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Preparing for Growth Equity Interviews: The Ultimate Guide

Preparing for a growth equity interview

Growth equity roles are among the most attractive in the investing world right now. Growth investing is attractive because it allows investors to place exciting bets on the future (similar to venture capital), while also bringing rigor and potential for attractive returns (similar to private equity).

However, given the unique nature of growth equity, preparing for growth equity interviews can present many unique challenges and questions for candidates.

Given my experience in the industry – I previously worked as an investor at General Atlantic, and I’ve worked for several years at portfolio company Airbnb – below I put together a prep guide to help candidates ace their growth equity interviews.

In it, I will discuss the most common (and important) interview questions you’ll be asked in growth equity interviews, in addition to the sourcing, modeling, and case studies you can expect.

Growth equity overview

Growth equity refers to investing minority ownership positions in high growth companies that have demonstrated customer traction and have proven, to a large degree, the viability of their business model.

Many find it helpful to think of growth equity investments as the stage after venture capital, but before private equity and hedge funds (LBO buyouts and IPOs, respectively). Unlike private equity buyouts, growth equity investments tend to be minority (sub-50%) stakes and involve little or no debt.

Elite firms from every corner of the asset management industry (e.g. venture capital, private equity, hedge funds, etc.) have raised growth stage funds in order to capture attractive returns.

Further, growth equity investing roles are among the most competitive in the finance world, because they are well-compensated (similar to private equity) and they focus on investing in exciting, high-growth companies.

For an in-depth tutorial, including comparisons to private equity and venture capital, check out this complete primer on growth equity industry, investment strategy, and careers .

How to get growth equity interviews

The ideal qualifications for growth equity roles vary, based on the role/firm you’re interviewing with and the stage of career you’re in.

Most growth equity firms seek to hire candidates with “traditional” finance background – this includes stints in investment banking , consulting, other kinds of investing, etc. However, new or smaller growth firms are more open to hiring candidates with diverse or non-traditional backgrounds as pre-MBA associates (e.g., former entrepreneur, product manager, other industry role).

Below is a summary of the “traditional” qualifications that most growth equity firms look for:

• Undergrad interns and full-time analyst roles  – Competitive undergraduate schools with a track record of achievement in extracurriculars, leadership, and finance-related activities; you do  not  generally need to have studied business or economics, but this may vary based on the firms’ preference
• Pre-MBA associate roles  – Former analysts from investment banking and management consulting programs. Given most pre-MBA roles are filled by candidates with just 1-3 years of post-undergrad work experience, one’s undergrad qualifications can also play a role in assessing your candidacy as well
• Post-MBA or partner track role – prototypical qualifications are: (1) experience in investment banking or management consulting, (2) significant pre-MBA experience at a strong investment firm (e.g. private equity, growth equity, maybe venture), and (3) attend a top MBA program

Growth equity headhunters

Many growth equity firms, especially the larger and more established ones, work with traditional headhunters and recruiters to find candidates to interview. Usually the recruiting firm will be hired to provide the growth firm a list of pre-vetted candidates, from which the growth equity firm will ultimately decide who gets an interview.

Usually headhunters will generally reach out to candidates proactively in the months leading up to recruiting seasons, if they have an investment banking or consulting job.

Growth equity networking

While it’s unlikely to “get” you the job, networking can be pivotal in getting you an interview. This, of course, depends highly on the firm and the situation, but when done well, it can help you get opportunities.

The hardest part of networking is usually that it can be difficult to get engagement from growth equity investors, given how busy they are and how many candidates reach out. To help candidates navigate these and other challenges, I’ve created a separate guide that goes into lots of detail about  how to network successfully in growth equity ; check it out for more details.

Growth equity interview process

Depending on the firm, recruiting for growth equity can either look like private equity recruiting (highly structured process with a defined “on cycle” recruiting schedule) or venture capital recruiting (less structured process with more “off cycle” opportunities).

Multiple rounds

Regardless of on-cycle vs. off-cycle, a typical interview process usually spans several rounds of interviews, no matter the role. Processes often start with an initial phone screen, generally conducted by an associate or VP-level person at the firm. If a candidate makes it past the initial screen, he or she would move to superday interviews (typically, a batch of interviews conducted on a single day).

If the candidate makes it through the superday, they would likely be assigned a case study assignment (check out my guide on  growth equity case studies  for more detail), and they might be invited back for an additional superday round of interviews.

Whereas the first superday round is likely to be administered by VP and principal-level professional, the final superday is much more likely to involve group heads, managing directors, and partner-level folks for one or more of the interviews.

Getting an offer

After completing your final round of interviews, firms will usually make a decision as to whether to give you an offer relatively quickly (e.g. in a matter of days). Having been part of this before, I can tell you that usually the bottleneck that prevents firms from making decisions faster is the difficulty in coordinating across all interviewers’ busy schedules to find a time to huddle and make a decision.

During on-cycle recruiting, firms generally make decisions very quickly, sometimes on the same day, in order to be competitive with other buyside firms making offers.

