I am in B school and upon graduation next year, I am planning to join what is basically a startup / extremely young fund. It isn't pure play PE, but is structured more like PE than anything else, hence my posting here. The investment team is a few partners and an analyst, and I will be the first real investment professional they have hired since inception (the partners formed the firm together and I'm not counting the analyst). My background is banking in the IB group/firm that I would say is the best fit for this fund, and I'll be coming out of a top B school - but I have never worked in PE.
In advance of receiving my offer, I was hoping to get some wisdom from the WSO PE crowd about what I should be thinking about and asking at this stage. This is a situation where I don't know what I don't know, so any and all questions, considerations, and thoughts are welcome. What questions would you be asking before signing an offer letter? What do I need to make sure I understand? What needs to be in writing in an offer letter and what is it fair to "take their word on"? What are red flags to look out for? What types of things would you push for at a fund of this stage that you might not see / be able to get in a more mature PE fund? What should my econs be at a place like this?
The things I have already diligenced and am comfortable with are the backgrounds and confidence I have in the partners, my confidence in the partners' ability to raise money, and the vision for the firm.
Thanks in advance, I appreciate everyone's time and input
How much of the fund have they closed on to date? From who? More is obviously preferable, and it's much stronger if it's real institutional capital v. GP commit / their friends. Most new funds fail before they get to a first close with real outside capital, so it's substantially de-risked if they're already over halfway to the target.
If they haven't closed much real outside capital, you can vet how funds with similar strategies have done with raising lately. But would also check and see who else is in the market -- asset managers only have so much dedicated to new managers and if there's a better fund out there it could be tough.
Also have they done deals yet? Are they any good? Is there active pipeline right now and how does it look? Quality of pipeline can be a great indicator of if these guys are actually good, have relevant connections, and are perceived well within the industry.
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