PE Fund of Funds to Actual PE?

Hey guys,

I am curious as to whether any of you believe that working for a private equity fund of funds (a company like stepstone) provides a realistic path into landing a job at a PE firm. I can see how a great deal of the knowledge would be transferable and valuable from the standpoint of understanding the way funds raise money and gauging their performance. I am just curious as to whether people see a position like this as only a path to a fundraising/monitoring/reporting position in a PE firm or if it is possible to transfer into a true associate role.

Any thoughts would be appreciated.

Thanks,

Comments (39)

Nov 1, 2013

I imagine it would be difficult, I believe less of the skill set would be transferable than you imagine. That being said, I'm sure it's not impossible. You may need to go to banking first- you won't have the modeling skills they want. I'm sure it's not an easy transition.

Nov 5, 2013
notthehospitalER:

I imagine it would be difficult, I believe less of the skill set would be transferable than you imagine. That being said, I'm sure it's not impossible. You may need to go to banking first- you won't have the modeling skills they want. I'm sure it's not an easy transition.

This. Although the material may be similar, the work is entirely different.

Nov 1, 2013

Know a guy who did IB then moved to a large FoF. Tried to move to PE but had a difficult time. Was paid close or in line with PE though.

Nov 4, 2013

GS PEG has a history of sending its analysts to top megafunds.

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Nov 5, 2013

Tough to do. Ideally you want to be at a FoF with a direct investing function, and that's where you'd want to sit because you atleast get to some exposure to PE investing, albeit superficial. Even in the direct investing group, its still an uphill battle.

To the guy referencing GS PEG... its typically out of the direct investing group within GS PEG... I'd caution against thinking that GS PEG is the road to MF.

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Nov 5, 2013

That is along the lines of what I was thinking. Thank you for the input!

Nov 8, 2013

possible but very difficult, gotta network like crazy and get lucky - tough to develop the modeling skills doing FoF work

Nov 8, 2013

To clarify, do you have previous IB experience? I imagine the transition would be infinitely easier if you went IB--->FoF----> PE (for whatever reason).

Jun 13, 2018

And if you have prior PE experience? PE/ FoF/PE?

Nov 8, 2013

Yes, in IB now (not at a BB). Will still most likely avoid this route after the comments above.

Nov 8, 2013

Probably a good idea, I think IB---> PE if possible is obviously easiest. Probably also easier to go to a "lower quality" PE fund and then move to a better one than it would be to go to FoF. I'd argue it'd be easier to stay in IB for a while longer then go PE, or even go consulting for a while then PE etc. Basically, many easier options and you don't want to get yourself stuck in a FoF role if that's not where you want to be.

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Nov 8, 2013

Got it, thanks. I have been weighing the consulting route a great deal lately as some partners at my firm are MBB alums.

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Aug 20, 2019

You do LBO modelling when you work on co-investments so at least as much modelling as consultants...

Nov 8, 2013

this has been discussed in detail many times--do a quick search. Most people will tell you that the skillset is not readily transferable, so it's tough to do (esp. to MF) regardless of how much you network while at your FoF. This isn't typically (or really, at all) at route to PE.
Best advice i have heard is network like hell then go get an IB job (or maybe even MBA -> IB), and use that network once you have some more relevant experience.

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Nov 8, 2013

Could move to a megafund on their IR team maybe but I've never seen anyone make that jump directly as an investment professional.

Best Response
Nov 8, 2013
Hugh Myron:

Could move to a megafund on their IR team maybe but I've never seen anyone make that jump directly as an investment professional.

This.

I'm of the belief that anyone can do anything if they set their mind to it and work at it (and this means moving from like FoF to an investment position at a fund and vice versa). Sadly much of the market disagrees with me but that's for a different thread on a different day.

A few thoughts. I've been in this game a while now (and have seen it happen, though in Asia where things can be less structured). Essentially here's the deal. For most roles with PE firms that you will get from the FoF side will most likely be in IR. You have a natural advantage over bankers in this role because as an LP you'll have other LP relationships and know how LPs thing and know the individuals making decisions etc. So in theory you could be a more informed, nuanced fundraiser than some banker (though if they want a ppt monkey they can go trawl the banks). IR is super important and if you are good at it (and raising money) you are gold since you can get a cut of what you raise and carry.

You can and definitely should network though (it never never hurts). The mega funds probably won't take you as an investment professional unless someone high up really likes you and dictates that you need to get in (small chance) plus it's probably not a job you want. You can at smaller funds since they are more family run kind of shops especially if you get to know the people and they like you. Although you may not have technical skills (you can learn to model using samples on this site and from banking friends who will teach you the basics) and you can practice by reading 10Ks etc when doing your own PA investing (it makes you a better fund investor as well).

Ok. So then. How to network? Well. Talk to everyone. Tell them your story. Get to know them over coffees, beers, meals, diligence events, planes (more Asia specific) etc. More importantly (especially the senior types) ask for theirs. People will be open to talking about themselves and happy to share and brag (you'll be surprised how random some paths have been). Ask nice softball but pointed questions about them. And about their career and investment philosophy. You're young, hungry, eager to learn. Some might even ask you about yours. Tell them what you've learned. What interests you. Ask about specific investments? Be interested. Did they invest in retail? Funny. You just read GAP's 10k and know x,y, z (keep it basic and don't brag). What are the parallels, differences, other things you should look for? Do this enough and I can bet you someone, somewhere, may be like "hey you seem really into investing, smart, work hard and maybe you should give it a try. I know someone that..."