Growth equity interview prep

One of the most difficult aspects of preparing for growth equity interviews is the sheer variety of material one might encounter during interviews and therefore must study during preparation.

While private equity buyout interviews have become mostly standard at this point (e.g. LBO modeling case study + paper LBO, etc), the interview processes at growth equity firms can vary widely. The type of interview you face is usually influenced heavily by the background of the firm; for instance, if the firm has venture capital roots, your interview with the growth fund may not only cover typical growth material, but it may also borrow interview elements that are more common to traditional venture interviews.

Given the diversity of firms now investing in the growth stage (e.g. firms with roots in private equity, venture capital, hedge fund, asset management, etc.), the material one could face in growth interviews is quite vast.

The good news is this creates an opportunity for diligent candidates to set themselves apart by undertaking a structured and comprehensive interview prep plan .

In the next sections, I will provide an overview of major areas to prepare:

Why growth equity

• Interview questions
• Modeling test & other case studies

Mock cold call exercise

Market thesis exercise.

• Other prep areas

Comparing prep to private equity and venture capital

Relative to private equity interviews , growth equity interviews tend to place a greater emphasis on assessment of markets, sourcing & cold calling, and growth modeling techniques. While you need to know LBO modeling (including paper LBO) , it’s unlikely you’ll receive questions on advanced LBO modeling tactics.

Relative to venture capital interviews, growth equity interviews tend to place more weight on modeling case studies and rigorous financial analysis. Meanwhile, in venture interviews, you will likely encounter more questions about early stage investing and term sheet understanding. In both types of interviews, you will be expected to discuss markets, trends, and businesses that are attractive to invest in.

Growth equity interviews tend to be heavy on assessment of “fit”. One major aspect of “fit” is whether you have a clear and compelling rationale to why growth equity makes sense as the next step in your career.

There’s good news though. As an industry, growth investing has such a compelling story that it shouldn’t be hard to nail this part of the interview if you put in some work up front. I mean, think about it, the entire industry is about finding and helping the next generation of companies that will change the world. That’s certainly much more exciting than doing leveraged buyouts of slow-growing plastics companies in traditional private equity :-).

Still, there are more nuanced layers of this answer to consider. For example, how does your experience prepare you for growth equity and what skills are you looking to develop in growth equity that you couldn’t develop in other kinds of investing? You’ll want to be prepared for these and other areas in case your interviewer wants to go deeper.

Luckily, I’ve prepared an in-depth guide to help you answer the question “why growth equity” ; check it out for more detail.

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STEP-BY-STEP ONLINE COURSE​

Everything you need to master growth equity interviews, growth equity interview questions.

Of course, all interviews come down to a series of interview questions. As with any interview, what questions you receive will depend highly on not just the firm, but also on the individual interviewer.

Before we get to interview questions & answers, I feel compelled to give a public service announcement . I know many readers won’t believe me, but you should practice not only WHAT you say, but HOW you say it. The substance of your answers is clearly very important, but don’t underestimate the importance of your delivery and other non-verbal communication (i.e. your overall impression, posture, etc.).

In growth equity, you will be representing the firm with investment targets from the get go, and so firms place a high importance on how well you communicate and carry yourself in interviews.

Alright, with that general advice, let’s talk about actual growth equity interview questions. Generally, interview questions in growth equity will fall into these categories:

• Standard fit questions
• Behavioral questions
• Resume and deals questions
• Technical questions

Different firms and interviewers will prioritize categories differently; however, as a general rule, I find that candidates are consistently surprised by the extent to which their interviews seemed to focus on standard fit and behavioral questions. Of course, you will still need to prepare for all question types (e.g. technical & investing) — because a bad answer can certainly be disqualifying — but don’t be surprised if the normal fit and behavioral questions take the majority of your interviews.

To a degree, answering these fit and behavioral questions should be similar to interview experiences for other jobs. However, I find that successful candidates for growth equity roles are able to infuse their answers with evidence of key traits that growth firms are looking for: self-starting / entrepreneurship, ability to learn quickly, love for investing, and track record of excellence.

To see examples from each interview question category, check out my deep dive on non-technical growth equity interview questions (including suggested answers) .

Growth equity technical questions

Technical questions are a source of lots of anxiety for candidates. It’s understandable; technical questions are more black-and-white than other forms of interview questions. There’s (usually) a right and wrong.

I find there’s also general confusion about technical questions as they relate to growth equity interviews. The reasoning goes: if growth equity doesn’t have complicated debt and LBO structures, then what is there to ask about?

Well, the answer is growth equity technical questions tend to fall into these buckets:

• Growth investing concepts
• Accounting concepts
• Deal structuring & term sheet concepts

If you’d like to go deeper and review sample questions with answers, I discuss growth equity technical questions in a dedicated article. Check it out!

Growth equity modeling case study

Many growth equity interview processes will require candidates to complete a modeling test or case study as part of interviews. This can occur in the office or as a take-home assignment, but in either it will be time limited. Typically, it involves building an investment model and developing an investment recommendation on a target company, based on materials provided (e.g. memo or presentation).

