Hi guys,
I'm currently a Sr. Associate at a late stage, technology-focused venture capital fund. I've done two years in technology banking and three years in technology investing. I'm interviewing at a technology-focused L/S hedge fund for an analyst role where I'll specifically cover software, consumer internet, and technology-enabled services. I'm having a lot of trouble articulating why I want to move from a VC fund to a HF. Any help? Here's what I like and dislike about my job:
Likes: sector focus, buyside, ability to see a lot of emerging trends in technology, how emotionally invested I am in deals I work on (it's pretty awesome)
Dislikes: lots of sourcing, look at a LOT of crappy companies, ability to see a company you invest in shit the bed because they can't scale, lack of analysis/modeling, lots of post-investment work, including strategic, hiring, exits, managing relationships, etc. that takes away from looking at new investments
I'm sure I can think of others. But, that's generally it. Any thoughts would be amazingly helpful and much appreciated.
disclaimer: just a college student, but this is the impression i got from talking to a lot of alums in later stage vc/growth equity vs hedge fund alums
At a HF, at least fundamentally driven ones, it seems a lot more value driven in that you're trying to pick winners, companies who have strong competitive advantages vs their peers and can generate better returns (FCFF) for their shareholders as an actual business.
Hopefully that (2nd hand) knowledge helps.
College student also, first thing that springs to mind is that you want a more markets based role/you want to focus on investing rather than some of the other aspects of your job you mentioned. If your background in investing was related in some way to what you want to do in this new job, you could say you tried VC for xyz and found that you liked these aspects of your previous job better, which you can find in this new job but this new job will also give you abc.
Shouldn't this be straight forward? Where does the market come into play for a VC? If it comes into play you're looking at an exit, for a HF you're always in the middle of the market (at least at most L/S HFs). At HF you get to see direct results immediately (admittedly these aren't always true signs of success), whereas at a VC you need to be involved with the investment more directly and often for a longer period of time. Just my $0.02
Rather than focus on why you like/dislike your job focus on crafting a convincing story regarding how you can leverage your existing skill set to help your PM generate returns. I would focus on your sector knowledge and your oversight (of portfolio company management and business practices) experience. You need to convince the group that you are more interested in market oriented investing than you are in process oriented invested. That has been a key factor as I transition from working on complex private equity deals, which are highly structured (source, diligence, finance/bid, win/lose, operate/de-lever, exit, repeat) and due diligence oriented, to a role that is fundamentally driven and more sensitive to the markets. The key differentiating factor is that you are more interested in passive investing (screen, analyze, buy/sell) vs. the active investing (getting your hands dirty and actively trying to drive company value) that comes with PE/VC.
Thanks for the responses. Drijver, I wish it was "that" simple but it's really not. And it's always helpful to get an outsider's perspective.
junkbondswap, that's really helpful advice. Would you mind if I PM you? Seems like you made a similar transition and I'd love to learn a bit more about it.
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