth
Sep 24, 2020 - 2:10pm

First few months was 100% sourcing to build my pipeline. End of first year was 80/20 sourcing diligence. second year I sourced a deal and got to work on it a ton. Frankly, though, sourcing will be a huge part of any analyst role. It gets a lot of flack but the amount of business model intuition you get after talking to hundreds of companies is pretty damn valuable. My opinion is that's harder to "learn" than modeling is. 

 
  • Associate 1 in PE - Growth
Sep 24, 2020 - 2:18pm

1. rev, rev growth, gross margins, customer concentration, differentiation, past and future capital raising plans, ebitda margin etc. typical stuff 

2. it's changed a lot with covid. all of the industry/conference stuff is gone and replaced by a shit ton of linkedin/crunchbase/industry list based sourcing + you're relying on your network at other growth funds. aka they pass on a deal but tell you that your fund might be interested. banker relationships too (i definitely didn't have this as an analyst)

3. this is where the personable part comes in. you send them materials from your value creation team (if you have one). you understand when you need to push harder and when you need to back off. most importantly, if you're a good analyst, you're able to give them knowledge they didn't already have about trends in their space, competition etc. if the conversation is a value add for both parties, it'll go better overall

 
  • Associate 1 in PE - LBOs
Sep 24, 2020 - 2:27pm

Super helpful, thanks a lot.

 

Last question. I've made a huge mistake going to large cap PE, and need to get into growth ASAP. I want to be sourcing and eating what I kill, not doing data entry, mindless sensitivities, template LBOs, spreading comps, pushing papers with legal and tax guys, etc., for the next ten years. What do you think the best approaches are here? I already have a good early stage network, just not growth stage.

 
  • Prospect in IB-M&A
Sep 27, 2020 - 11:30pm

I looked at KKR's growth tech arm but ended but signing with a REPE group later since the sourcing sounded nauseating to me and was much more interested in later stage equity modeling and complexity.

 

Having seen your post, I'm a bit surprised how simple the metrics are (rev, rev growth, gross/ebitda margins). 
 

Do you ever ask about churn? R&D? % of costs that are fixed? Eventual unit economics on contribution margin? Backlog? Billings? RPO? % deferred revenue? Long term plan for op margin/gross margin? 

What size companies (revenue) do you work with usually? I'm curious what the opportunity I didn't go with feels like now, potentially might switch back for associate. 

Finally, how often do you do refresher calls with earlier stage companies? Just to catch up and see how their startups are doing in case there's a later point when you may provide financing?

 
  • Associate 3 in PE - LBOs
Sep 28, 2020 - 10:45am

Do you ever ask about churn? R&D? % of costs that are fixed? Eventual unit economics on contribution margin? Backlog? Billings? RPO? % deferred revenue? Long term plan for op margin/gross margin?

Ask yourself - do you really think they're not asking themselves these questions? 

 

Finally, how often do you do refresher calls with earlier stage companies? Just to catch up and see how their startups are doing in case there's a later point when you may provide financing?

Depends person to person, but it's the same with all sourcing - you can't spread yourself too thin chasing down non-material leads, but you also need to have an "in" with companies before everyone wants in. That's the art. I know that's not a helpful answer but that's the true answer. 

 
  • Intern in IB - Restr
Sep 28, 2020 - 10:52am

As to your first point, of course they eventually ask about those things once NDA's are signed and you're formally doing diligence. The first call is just meant to understand whether the company is of interest to my firm at a very high level. You also have to keep in mind that the CEO will likely not know those metrics off the top of their head and will likely be extremely overwhelmed if you ask "what are the eventual unit economics on your contribution margin" on an "intro" call.

 
  • Associate 1 in PE - Growth
Sep 24, 2020 - 2:36pm

I'll try my best but because I was A2A I'm not sure I'll have the best answer for you. Frankly, there were plenty of times in my first year as an analyst where deals I'd source would get killed over and over to the point that I wished I had taken my large cap PE offer. Grass will always be greener but right now I'm very happy I ended up in growth. My best advice would be to build your network within growth not by cold messaging associates but by using your existing network to get warm leads. Almost everyone in growth (junior level) is willing to chat because they chat with smart people for a living. Corny but growth is a space where your network is really your net worth. I'd chat with nearly any intelligent person that reached out to me no matter what they were doing in life. Growth funds will value your hustle if you reach out to them as they want to see that you're someone who will do the same for CEO's of hot tech companies. 

Past that, make sure your business model intuition is well-developed. Read everything you can about growth stage companies. In the beginning, understand why net retention >100% is a beautiful thing and why subscription models are more attractive than license/maintenance. From there, build your knowledge about the relationships between retention, cohort performance, ASP, contract structure, etc and start forming your own theses that you can confidently talk about in interviews.

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