Compared to private equity interviews , the modeling itself tends to be much less likely to have tricky or advanced LBO concepts (e.g. PIK debt, etc). Instead, it’s likely the modeling exercise will require modeling features that are more specific to growth phase deals (to name a few: minority investments, primary vs. secondary proceeds, employee options, detailed revenue builds, SaaS and other software specific features). That said, many growth equity firms – especially those with more of a private equity orientation – will still ask candidates to build or discuss a basic or paper LBO model to ensure they grasp the fundamentals of modeling.

In addition to building a model, the modeling case study in growth equity tends to put more importance on the quality of the candidate’s investment recommendation, which the model will support. These recommendation usually involve preparation of written materials (e.g. memo, slides) or spoken presentation.

Overall, candidates should be comfortable with the following in order to be fully prepared:

• 3-statement model with debt schedule
• Paper and basic LBO model
• Growth technicals/modeling
• Software specifics
• Investment recommendation

For a detailed breakdown at what you need to know for each of these areas, check out my deep dive into  growth equity case studies and modeling tests .

Especially in a junior role (e.g. pre-MBA or post-undergrad), finding and contacting new investment prospects is usually a central part of your job in growth equity (via cold calling).

The emphasis many firms place on the skill of cold calling is one of the most unique elements of growth equity recruiting. Given its importance on the job, many growth equity firms will screen heavily for cold calling during interviews, especially for junior roles.

While some firms will simply ask about your experience and attitudes toward cold calling during interviews, some firms assign such an importance to it that they will have an entire activity or case study dedicated to it. In general, this exercise will be an explicit interview where you “role-play” with your interviewer who pretends to be the CEO of an investment prospect in a mock cold call.

In the mock cold call, you pretend you work for the investment firm and you introduce the firm to the “CEO” while also asking questions to learn more about the business and assess the investment prospects. Afterward, you usually end the “cold call” conversation, and then do a “mock debrief” where you report on your conversation to you deal team (again, played by your interviewer).

To go even deeper on mock cold calls and potential interview questions about them, check out the  complete guide I wrote on growth equity cold calling .

I’m a nerd, but if you were to ask me what my favorite growth equity interview activity is … I’d say it’s the market thesis exercise (and it’s not even close)!

The market thesis involves the firm asking candidates to present an investment thesis on a particular market or trend that’s attractive. In addition to investment catalysts (why now), the candidate should be ready to discuss market size, growth trends, leading companies, pros and cons of business models, and public valuation metrics. Also, the candidate should prepare 2-4 private companies they think are attractive that may be “investable.”

The reasons I love this activity so much is: (1) it provides candidates a chance to outshine their peers, (2) it’s meritocratic because this is the actual job of a growth investor. Plus, it’s fun! You get to have a view on where the world is going and how to invest behind those trends.

The market thesis exercise can either come up as part of interview conversation (e.g. tell me about a space you like), or some funds give it as a formal take-home assignment where the candidate prepares a formal presentation of slides.

Stock pitch & other investment ideas

In addition to the market thesis, firms are likely to probe your investment judgement and ability to present investments in a number of other ways:

• Stock pitch – this is definitely the most common; candidates should come prepared with 2-3 public companies they are prepared to pitch as an investment
• Firm’s portfolio company – it can be a little unfair, but sometimes firms ask candidates what portfolio companies of theirs that you like (and don’t) as investments; candidates should do (light) prep beforehand to find one you like and one you don’t
• Your deals – even if the transaction is not an acquisition (e.g. debt financing), be prepared to speak about each deal company as if it were an investment. Would you invest? Why or why not?

To go even deeper, check out my guide to preparing a stock pitch or investment idea for interviews .

Miscellaneous prep

Alright, so we’ve covered the major areas of preparation. You’re nearly ready. But there’s still some odds-and-ins we haven’t covered above that you’ll need to prep:

• Review the firm and interviewers  – During your preparations, hopefully you’ve already studied the firm, its portfolio companies, and who you will be interviewing with
• Prepare 4-5 questions to ask the interviewers  – You’ll get time to ask questions of your interviewers, so make sure to consider what you want to ask ahead of time; we discussed this in more detail below
• Print fresh copies of your resume  – Print out way more copies than you think you need. If you have 5 interviews, print at least 15 copies. It’s possible some of your interviews will be 2-on-1, and you’ll still have some to spare.
• Don’t over-caffeinate  – When I was interviewing for growth equity roles, I remember at one point my voice started shaking, because I was over-tired and over-caffeinated. Remember that you will have lots of natural adrenaline without over stimulation from caffeine
• Bring a nice folder with notepad and pen  – Especially during Q&A at the end, you may want to play the “studious” interviewee by taking notes. Even if not, this gives you something to keep your resumes in.
• Practice, practice, practice (talking)  – Before every key interview, I spend at least 30 minutes practicing answers out loud just to get the right energy flowing

Alright, that’s it for now. If I missed any topics, feel free to email me at [email protected]. Also, check out my  other free articles , and if you want to go even deeper, take a look at my  comprehensive interview preparation course.

