What are growth equity firms?
Growth equity firms are investment firms that purchase significant minority stakes in fast growing, private companies with proven business models and strong customer traction. Usually, companies receive growth investment rounds after several venture capital rounds, but before going public in an IPO or SPAC. Most often, companies who take growth equity investment do not have significant amounts of debt.
The growth investing ecosystem
While growth equity pioneers like General Atlantic, Summit Partners and TA Associates have long enjoyed leadership in this cateory, recently the growth investing asset class has seen an influx of new entrants.
Firms from seemingly every other category of asset management have started growth investing efforts:
- Venture capital – Given their traditional position as early-stage investors in technology startups, many VC firms have realized they can “double-down” on winners in their existing portfolio via later stage funds. Given the similarities between the two, many “growth” funds market themselves as “late-stage venture” and vice-versa
- Private equity – Many private equity firms, especially the so-called “mega funds,” have raised dedicated growth and technology investment vehicles (e.g. TPG Growth, KKR Technology, Carlyle Growth, Blackstone Growth). Given their large platforms, this provided an attractive way to increase exposure to the growth asset-class, while increasing AUM.
- Hedge funds & crossovers – Several funds who had previously focused on public market investing like Tiger Global and Coatue have become significant players in growth investing for private companies.
- Traditional asset managers – Given many growth companies have avoided going public for longer, traditional mutual fund and asset management companies like Fidelity have started private market growth funds to get exposure to this asset class
Drivers of new entrants
While every firm has its own specific rationale, there are also broad macro trends credited with accelerating the rush toward the growth asset class:
- Attractive returns from technology mega-cycle – Marc Andreessen of a16z famously said, “software is eating the world,” and it’s true. The impact of software and technology has been felt widely across our society; there are more technology startups than ever and the returns to successful companies is larger than ever before
- Successful growth stage companies stay private longer – due to new regulatory hurdles and the increasing burdens on public companies, many growth stage entrepreneurs elect to stay private and avoid IPO as long as possible. This creates greater opportunities for late stage growth capital providers in the private markets
Criteria for top firms – an insider’s point of view
I should say upfront — this list is NOT based on any “scientific” or measurable criteria (e.g. highest AUM, number of investment professionals, etc). Instead, it’s meant to capture three criteria folks care about most, especially when considering joining the growth industry:
- Which firms are the most respected by industry insiders?
- Which firms are most prestigious to work at?
- And which firms are known for having the smartest investors working there?
With these questions in mind, the list was compiled based on conversations with industry insiders, as well as my own personal experience having worked in growth equity.
Top growth equity firms in NYC
New York, NY
OK, so I’ll admit I’m very biased here … of course, I’m going to mention General Atlantic first! Yes, it’s where I used to work, but in fairness, the firm has an incredible tradition! It was founded in 1980 by Chuck Feeney, an entrepreneur who made his fortune by founding Duty Free Stores. Mr. Feeney pledged to give away his entire fortune during his life (rather than pass it to descendants). General Atlantic became the captive investment arm of his non-profit with the aim of growing the amount of money he could eventually give away. While both firms have evolved and are now formally independent, GA’s mission remains to empower entrepreneurs around the world. Headquartered in New York City — but with more than a dozen offices globally — GA remains a top growth equity provider to entrepreneurs around the world.
- Select investments: Meta, Uber, Fandango, Markit, Crowdstrike, Adyen, Cyient, Ginkgo Bioworks
- Offices: New York City, Palo Alto, Stamford, Shanghai, Hong Kong, Beijing, Amsterdam, London, Munich, Tel Aviv, Sao Paulo, Mexico City, Jakarta, Mumbai, and Singapore
New York, NY
Formerly known as Insight Venture Partners (or IVP), Insights Partners has quietly become a powerhouse in the growth investing space. In 2021, the firm made headlines for crossing $90 billion in aggregate capital commitments. Based in New York City, the firm was founded in 1995 and has established a long track record of success.
