Private Equity to startup founder?
Is moving from post mba private equity (maybe vp level) to starting your own tech startup a common exit opp? My only worry is lack of techincal experience for the actual product but is it something that people can do sucessfully?
No, not common at all and requires a completely different skill set. Most of the best founders have technical backgrounds and have worked at other startups before to get a better sense of the operations. PE operations are COMPLETELY different from startup operations.
if your goal after PE is entrepreneurship, a search fund is likely a more achievable path
That depends upon the type of tech he wants to work with. SFs typically target stable businesses in low-risk non-cyclical industries, which excludes what is often connoted by tech entrepreneurship. The exceptions I've seen would be something like an niche-industry-specific ERP system that's been owned by some dude for the past 20 years who wants spend his days sailing. The viability of the search model is also based on an acquisition in the 3x - 5x EBTIDA range, which will exclude most of these businesses. I'm a fan of the search model (got my feet wet at a search fund), but I'm not sure this will accomplish what ballin3201 is aiming for.
I'm going to disagree here and say it's doable IF you have a strong technical co-founder and are willing to wear multiple hats. You'll do the investment sourcing, marketing, legal, client acquisition, etc. You'd be hard pressed to find a non-technical founder who knew all of those prior to starting up his company (only exceptions being founders who are on their 2nd, 3rd companies).
If you're serious, leverage your PE background as much as possible when fund raising. VCs love throwing money at MBAs from IB/PE/HF, so play it up as much as you can. Also, use your connections to reach out to people in the VC community, you'll likely have a few leads given your position.
As a current PE professional and a co-founder for a startup, I will agree with this statement.
You will need a technical co-founder that best compliments you. You will most likely be front-facing with clients, customer, partners, investors, etc. I think you really leverage your PE experience by being 1) disciplined, 2) investor mindset, 3) managing people; think about the times you manage people during diligence, 4) experienced in being front-facing.
As a business owner that is considering PE in the future, here is my perspective:
If you can get insight into the way the COO runs the fund (i.e., the actual operations of the business), it can be valuable. You can also develop a list of contacts (HNW individuals, people who've ran or built businesses) that you can lean on for financial, emotional, and strategic support as you build your business. It will also put you in touch (hopefully) with other entrepreneurs as you vet and perform DD on deals (the value of this network hopefully need not be explained).
Overall, it's pretty good. But, keep in mind that running a fund is way more cerebral than building other types of businesses, particularly high-growth technology businesses. You're dealing with only a handful of employees who make infrequent but high leverage decisions. Building and operating a company from 0 to 1 and beyond involves making many tiny low-leverage decisions until you can afford not to. Less cerebral, more animalistic. Not to mention, you're going to miss out on specific domain expertise required to make that business run (whether it's a tech biz, a traditional brick and mortar, and so on).
Greetings! What are the common causes of product failure early on and what steps can entrepreneurs take to increase the chances of success when launching their products?
Hello. Initial product failure can happen for a variety of reasons such as lack of market research, poor product design, ineffective marketing strategies, and insufficient funding, read more on the blog. To avoid these problems, entrepreneurs must conduct thorough market research to determine customer needs and preferences, create a well-designed product that meets those needs, develop a robust marketing plan to attract potential customers and secure sufficient funding to support product development and launch.
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