Why the hate towards growth PE / sourcing (e.g. KKR Tech)?

Will not comment on traditional Growth PE vs. Growth PE at MF, but on Growth PE vs. MF Buyout as a junior, explaining some of the negative sentiment:

- Medium to heavy sourcing (cold email/call) at Growth, little to none in buyout

- Modelling is more complex for buyout transaction

- Larger comp gap between growth and buyout the more senior you get

- Possible to go from buyout to growth easily, not the other way around

On the other hand, positives for growth are:

- Trains your soft skill as a junior, which is probably the most indispensable quality in this industry

- Sector/Companies could be more interesting than what buyout PE look at

- Better W/L balance

I've done a sourcing role and a typical modeling role before. They suit different personalities. Do you want to spend your day talking to people, pattern matching, building relationships, and understanding markets and constituent companies closely? Or do you want to spend your time solving complex math problems, working with advisors to coordinate data flows, and building a numeric thesis for the attractiveness of a company?

Money is fine no matter where you go and never count on WLB in an investing role that's not venture. It comes down to 1) what do you like thinking about and are you spending your days thinking about what you like thinking about, and 2) what types of people tend to be attracted to the type of work in question and do you like being around those types of people.

Who cares what sophomores with 0 experience at no-name schools think. If you can break into any FO role at KKR, take it. 

Modeling is super gay srs

dream job for me tbh 

talk shit all day while barely passing algebra 101 making hella cash 

Tbh anyone who hates on sourcing roles is an idiot that doesnt not understand the PE or VC industry. Literally anyone with above room temperature IQ and ability to press a few buttons can build a model to analyze a deal. The hard part is not analyzing the deal, its convincing the entrepreneur to get the opportunity to analyze the deal. 

You cant find a unicorn deal if you dont source and your hardo ability to run IRR sensitivity analysis is useless if you dont got any deal flow or financials to analyze.

I think they attract very different people and it's more about where you can leverage your skills best as an investor. It can take a while to figure out what you are good at though!

Going back to the comp question, why is it that people say senior comp is lower in growth? I get the AUM argument at the junior level probably corresponds to higher base comp, but at the senior level, comp is mainly based on returns/carry? My understanding is its a lot easier to hit a massive home run investment in the growth space vs buyout, which should in theory correspond to higher comp? 

I think there are a few misconceptions here. Perhaps I can provide some concrete examples. Whatever you call your fund, whether it is PE/VC/Growth/RE/Private Credit/Whatever, the economics don't change. The terms that you can extract from LPs ('limited partners' or what most of you might call 'investors') do change, but only slightly. The standard terms in a 'master limited partner agreement' are not '2 and 20'. The Limited Partner Agreement (LPA) for newer funds (what people in the business call 'emerging managers') is quite different from what you'd expect for a fund on their third or fourth fund. This is why 'private placement' groups and 'capital introduction' teams exist at BBs and boutiques alike. 

I won't lie--I'm high while writing this. I apologize if it's a bit stream of consciousness, but the points I wrote above largely hold true regardless of my sobriety. 'Growth' as a subset of private equity is really a proxy for late-stage venture for most asset allocators. You see--you have to consider how LPs think about the funds. When I talk about LPs, I mean endowments, foundations, family offices, RIAs, UHNWIs (basically the same as family offices, but there are a lot of people my age without 'family offices' who invest nevertheless), sovereign wealth funds and pension systems. Most LPs don't have large venture portfolios. In many instances they don't have any exposure to VC at all--for good reason. What's that reason? Most venture returns suck. There are very few VCs that consistently return top quartile or top decile returns.

Let me talk to you about Chris Sacca. I suppose many of you have seen him on Shark Tank. He was in debt (not just broke, but in the hole) when he raised his first venture fund. He doesn't talk about this enough because he's embarrassed by the fact that his first fund was just $6 million. He did it so he could prove to the world that he was a good investor. He didn't have to. He just had to prove that thing to the people who originally believed in him. He killed it. He netted a monster return for his investors. His money comes from investing in Uber. He got lucky, but at the same time, he didn't. He couldn't possibly have lived on the management fees from a $6M fund. That was never the point. 

He's rich now because he bet big, he was right, he won, and he kept getting it right thereafter. This is the dream for venture and eventually growth investors. 'Growth' is a bullshit concept to most people. I don't view it as a real asset class and most LPs don't have a separate allocation to it. Very few funds do it well. Catterton is exceptional. I invest in almost every deal they show me. If some college or MBA kids shunned them, they'd be fools. The same is true for Accel-KKR. The same is true for a handful of other funds, but the idea that growth PE is somehow worse than buyout is just silly. 

You first have to understand fully how a GP at a fund is paid. There is a preferred return at all funds below which the GPs get paid nothing at all. That preferred return is normally 8%. There is a good reason for this. Most pension funds require something like an eight percent return to be fully-funded over time. If you don't understand how this works, I suggest you study more.