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General atlantic and xp announce strategic minority investment in brazil-based livemode.

NEW YORK & SAO PAULO, April 23, 2024 --( BUSINESS WIRE )--General Atlantic, a leading global growth investor, announced today the firm has led a strategic minority investment in LiveMode (the "Company"), a leading company within the sports and media ecosystem in the Brazilian market. This investment also included the participation of XP Private Equity, the private equity fund of XP Inc. The investors' partnership with LiveMode aims to accelerate the company's growth and its impact on the sports and media market through its portfolio’s full range of solutions for rights holders, as well as through long-term investments in sports properties.

Founded in 2017 by Edgar Diniz and Sergio Lopes, LiveMode works in partnership with clubs, leagues, and sports federations to develop distribution solutions, and produce live and social media content, in addition to maximizing commercial return and digital engagement for its customers. Solutions for sports broadcast rights holders include white-label streaming platforms and CazéTV, a partnership with streamer Casimiro, which reached more than 12 million subscribers in its first year and broke several live broadcast records on YouTube.

LiveMode's rights-holder partners include FIFA, UEFA, the International Olympic Committee, Federação Paulista de Futebol, Athletico Paranaense, and the Brazilian Olympic Committee, among others. In April 2024, LiveMode was renewed as the exclusive media rights agent to market the 2026 FIFA Men’s World Cup in Brazil. After playing a prominent role in structuring the Liga Forte União, LiveMode became the exclusive agency of this group, comprised of 26 clubs, for negotiating the Brasileirão broadcasting rights from 2025 onwards.

The investment from General Atlantic and XP is expected to support LiveMode in strengthening its impact through long-term agreements with sports leagues, clubs, and federations across three critical domains: Football Leagues, Olympic Sports, and Emerging Sports. LiveMode also intends to focus on international expansion, combining its own well-established international relationships with General Atlantic’s global reach and operational resources.

Leo Lenz Cesar, partner at LiveMode, who will be leading the investment strategy and execution, commented, "Our partnership with General Atlantic and XP marks a significant milestone in our journey. Both firms’ expertise in scaling growth companies, along with their extensive global networks, will be invaluable as we expand our operations and further innovate. We are thrilled to have their support as we focus on our ambition to help expand and professionalize the sport in Brazil and other countries."

Luiz Ribeiro, Managing Director and Co-Head of Brazil at General Atlantic, commented, "The Brazilian sports industry is reaching a critical inflection point. LiveMode is well-positioned at the crux of innovation and impact to build a leading multi-asset sports rights manager, as exemplified by the Company’s unique solutions to live sports and its support in the formation of Liga Forte União. We are excited to partner with the LiveMode team on the next step of their journey as the Company further strengthens its business through long-term partnerships, strategic IP investments, and global expansion."

Guilherme Teixeira, partner and director of Private Equity at XP, commented, "Globally we are witnessing the traditional sports media value chain being disrupted by streaming services, and LiveMode is at the forefront of this trend in Brazil. With a proven track record, the Company has become the partner of choice for numerous sport entities, being well-positioned to explore its media rights and league management not only in soccer but also in other sport modalities. We believe this investment will help develop the business mindset of the sports industry in Brazil."

About General Atlantic

General Atlantic is a leading global growth investor with more than four decades of experience providing capital and strategic support for over 500 growth companies throughout its history. Established in 1980 to partner with visionary entrepreneurs and deliver lasting impact, the firm combines a collaborative global approach, sector specific expertise, a long-term investment horizon and a deep understanding of growth drivers to partner with great entrepreneurs and management teams to scale innovative businesses around the world. General Atlantic has approximately $83 billion in assets under management inclusive of all products as of December 31, 2023, and more than 280 investment professionals based in New York, Amsterdam, Beijing, Hong Kong, Jakarta, London, Mexico City, Miami, Mumbai, Munich, San Francisco, São Paulo, Shanghai, Singapore, Stamford and Tel Aviv. For more information on General Atlantic, please visit: www.generalatlantic.com .

About LiveMode

Founded in 2017, LiveMode develops and operates distribution solutions, content production, and revenue generation for sports entities. Among its solutions, LiveMode offers proprietary channels such as CazéTV, in partnership with streamer Casimiro Miguel. Recently, it has also begun making long-term investments in sports properties. The company brings together a unique combination of experience in the sports and media markets, innovation, and execution capability that position it as a transformative agent in the Brazilian sports market.

LiveMode's partners include FIFA, UEFA, the International Olympic Committee, Federação Paulista de Futebol, Athletico Paranaense, the Brazilian Olympic Committee, among others. In April 2024, LiveMode was announced as FIFA's exclusive agency to market the rights to the FIFA World Cup 2026 in Brazil. LiveMode has played a key role in shaping the Liga Forte União, a commercial bloc formed by 26 football clubs in Brazil.

