To those who have experience in one or both of the above fields, what are some differences in the way that these funds find new deals?
* MF LBO shops vs MM/LMM LBO shops vs Growth shops vs VC shops?
* Are deals typically sourced at the partner level, or the junior level?
* For shops where it's done at the junior level - is it more via phone/email at desk, or via meeting in person?
Obviously these will vary a lot from firm to firm but looking for trends/generalizations here.
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Can speak for VC/GE.
For early stage VC (seed/series A/B), most funds would have a continuous deal flow with startups sending decks (juniors sourcing). VCs attend events and go to pitching competitions/incubators to get to know the startups before a fund raise to be or their radar, my fund used to do this with people from Junior level to Partner depending on availability.
For Growth Equity, at least in the tech space there is a limited number of highly successful startups, its pretty much all about following them and be ready to jump on an opportunity with an attractive valuation (Partners would have the relationships, juniors would grind valuations/competition analysis etc).
Note this is from my experience in a shop investing from $1m-$50m+, having designated teams for each.
On the MM LBO/Growth front, I tend to see more deals get generated from the usual auction process/marketed by the bankers. These processes are level agnostic since the advisors try to get as many eyeballs on the opportunity as possible.
VC sourcing is very much aligned with the previous poster - i.e. pitch days, incubators etc. Similarly level agnostic once the company has raised beyond seed in my opinion.
I've led/managed/been involved in over 15 investments to date, ranging from early to late stage growth, as well as MM buyouts. Only 3 have been absolutely proprietary and were at the partner level - a function of their 10-20 years of experience and tracking the opportunity for over 3 years. The promotors/business owners were also relatively close to them e.g. business school mates, ex-colleagues.
A little side-track from the main topic, these deals were all sourced by different partners and all at the late growth/buyout stage - leading me to think that perhaps the average senior investment professional would proprietorially source/develop a great investment opportunity in this space every 3-5 years. Further, these investments generated the highest returns as well.
I'd also note that my investment experience spans primarily across Oceania and Asia with ticket sizes of $150m max so this may differ from US and Europe.
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