Sourcing in Growth Equity
I am just curious on what are the steps that an analyst takes when sourcing. Please be as detailed as possible. How do they find new targets? Who do they cold call? What questions do they usually ask?
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Good question, I've always been confused. Does an analyst reach out to corp dev guys at a $1bn firm, imagine you can't get a direct line to the CEO there?
Is it mostly cold calling or is it warm intros / relationships that are cultivated over time through conferences, previous connections, partner connections?
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Can you provide insight on what those calls look like and the next steps from there? What is the process of that sourced deal moving up to IC and what are the hurdles in between? And is the Analyst involved in those aspects as the deal moves from identification to analysis and then execution?
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Depends what size. If you mean 10-50m€ checks most shops would just take trade shows list and industry growth lists and check every single company on LinkedIn to see which one is growing / seems interesting. 50-300m€ checks is probably more sourced through banks and contacts
You go to a firm that specialises in finding places for you. Will usually be run by half a dozen guys who have worked in industry for 30 years and know everyone in the city
It depends on the fund. Some of the bigger shops just get a lot of inbounds because they’re the go to name when you need some ca$h. If you’re smaller I’d say it’s a lot of cold calling and legwork. You’re really trying to sell the firm. I’d say what makes an amazing analyst over an ok one in this regard is someone who leveraged their personal network. No one is expecting you to be friends with CEOs, but it’s kind of expected you have friends. Reach out to people in your network working at cool companies and get a feel for the business. Worst case you’ve cultivated a relationship that might be helpful later - this business is a long term one anyway
I've actually always wondered about this. Associates who source at shops like Summit or TA, where is that rolodex coming from and is there any proprietary sourcing involved as well?
Day by day I grow more jaded and elated on associates and the industry, respectively.
Outer circle:
And so on and so forth, until you have an excel sheet with thousands of names and corresponding info, with automatic calendar reminders for important events/follow-ups.
The rest is cold-calling. It's faster, more direct, and you don't need to be living, breathing human-scum to get what you want.
Not sure why this received MS. Solid illustration of what happens IRL.
Super helpful man. Heard stories about this but good to hear it corroborated. I have heard too that at TA, the comp structure for even associates who source and execute a transaction is pretty crazy
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