There are literally TONS of funds out there. A bunch just aren't name brands and most people have never heard of them.

There is also the whole joining a sovereign wealth fund and hope they do directs alongside GPs. If you climb up the ranks then you'll have tons of relationships etc and can maybe move to a GP that way.

Or you can get a banking job, pray markets don't collapse, join the ratrace and do the standard route.

Another idea is meeting and networking with hedge fund managers, many who can be less structured than PE guys but are fundamental in their thinking/process. For those guys you'll want to have stock pitches ready...

Good Luck

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Nov 8, 2013

This is something I honestly don't know the answer to. Do large PE funds have large IR teams? I feel like the theme at hedge funds is that large funds with high Sharpes don't do a whole lot of marketing.

Nov 8, 2013

Thanks for your responses, I agree that it's probably better to still try to go banking and then PE rather than directly. Both seem difficult though so I'd rather just make the direct transition if it's possible.

As far as networking though, I'm not sure what would be too aggressive considering I work with them and I wouldn't want word to get back to my managers. What do you guys think is appropriate? Should I reach out to many of the GP's and just be vague? Or should I be blunt and say I want to make a transition?

Nov 8, 2013

Had one of the three head MD's at Bain Capital once say to me "PE FoF's is where you go to die. Don't ever go there. It will never help you get an investment professional role".

While extreme, that was a direct quote from a guy that has run a MF PE shop since the mid-80's.

Aug 20, 2019

Well I know some people from PE FoF who went to Bain Capital Investment Team...

Nov 8, 2013

Yes, it is far too steep of a learning curve. Perhaps (still small chance) with a smaller, lower middle-market fund, but not at a Mega Fund. If you're looking for an IR position, I know ex-EB banking analysts that took IR jobs at MFs, which reflects the level of competition for even those roles.

This is probably not what you want to hear, but the best move would be to lateral (probably start as a first year) to an investment bank; the summer is the best time of the year to start looking. Maintain your contacts at the MF, casually grab coffee and hope that you can leverage your relationships to get involved in their next recruiting cycle.

Best of luck.

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Nov 8, 2013

pe recruiting is almost entirely done by set group of head hunters through a standardized process. get on their radar. otherwise you are looking at a very painstaking journey.

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Nov 8, 2013

PE recruiting has not even started for summer 2014; above poster might be referencing 2013.

I think having FoF experience is great to have, and you should be able to get the attention of HH's. While you say you 'know' more about PE than IBD guys, this doesn't make a difference with Direct PE guys. What's important is the robust modeling experience, which you attain in IBD.

Nov 8, 2013

.

Nov 8, 2013

no where in my post does it mention 2014 or 2013. general speaking.

Nov 8, 2013
banker00:

no where in my post does it mention 2014 or 2013. general speaking.

So why are u saying "PE recruiting is done"? It's done for 13, not 14.

Nov 8, 2013

pe recruiting is done by headhunters. lol not pe recruiting is done. are you fuckin retarded?

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Nov 8, 2013
banker00:

pe recruiting is done by headhunters. lol not pe recruiting is done. are you fuckin retarded?

Far from retarded, actually. Everyone here knows PE recruiting is carried out by recruiters, ur sentence reads incorrectly and adds absolutely no value to the OP's question.

Nov 8, 2013

thanks for your comments everyone but lets keep this constructive =)....also normally, when you try to network with PE guys, what kind of things should you talk about? I mean is it fair to ask which HH they might be using, asking them to help you push you resume in front of their HR directly (if possible at all)...

"I worship individuals for their highest possibilities as individuals and I loathe humanity for its failure to live up to these possibilities."

Nov 8, 2013

OP - banker00's advice was actually pretty solid despite the reception it received from johnny_quest.

To add a bit more detail, some of the headhunters who you should target would be Oxbridge, CPI, SG Partners, Amity, Henkel Search Partners, etc.

Getting onto their radar is the best thing you can do apart from initiating dialogue with the shops directly. Some smaller shops may be receptive to cold approaches but most of the more reputable shops prefer to let headhunters run the screening process and then provide a list of candidates to interview.

Other than that, is there anything in particular that makes you think that your modeling and understanding of PE is better than kids who work in top sponsor groups? Speaking from what I experienced having gone through the PE recruiting process this past year, I can honestly say that it was extremely intense and there were lots of very qualified candidates who were great at modeling and really intelligent. I wouldn't underestimate the types of candidates you will encounter when interviewing for these jobs. I'm sure you are adept at modeling and understand PE, but I would devote a lot of time to preparation regardless and try to ensure that you convey yourself as humbly as possible because I even saw kids who were better than me who didn't get offers, likely because they were perceived to be too arrogant. PE firms are looking for the whole package, so coming across as well rounded, modest, and hard working is critical.

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Nov 8, 2013
Comment

"I worship individuals for their highest possibilities as individuals and I loathe humanity for its failure to live up to these possibilities."