About XP Private Equity

XP Private Equity is the private equity division of XP Inc., the largest independent financial platform in Brazil, with R$ 1,1 trillion in assets under custody. XP Private Equity was established in 2020, with an innovative format, being the first private equity in the world tailored specifically to individual investors, with an investor base of over 21,000 individuals. Since its inception XP Private Equity has been one of the most active funds in Brazil, leveraging XP Inc.’s ecosystem, and its network of more than 14,300 independent financial advisors, to source and identify attractive the best investment opportunities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240423753516/en/

Media General Atlantic Juliana Santos / [email protected] LiveMode Michele Chaluppe / [email protected] XP Letícia Garcia / [email protected]

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Parent item expand the sub menu, general atlantic invests in hair growth brand vegamour.

The growth equity firm sees clean beauty as "table stakes for many consumers."

Market Editor, Beauty

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General Atlantic , the growth equity firm behind Morphe parent company Forma Brands, has set its sights on clean beauty .

The firm has acquired a minority stake in Vegamour , the clean hair care brand centered around hair growth, for $80 million. Vegamour offers hair growth products for scalp, lashes and eyebrows. The offerings are vegan, cruelty-free and free of parabens, toxins, and phthalates, among other ingredients purported to be potentially harmful.

The ideal brand partner had to have clean ingredients, said Andrew Ferrer, managing director of General Atlantic. “Vegamour delivers hair wellness in a way that the consumer can see, especially when they use the product consistently. It also does it in a way that delivers in terms of having clean ingredients, which for many consumers, is just table stakes,” he said.

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Ferrer sees consumers battling hair loss as a largely untapped market. “Hair loss is a problem that affects roughly 35 percent of women, which is tens of millions of women in the U.S. alone and more globally,” he said. “It is a big market opportunity.

“This brand in particular really jumped out to us based on our work, talking to consumers across surveys and focus groups, and what jumped out was this product really works for them,” Ferrer added.

Industry sources say the brand could track between 300 and 400 percent growth year-over-year from 2020, which was already a 750 percent increase from 2019. Sources added that Vegamour could reach the billion-dollar mark in annual sales with the help of the investment.

The brand’s boom in business was partially due to the coronavirus pandemic, which accelerated hair loss for many consumers. Daniel Hodgdon, Vegamour’s founder and chief executive officer, thinks the investment will help scale operations to meet consumer demand.

“At Vegamour, it’s our mission to reset and redefine what hair care actually is today. This relationship with General Atlantic enables us to broadcast that message and share that message in a much louder, deeper voice on a global scale,” Hodgdon said.

Taking the brand global is part of General Atlantic’s growth strategy for Vegamour. “There are geographic expansion opportunities, and as a global firm, General Atlantic is always looking to help brands think about opportunities in other geographies. This brand will be able to scale globally, over time, and through that, we will consider other channels beyond just the direct-to-consumer channel. But for right now, d-to-c has proven to be a very effective way for this brand to find the consumer that wants this product, and to deliver to that consumer,” Ferrer said.

For now, General Atlantic sees the business growth happening organically without any add-on acquisitions . “This brand has a huge opportunity, and our focus for the foreseeable future is to partner with Dan and his team to scale this brand,” Ferrer said.

Financo advised Vegamour on the deal.

For more from WWD.com, see:

Updated: All the Beauty M&A Deals of 2021

Estée Lauder Hires Dave Smith for M&A Role

With General Atlantic Investment, Morphe Plans to Buy More Brands

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WWD and Women's Wear Daily are part of Penske Media Corporation. © 2024 Fairchild Publishing, LLC. All Rights Reserved.

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General Atlantic

General Atlantic doles out $1 billion to maturing Israeli startups

New York investment firm, among the global leaders in private equity, looks for next Mobileye while dipping into Mideast climate tech

When Max August was a Harvard undergraduate, he scraped data from about 8,000 startups and 11,000 of their founders to complete a senior thesis on Israel’s fast-maturing tech scene that was supervised by former U.S. Treasury Secretary Lawrence Summers. Three years later, many of those same Israeli entrepreneurs are vying for the attention of the young investor, who has helped distribute close to $1 billion on behalf of General Atlantic, one of the world’s biggest private equity funds. Most prominent of nine companies in the firm’s Israel portfolio is Mobileye Global, the Intel-controlled maker of self-driving technology that held an IPO in October and is currently valued at about $25 billion. After starting as an intern at the Park Avenue firm, August was sent to Tel Aviv as an associate last year to scout investment opportunities, opening an office in the 61-story Azrieli Sarona Tower where he can gaze over the Mediterranean coast. Alongside Alex Crisses, a managing director from New York who shuttles to Israel to close deals, General Atlantic last month recruited Yoram Teitz, who was managing partner in Israel at accounting powerhouse Ernst & Young, as a senior adviser. The team is overseen by Anton Levy, the firm’s co-president and chairman of its global technology group. “Israel is moving from a venture-capital-only market to a later-stage market, where you’ll find bigger companies [and] entrepreneurs who have bigger visions,” Crisses told The Circuit in an interview. “As a global investor, we wanted to pick the locations that over the next five years will have the most innovative technology. And we really do believe that Israel will be that.” With $73 billion in assets under management and 16 global offices from London to Shanghai, General Atlantic came late to the game in Israel, a tiny Middle Eastern country that has spawned the greatest number of  technology startups per capita in the world. Termed a growth equity firm, General Atlantic held back until it saw a growing pattern of Israeli companies raising $100 million and more in a funding round, an indicator of business strength. Similar criteria have drawn other global investment leaders including Blackstone , SoftBank and Koch Disruptive Technologies . According to the Tel Aviv-based IVC Research Center , the number of Israeli companies valued at over $1 billion – dubbed “unicorns” in Silicon Valley – rose from two in 2018 to 42 in 2021.