- Select investments: Twitter, Shopify, Darktrace, Tenable, Nearpod, Monday, Docusign, Fanatics, HelloFresh
- Offices: Apart from their New York City HQ, Insight is inexplicably tight-lipped about where their other offices are, but they surely have many
Blackstone (Growth Fund)
New York, NY
Blackstone is a juggernaut in practically all things finance, and few would argue that it is among the most prestigious firms to work at in finance. A relative latecomer to growth, Blackstone made quite an entrance in 2021 with the close of its $4.5 billion Blackstone Growth Fund (BXG). It’s reported that this was the largest “first-time” growth equity fund raised in history. While Blackstone itself was founded by Stephen A. Schwarzman and Pete Peterson, the growth investing unit at Blackstone is run by Jon Korngold, who was hired away from General Atlantic and continues to lead the effort.
- Select investments: Oatly, Bumble, Spanx, Headspace Health, Clari, Epidemic Sound, Relex, Vectra, and Mollie
- Offices: Blackstone has many offices globally, but for now, growth investors are based in San Francisco, and London (in addition to NYC HQ)
Tiger Global Management
New York, NY
For those who are “in the know,” Tiger Global has taken the growth investing world completely by storm. You may not have heard of them, but this investment firm is known for being one of the smartest in the industry. They invest globally in both public and private markets (a so-called “crossover” fund). With elite “tiger cub” heritage, the firm was founded by Chase Coleman in 2001. In recent years, the firm has pumped loads of money into venture and growth investments with the aim of creating an “index” of attractive late-stage venture companies in tech.
- Select investments: Coinbase, Flipkart, Roblox, Meta, Zomato, Yandex, and Blinkit
- Listed offices: New York City only
Honorable mention – NYC
Top growth equity firms in San Francisco Bay Area
San Francisco, CA
In 2007, TPG launched TPG Growth, a dedicated fund to support growth stage companies. It was the first of the “mega” private equity firms to launch a dedicated growth fund. While the former head of the growth fund generated some unfortunate PR in recent years, the growth fund itself has been very successful and has ballooned in AUM. Based on its success, TPG is even launching spinoff efforts within their overall “growth platform” that will be focused on specific growth opportunities — namely, digital media, technology adjacencies, and life sciences.
- Select investments: Precision Medicine, Vaxcyte, MX, Tanium, Zscaler, Halo Branded Solutions, Crunch Fitness, Uber, Spotify, AirBnB, and Prodigy Education
- Offices: TPG has several offices, but TPG Growth is mostly based in San Francisco HQ and New York office
Menlo Park, CA
No conversation about growth would be complete without mentioning the legendary Sequoia Capital. Founded by Don Valentine in 1972 in Menlo Park, Sequoia has long been THE powerhouse of the venture capital industry. However, in recent years, it has also built incredible prowess in growth stage investing as well. Sequoia not only invests in new companies, but it also doubles down on existing portfolio companies from the early venture stage.
- Select investments: 23andMe, Instacart, Klarna, Nubank, Snowflake, Doordash, Zoom, and Stripe and many many others
- Offices: Menlo Park, Singapore, Bengaluru, Mumbai, New Delhi, Hong Kong, Shanghai, Beijing, London, and Tel Aviv
Honorable mention – SF Bay Area
- Capital G (growth fund of Google Ventures)
- Andreessen Horowitz / a16z (growth fund)
- TCV (formerly Technology Crossover Ventures)
- Altimeter Capital
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Top growth equity firms in London
KKR (Tech Growth)
Since 2016, KKR has been investing in technology growth deals through its Tech Growth platform. While the firm overall is headquartered in NYC, many of the firm’s Tech Growth team is based in London and San Francisco. In seeking to win over entrepreneurs, the firm sells not just capital, but also access to its broad global platform of resources, including KKR Capstone (its in-house consulting team). Candidly, it’s a little hard to know where to place them on this list, but I decided to list them under London, given some of the most interesting deals they’ve done have been out of Europe.
