Lateraled to another growth equity fund over the last 12 months. Moved from Sr. Associate to VP.
I previously posted a Q&A here.
Happy to answer questions without going into too much detail about myself.
Always enjoyed the insight I was able to gather here, and so trying to pay it forward.
have you heard of Joshua Tree
Thanks for doing this. A few questions...
1) How important is is that a candidate coming from IB specifically have a tech-related IB background? Is it absolutely necessary that his/her IB experience was in the tech space? And if so, is it imperative that the specific area of tech be related to what you guys do?
2) What is your firm's hiring practices when it comes to analysts coming from BBs vs. reputable boutiques?
3) If you guys are based in NYC, is there a preference for analysts from NY shops?
Thanks!
No problem.
1) It is not absolutely necessary. I know plenty of people who covered other industries in IB before getting into tech growth equity. It helps, but definitely not required. You do need to articulate why you want to get into the specific industry. And really, why growth equity vs. LBO shop, why this stage of fund, etc.
2) Associate hires come from various BBs and boutiques.
3) No preference.
Great, thanks so much for the information.
Just a quick follow-up... can you please briefly explain how your job/tasks at a Growth Equity firm might differ from someone who's at an LBO firm?
Thanks!
How hard is it to lateral? I'm joining a 2 and out shop and trying to prepare for that process if I end up choosing to not go to B-school.
I'm not going to say it's easy, but if you network properly you should be able to get an interview somewhere. Headhunters can also help facilitate the lateral too. Hiring for Sr. Associates and VPs are much episodic and less structured. So you have to come across the opportunities, and evaluate whether or not it's the right one for you.
Moving up-market in terms of fund size as opposed to down is definitely harder.
How early do you recommend to start networking / contacting headhunters once I join the PE firm?
Thanks for taking the time to do this.
1. What were the main differences in what shops were looking for at the VP level vs. the senior associate level and how have your responsibilities changed? 2. When you have sourced deals what's your value proposition for the company to have you come on as an investor compared to your competitors?
If you’re going to another shop, particularly if at a bigger shop, it’s better to get in at VP vs. Sr Associate. VP is a hurdle that’s harder to get over, and you’ll expect the next couple of years worth of tenure will likely be more certain.
Thanks for the insight!
Can someone in the BD/sales side of a leading FAANG company jump to growth equity?
More likely for you to break in for a pure sourcing position, otherwise it’s hard.
Different topic - don’t use acronyms with people who may not know what they mean. ICould make the other person feel stupid or just not know what you are talking about. I had to look up what FAANG meant just to tell myself I should have known what that meant...If you’re talking to a owner of a family run business who doesn’t know squat about PE or anything like that, may turn that person off. Sourcing 101.
To be fair, bankers use acronyms all the time.
ilc22 don't use acronyms with people who may not know what they mean. ICould make the other person feel stupid or just not know what you are talking about. I had to look up what 'PE' meant just to tell myself I should have known what that meant...
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I’m at a similar fund as an Associate and find myself going back and forth on if I want to pursue VP+ roles versus actually testing my mettle as an operator (likely starting in some Corp dev / strat / Chief of Staff kind of role).
What made you decide to pursue a long-term career in growth equity?
Did you ever explore actually joining a growth-stage tech company in a position like the ones I mentioned above, and what did you see as the merits / risks? I know it’s not a terribly uncommon exit for folks
1) I think it's an exciting segment within finance, and more specifically PE broadly speaking. I enjoy getting to go out and meet companies. And then when you invest returns are typically driven by growth - the traditional LBO model is less appealing to me, and frankly i wouldn't be great at it I don't think.
2) I never did, but I've seen plenty of people go down this route. Aside from the career transition, merits include better work life balance and potential earnings power (company equity). Risks are related to the company itself (particularly if early stage) and time it takes to recognize the earnings power (might have to wait longer and be lucky at the right company) I've seen plenty of people be really successful making this kind of move
How easy or difficult would it be for a McKinsey/Bain consultant to exit into tech growth equity?
i see it happen all the time
deletedeletedelete
I think at a higher level you need to ask yourself the following:
What type of industry do you want to be in. If Technology, what end of market of tech do you want to be in (healthcare, infrastructure, vertical market, etc.) Do you want to do business to consumer, or business to business software?