And if Israel was once known primarily for being a powerhouse in cybersecurity and software, Crisses said General Atlantic is looking at the next generation of entrepreneurs in fields ranging from financial services and healthcare to climate technologies. In 2020, the firm led a $210 million fundraising round for AppsFlyer , which uses data analytics to help marketing firms grow. It led two $150 million rounds for HiBob , which assists midsized companies in managing human resources. In 2021, it co-led a $543 million funding round for Transmit Security , which authenticates users without employing passwords. Mobileye, which Intel bought for $15.3 billion in 2017, is a model for what brought General Atlantic to Israel. It’s “really defining the next chapter of the maturation of Israeli technology,” August said. The firm agreed to buy $100 million of Mobileye shares as part of the IPO. 

General Atlantic also sees opportunity in Israel’s growing connections with Arab countries, paved by the 2020 Abraham Accords that were signed with the United Arab Emirates, Bahrain, Sudan and Morocco. “Israel has amazing technology to export,” making it “a real beacon in the area,” Crisses said in the joint interview with August on Zoom. The arrival of General Atlantic and other world-leading firms reflects the “evolution of ecosystem” in Israel’s investment market and gives it credibility as a country with a greater number of large tech firms, said Avi Hasson, CEO of Start-Up Nation Central, a nonprofit group that promotes the country’s innovation industry.

“Ten years ago, that list would have been very, very short… whereas now there are dozens of such companies in multiple sectors,” Hasson, who was previously Israel’s chief scientist, told The Circuit . Funds such as General Atlantic bring with them financial knowledge, operational expertise, best practices and international networks, all of which are “critical to the growth” of Israeli companies, he said. August, 25, who grew up in New York City and attended Horace Mann, an elite, college-prep school in the Bronx, developed a connection to Israel at Harvard, where he studied economics. While there, he co-founded the “Israel Summit at Harvard,” an annual campus event that connects students from more than 100 universities with the Jewish state. Summers, who was previously Harvard’s president, and economics professor Paul Gompers served as advisers on August’s thesis: “The Impact of Experience on Israeli Entrepreneurial Success.” General Atlantic is looking for further investments in Israel and will put money into companies that demonstrate a market growth opportunity and “real product-market fit,” August said. Financial technology, life sciences, biotechnology and climate technologies are the firm’s target areas for Israel.

General Atlantic closed on its BeyondNetZero fund last month, allocating $3.5 billion to support entrepreneurs who deliver innovative environmental solutions while creating durable growth businesses. “We’re deeply focused on climate in Israel,” August said. “We define climate fairly broadly, and so if you think about food tech, ag tech,” and reusable materials, there are “a lot of companies that are already reaching a growth stage” and become ripe for investment.

General Atlantic does not divide its global investment budget by region. Funding for individual companies ranges from $25 million to $1 billion. A single investment committee decides which companies will receive the money, Crisses said. “We have a lot of confidence that… a number of those will come from Israel.”

Politics in Israel and criticism of its new government under Prime Minister Benjamin Netanyahu are unlikely to affect General Atlantic’s investment plans, Crisses said. He also takes in stride the economic shakeout that has cut venture capital funding in Israel almost in half from 2021. Crisses pointed to the General Atlantic’s steadfastness through political and economic turbulence in India, China and Latin America.

When the firm enters a region, it does so with “a lot of thought, a lot of preparation and with the desire to stay long-term and be part of the fabric of the community,” Crisses said. “That’s what we do in all the geographies we enter, and we’re really passionate, personally and institutionally, about making that in Israel.”

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Struck by Byju’s, General Atlantic’s India ship is in distress. Will it survive?

• The PE firm invested nearly $400 million in Byju’s. It may turn to dust. While that would be a big blow, General Atlantic is counting on big payoffs from other investments to balance out its portfolio. But, the Byju’s experience could change how and where the firm invests, going ahead.

Mumbai: On 27 January, Byju’s, once India’s largest edtech company valued at $22 billion, launched a rights issue or an issue where a company raises capital from only existing investors.

This put General Atlantic, a global private-equity fund with $83 billion in assets under management, in a quandary—to invest more or refuse.

Byju’s, run by its charismatic founder Byju Raveendran, has been struggling with bleeding acquisitions, governance slip-ups and lawsuits filed by investors. General Atlantic first invested in the edtech company in 2018 and then topped up its investments in subsequent funding rounds to maintain its stake of about 6%. Overall, its investment in the company today total $380 million. The investments were made at various valuations but its cost averaged at a valuation of under $3 billion, investors Mint spoke to said.