- Select investments: DarkTrace, FanDuel, GetYourGuide, KnowBe4, OneStream, OutSystems, PolicyGenius, Slice, and Zwift
- Offices: KKR has many offices, but most growth is done out of London, San Francisco, and New York City
Honorable mention – London
Top growth equity firms in Boston
Founded in 1968, TA Associates is the oldest firm on this list. The firm started as a regional venture capital firm, but eventually grew significantly, raising larger and larger funds. Today, it markets itself as a “growth private equity” firm. TA targets on growth companies exclusively, but they are willing to invest in minority or majority stakes. The firm remains one of the sharpest and most successful in the industry.
- Select investments: Sophos, InsightSoftware, Flexera, BillDesk, Sovos, K2, MRI Software, Nintex, IFS
- Offices: Boston, Menlo Park, London, Mumbai, Hong Kong
In 1984, Summit Partners was founded by Roe Stamps, Stephen Woodsum, and Greg Avis. The three met while working at rival TA Associates (also in Boston!). Since spinning off, Summit Partners has grown into one of the largest and the most respected investors in the growth equity landscape. In recent years, the firm has also launched other business lines (i.e. credit fund, public equities), but the heart and soul of the firm remains supporting entrepreneurs at the growth phase.
- Select investments: Darktrace, Infor, McAfee, Casa Systems, ReKTGlobal, Vivint Smart Home, Uber, Smartsheet, Markforged, Fuze, A10 Networks
- Offices: Boston, London, Menlo Park, New York City
Honorable mention – Boston
Though many would consider General Catalyst a traditional “venture capital” firm, the lines are increasingly blurring as the firm has been wildly successful in the growth and late-stage venture stages. Founded in 2000, the firm truly invests from seed to IPO now. A great example of this: General Catalyst led the Series A for Livongo in 2014, and then led or participated in every subsequent funding round until the company was acquired for $18 billion by Teladoc in 2020. That’s conviction … and a great return.
- Select investments: Airbnb, Stripe, Livongo, Transcarent, Anduril, Grammarly, Snap, Applied Intuition
- Offices: Cambridge, San Francisco, Palo Alto, London, and New York City
Top growth equity firms in other locations
Softbank (Vision Fund)
Founded by Masayoshi Son, Softbank has become a giant in the growth stage. While some of their bets (WeWork) have been questionable, you still have to respect Softbank and how they’ve taken the growth stage by storm with their bold strategy of providing super long-term growth capital at sky high large valuations. The flagship $100 billion Vision Fund brought growth investing into another era with its “mega” investment rounds going into late-stage venture companies.
- Select investments: Fanatics, Flipkart, WeWork, Oyo, Whoop, Better, Klarna, Revolut, Uber, Alto, Cerebral, Doordash, Flexport
- Offices: Tokyo, London, Silicon Valley, Abu Dhabi, Hong Kong, Mumbai, Riyadh, Shanghai, Singapore
Honorable mentions – other
How to get hired by a top growth equity firm
High compensation make roles in growth equity very competitive to get. The interview process for a growth equity firm varies based on the seniority of the position. The largest and most competitive growth investing funds usually look for entry-level candidates with the following backgrounds:
- Top undergrad and/or MBA school
- Investment banking and/or management consulting
- Extracurriculars and/or passion for investing
- Strong analytical and financial modeling skills
Smaller growth firms can sometimes be open to somewhat less traditional backgrounds (e.g. entrepreneur, industry, or tech experience). This is true often at growth funds with roots in venture capital (e.g. Capital G), where less traditional hiring is more normal. However, note that the bar is still considered to be quite high and roles are quite competitive at every level.
Interviews at top growth equity firms
Interviews at top growth equity firms can be quite varied as well. As discussed above, there are so many new firms — with diverse backgrounds and competencies, that now invest in the growth stage.
With this diversity of firms has also come a diversity of interviews in the industry. While private equity firms with growth funds may have their take on PE interviews, venture firms with growth efforts have their own spin. This is one reason it can be quite daunting to prepare for interviews at the growth stage; the preparation required can be quite diverse and wide-ranging.
To go deeper on how to prepare growth investing interviews, see my comprehensive course on how to ace your growth equity interviews.