Do you want to work at a earlier stage business, or something more mature? Do you want to work at a Sequioa backed business or do you want to work at a company run by Vista? Do you want to work for a public company?
Geo is always an important factor
What type of role do you want at a company? CFO, Sales Operations, Customer Success, Corp Dev, Strategy, etc.
I think if you flesh out these questions for yourself, you'll have a much better sense of what is a "good" company for you to join.
how much does tier of tech group matter in recruiting? Will you get looks at most good growth funds if you are at a solid BB tech group (not GS/MS)?
See posts above that address this question. TLDR, not critical but helps.
What are the top growth equity funds? Is it similar to MFs in PE?
to name a few: Insight, KKR growth, Accel Growth, Spectrum, JMI, Silversmith, AKKR, FTV, Norwest and many others
Growth is kind of a catch all, like VC. Some growth equity firms only invest in Series A (note different than pure VC still) and some are much more later stage (specifically the growth arms of MFs)
There's more growth equity firms that pure MFs if that's what you're asking. Not as qualified to opine on MF landscape though
How do you prepare for Growth Equity interviews as opposed to traditional LBO PE interviews? Do you have any resources you recommend to study?
There will always be a case study. Maybe review a CIM, or do a paper LBO. Even in a growth equity interview. Maybe the difficulty won't be as high.
If sourcing is important to the firm, than you'll be asked questions that address your ability and interest to source. If it's clear you're not excited about dialing the phone, cold calling, meeting companies, etc. harder for you to land a gig at a sourcing oriented shop.
Thanks for the Q&A. Are there any books or blogs you recommend to learn more on tech and growth equity?
Ton's of resources out there, and in this forum. Won't get into too much detail.
Google search SaaS Metrics, which is a good place to start.
What's your firm's investment criteria (formal/informal characteristics) for sourcing deals and companies
What's your best approach when it comes to networking, sourcing and calling up these companies? What kind of questions do you ask to really get an understanding of the company, the people, industry and have a thoughtful conversation?
I'm going to speak in general terms to keep anonymity.
Our firm wants to check the box on the following criteria: geo, whether or not it is software, growth, level of funding, business model and unit economics. all this, aside maybe unit economics should be easy to get a preliminary view through research. There are other nuances that are firm specific that make something more or less exciting.
Differentiate your outreach and stand out from the rest of the growth equity people. Do your research. build your sourcing muscle (prospecting, calls/meetings, etc.). Drive volume, which helps with pattern matching along with building sorucing muscle
if you missed on-cycle with your preferred growth equity firms, would you A) stay for a 3rd year B) move to Corp dev / Corp strategy and jump to growth later, C) lower your bar and go to a lower quality opportunity or D) is there another angle to play?
thanks in advance
Thanks for hosting this Q&A and hopefully this thread is still active.
1) What is your view on the ability of associates in capital markets (Private Debt, DCM, Syndicate) to transition to growth equity or PE shops in general? Although the valuation and modeling skills may be absent on day-to-day, could the sheer number of deal flow and ability to spot relative value among comps be an attractive skill? I assume that valuation & modeling can be learned at home
2) How often have you seen people leave corp dev or strategy roles to go back into PE roles? Would these be good candidates relative to competition that have PE or IBD experience?
Thanks!
Apologies, I have never seen this before. One route could be going to a top hedge fund or asset management fund (Tiger Global, Point72, Coatue, etc.) with PE/VC arms. Point72 is a good example with its venture arm - some of those people you see there started on the HF side i think. I don't know exit opps for those roles you mention, so i don't even know if HF's are viable exit opps to begin with
I've seen it happen more lower market and in VC, but not that often. For Growth Equity specifically, in a vacuum, these candidates will be at a disadvantage vs. IBD candidates.
I'm in the process of making a lateral move. Any insight into the interview process? How in-depth are the deal discussions for a lateral at the VP level? As technical as the associate interviews?
What is comp like?
Hi ilc22 thanks so much for sharing your insights! Have learnt a lot from your experiences. I’m currently considering an offer from an equity investment firm called Temasek (associated with Singapore). I understand they have a focus on growth/private equity, mostly minority investments. Was wondering how they are viewed in the professional growth equity industry by veterans like yourself? Thank you!
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