The rights issue, however, was dirt cheap. Byju’s was only valuing itself at $20 million to raise $200 million, and General Atlantic had to pump in only about $12 million to maintain its stake.

“The question was whether it will be akin to throwing good money behind bad," said a person familiar with the PE firm’s thinking in India. He didn’t want to be identified.

General Atlantic’s senior India executives, Sandeep Naik and Shantanu Rastogi, would have debated this over and over again. Investing at this throwaway valuation would have cut its losses. But a primary concern was that investors in Byju’s have little to no rights in share purchase agreements. Raveendran is one of the smartest dealmakers in India’s thriving startup universe and he has learnt from the experiences of entrepreneurs who lost control of their companies because they gave away way too much stake too early. Think of Sachin and Binny Bansal of Flipkart. By the time Walmart acquired the e-commerce company in 2018, the duo held around 5% stake each. Raveendran, as of now, holds over a fifth of his company—22%. Investors in Byju’s have little say on corporate strategy, forget board control. General Atlantic finally decided not to invest without securing more rights—say over management control and visibility on the use of proceeds.

But that choice has punched a hole in its India ship, a country where it has invested $5.1 billion since the late 1990s. The firm’s $380 million investment in the edtech firm—one of its larger bets in India—may turn to dust. Why is that? Since Byju’s was issuing a lot of shares at a very low price, General Atlantic’s non-participation means its stake is likely to get severely diluted.

The PE firm, and other investors, are digging in for a long stretched-out battle with the founders of Byju’s in the courts. Meanwhile, the development raises several questions. How deep is the hole in General Atlantic’s ship? Writing off nearly $400 million will surely be a hard bullet to bite and a blow it will take a long time to recover from. Can it stay afloat in the choppy sea? And how does it change the way it does business in India?

Turns out, Byju’s is not the only investment that is shaky. A clutch of other businesses General Atlantic has invested in is either losing money or have shed value. In short, the payday is far away.

Other than Byju’s, the PE firm made a second edtech bet—it invested about $180 million in Unacademy, which was last valued at around $3.5 billion. Combined with Byju’s, General Atlantic’s Indian edtech exposure is about $560 million—which is over 10% of its total investment in India.

Unacademy isn’t in great shape. The company made a string of acquisitions between 2018 and 2022—about 13 of them—and launched a series of new products. Most of them are now dead, or are operating on the sidelines, Mint had reported on 22 February. Faced with a slowdown in online coaching, Unacademy has pivoted to offline classes, where it faces entrenched players such as Allen Career Institute and Aakash Educational Services.

General Atlantic also invested around $50 million in NoBroker, an online real estate platform. The company filed its 2021-22 financial statements in December 2023, after a 15-month delay. It reported a 63% jump in losses to ₹ 309 crore though its revenue also grew by 96% to ₹ 326 crore. The 2022-23 statements are not available on the Registrar of Companies.

None of the two tech investments cited above are expected to be a write off—certainly not at the scale of Byju’s—but General Atlantic did have another stroke of bad luck, in October 2022. It invested in BillDesk, a payments gateway business, first in 2016. South African investor Prosus NV-backed PayU was in talks to acquire BillDesk for $4.7 billion but the deal was called off. Prosus scrapped the acquisition saying that deal conditions were unmet, though people familiar with the move told Mint at the time that it was because market conditions had changed. An exit here could have added a $700-800 million payday for General Atlantic.

BillDesk, meanwhile, lost the growth momentum as it was readying for the merger. The company is rebuilding its business and is aiming for a public listing over the next couple of years.

Investors put money to work when they think they can make returns in the shortest time possible. A delay in the exit timeline typically reduces the returns percentage from that investment. “It is clear that many of General Atlantic’s tech investments will take a longer time to yield results," said an investment banker tracking the firm, who asked not to be identified.

Trouble in non-tech

In the non-tech basket, General Atlantic is struggling with its investment in PNB Housing Finance.

Ahead of the housing finance company’s initial public offering (IPO) in 2016, the PE firm acquired shares at around ₹ 750-775 apiece. Thereafter, it doubled its investment in subsequent years, acquiring shares at a higher price from the open market. In 2018, it paid approximately ₹ 1,279 per share to acquire a tranche from Carlyle. In 2019, it paid around ₹ 850 per share, according to data platform VCCEdge.

However, PNB Housing Finance is trading lower now—on 1 March, its shares closed at 727.50 a piece.

Yet another star investment for General Atlantic is Rubicon Research, a pharmaceutical company. It acquired about 54% in Rubicon in 2019 for around $100 million. This investment, too, looks shaky. Rubicon reported double digit profits till March 2021. Thereafter, it has reported two consecutive years of losses—loss of ₹ 67.81 crore in 2021-22 and a loss of ₹ 16.89 crore last year, according to VCCEdge.

