Public Markets to New VC or Growth Equity Fund

I wanted to see if anyone had made the transition from a Public Markets investing role (either HF or AM).

I work on a long-only portfolio invests based on long-term trends/themes and have found that I really enjoy learning about the innovation. What I don't like is how passive the investing is and also that a lot of the innovation is nested within large companies with other value drivers. I'd rather be at the forefront and also build operational skills so I have been looking at a transition to VC. I have a potential opportunity at a new VC fund and am trying to get some ideas if this transition makes sense as well as what to expect. I understand the power-law dynamic with VC returns and deal flow so this is something I'm considering. On the flip-side, the fund has a niche focus both geographically (I'm in Canada) and sector wise (specific areas in clean-tech). 

Wondering if anyone can give their insights on the transition and what to know if I'm considering joining a brand new fund. One big debate is if its worth it to wait it out for a role at a well established shop or just get a foot in the door.

I realize there was a similar post in the HF forum and I shared some insights on the pros and cons of my AM experience:…


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Comments (3)

  • Associate 2 in PE - LBOs
Apr 28, 2021 - 7:21pm

Niche focus is a good thing for a first time fund: you have a clear zone which makes life more manageable. I have friends who are generalist VCs at top firms and their life is amazing because there's a process that's been fine tuned for decades. I have friends who are generalist VCs at new-ish funds and their life is awful because it's overwhelming to try to jump from covering this to that. Those are both polar examples but my point is that I would not consider that a "ding". I will say though the work as a VC is not truly operational. Primarily you will be a sparring partner with CEOs as well as do talent introductions and help with subsequent fundraising. Those are the most important things. You can offer advice based on pattern recognition for odd ends here and there (e.g., how to structure a salesforce) but you're never actually doing things *operationally* if that makes sense.

  • Associate 3 in PE - LBOs
Apr 29, 2021 - 10:30am

Did something similar - hedge fund to first-time growth equity fund. I had to start as a analyst despite 3 years of experience (all with a small L/S hedge fund), which was annoying, but they also made it clear I could be promoted quickly, which happened - my next two promotions took a total of 2.5 years (still here today)

Learning the deal process (especially legal work and structuring) took some getting used to, as did sourcing - I was used to thematic market research, but the cold calling and salesmanship was all new to me. There will typically be a lot of sourcing work at new funds that don't yet have the reputation to attract deals to them, and there's definitely a sense of "slim pickings" because top opportunities went elsewhere. Luckily in VC and growth you have a little more leeway than in buyout because a lot of the deals get done with multiple investors. 

I can't speak for VC as much, but the further you go down the maturity chain the more relevant deal reps are. This was the biggest barrier for me when trying to join more established funds, hence starting as an analyst at a first time fund. It gets a lot easier once your foot's in the door. I get recruiters reaching out for opportunities at much larger funds pretty regularly now

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