I've been reading that the # of new launches in megafunds has been declining in the last decade. Can't say it's surprising given where the industry is in its maturation cycle.
What do you guys think it takes these days in terms of experience (education, work) to launch a serious UMM/large cap PE funds these days (can be any strategies, growth/value/platform/buy cheap and operate etc.). How "low" can one sink in any of those areas - if a person is not HBS/GSB/GS/Target Undergrad, is the odds basically 0?
Assuming primarily buyout funds as VC/Growth Equity is a bit of a weird beast. Depending on your definition of UMM, pre-requisite to launch UMM/large cap fund is to have a track record that you own and have good returns, preferably with a team that has worked together for a while. Most common way to get there is to either spin a team (you will likely need to be a regional head/industry head) out of a different UMM/MF platform (Sycamore/Arcline), start taking outside capital from a family office with great returns (think MSD), or head up a MM PE Fund on likely fund IV or V with stellar returns. Big plus if you have seed deals already as well. Lots of the questions about “un-proven track record” and “ability to deploy” from LPs don’t focus on just on the star of the team, but how the team itself works together (how do you plan on creating value, how do you source deals, how is your IC, etc.)
No HBS/GSB/GS/Target undergrad required . . . But most people with the above come from those types of backgrounds.
Navab capital was supposed to be one of the largest new fund launches if not the largest in the past decade at $3b and there have been only a few other new fund launches over a billion (Cornell/Cove Hill/BGH in Aus/Golden Gate spinouts).
can you answer this question in regards to vc/GE? Why are those diff beasts?
Your schooling is irrelevant if you're launching a massive fund. It's all about experience and previous success running smaller funds.
There’s no such thing as launching an UMM fund. You become a partner at a top fund with a good track record then split off and launch a fund with $350 million then progressively raise larger funds as you perform well.
Yea Navab was going to be the largest ever first time fund at 2.5-3bn so then you're approaching "U"MM; but he ran KKR so..
Yep. I’ve seen a hedge fund launch at about $5b but never for a PE fund. Not even close.
Anyone throwing MS at this doesn’t know what they’re talking about.
Meant to reply to the post above yours.
Again depends on your definition of UMM.
I would solidly think of BGH as an UMM fund based on how big of deals they can do. Same with Sycamore who didn’t have stringent concentration limits. If we include Infra PE, you get some more players into the fray (GIP, Stonepoint).
That being said, I agree with you that it is extremely rare to launch a UMM fund and there is probably only one every year or so.
It takes a lot of stones
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