“The company incurred losses mainly on account of expenses incurred towards the initial set-up cost and employee cost in Advagen Pharma Ltd, which is a newly formed company," a Care Ratings report from 4 October 2023 stated. The report added that the group’s research and expenditure (R&D) expenditure had increased from 2018-19 to 2022-23.

“Furthermore, the group faces intense competition in the market with presence from the organized and unorganized players operating in the industry. Hence, the ability of the group to continuously upgrade the plant with all regulatory approvals in place remains critical," the Care report stated about Rubicon.

“General Atlantic chose to invest a significant part of the company’s revenue back into R&D and that contributed to net losses," said one person with knowledge of the firm’s thinking. He didn’t want to be identified either.

The firm, meanwhile, dabbled in fashion, investing $50-60 million in House of Anita Dongre in November 2013. The fashion company reported losses over the preceding four years till 2021-22 though it reported a ₹ 40 lakh profit in 2022-23, according to VCCEdge.

The people cited above said that the women’s apparel company with its two brands—AND and Global Desi—is shifting out of the crowded affordable fashion market. This could help the company sustain profitability.

What worked

On the brighter side, General Atlantic has booked several profitable exits, especially over the past two-four years, which could balance out its loss-making bets. It exited Capital Foods, which sells noodles and sauces under the brand Ching’s Secret, at close to 2.5 times its initial investment, when the business was sold to Tata Consumer Products this January, two people cited above, with knowledge of the development, said.

General Atlantic also stands to make at least $750-775 million on its investment in depository and registry services company KFin Technologies, which it partly sold in December 2023. While it has booked $275 million out of its investment, its balance shares are worth over $500 million, the people cited above said. KFin Technologies could well turn out to be the PE firm’s star investment out of India. The firm also made $800 million by selling its stake in Kerala Institute of Medical Sciences and 360 One (previously IIFL Wealth), according to news website VCCircle. In addition, the firm exited data analytics business MuSigma, health tech firm CitiusTech and the National Stock Exchange between 2019-2022. The deals fetched handsome returns. “Most of these exits have returned 2.5X to 5X on investment," one of the people cited above said.

Overall, in the past three-four years, General Atlantic would have made exits that total $2 billion. India, thereby, has been a lucrative market for the firm, notwithstanding its current troubles with the edtech portfolio. General Atlantic did not respond to Mint’s questions on the company’s investments, exits and their specific value.

Learning from Byju’s

This brings us back to how General Atlantic’s India strategy is likely to shape up, going forward. One thing is clear. After the Byju’s episode, the PE firm will seek to invest in companies where it is able to exert a greater influence. It has also invested nearly $1 billion in two Reliance entities—Jio Platforms and Reliance Retail Ventures—for a fraction of a stake. While most investors view investments in Reliance entities as safe, it is unlikely they can influence the group’s strategy.

“The firm wants to do larger deals than what it has done in the past and deals where it has higher influence," one of the persons cited above said.

This would mean taking up 30-80% stake in investments, starting with $100 million deals. Over time, the firm can invest up to $350 million. Typically, investors take this approach so that they are able to monitor growth over time. This is exactly what General Atlantic did with Byju’s too. But from now on, portfolio companies can expect more due diligence.

In addition, General Atlantic will concentrate more on capital efficient companies, the people quoted above said. This would mean eschewing companies that are raising a lot of capital without any clarity on the use of proceeds.

Still bullish?

Will the Byju’s experience change the nature of its relationship with startup founders?

We hear the PE firm still wants to be founder-friendly. In fact, the company has supported founders going through turmoil in the past. CitiusTech is an example.

General Atlantic invested in Citius in 2013 and subsequently sold its stake to Baring Private Equity Asia in 2018. Rizwan Koita, co-founder of CitiusTech, told Mint that the PE firm was always supportive. “During the period when General Atlantic was invested, there was a 18 months lull when the business did not grow as per targets. General Atlantic was very involved and helped us figure things out," he said.

The other question: will the recent spate of bad runs switch the firm off the tech sector? Apart from edtech, the firm has made bets on fintech, healthtech and software-as-a-service companies.

A General Atlantic spokesperson told Mint it remains bullish on tech and tech services. “As long-term investors in India, the digitization of every sector—including telecom, healthcare, and financial services, among others—has long been, and will continue to remain, a consistent theme in our investment approach as entrepreneurs focus on addressing the needs of the local population and expanding access to key goods and services," the spokesperson said.

In India, the firm has undergone a leadership change in the last two years. After leading the firm’s investment thesis in India and south east Asia, Sandeep Naik, the face of the company in India for long, is now mostly building the PE firm’s south east Asian portfolio.

This leaves Shantanu Rastogi, a more media shy investment professional, with the task of shaping the firm’s investment thesis in India.

We got a glimpse of his thinking during the recent Mumbai Tech Week. On 18 February, a Sunday, Rastogi was part of a discussion rather positively titled ‘Startup winter: The ice begins to melt’. He came dressed in casuals.

What would he have done differently while making technology investments in India, he was asked.

“Invested more," he replied.

• #Long Story

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