Engineering an Edge in Growth Equity

I started working at a growth equity firm called Full In Partners as a software engineer about 6 months ago - not long enough to understand every in & out of the business by any means, but long enough to settle into my role & start creating value for the company.

The story of how I got there - from dropping out of high school & living in my mom's attic to working as a finance professional in NYC is (in my opinion) quite compelling, but it'll have to wait for another time.

Today, I'm writing about how why I have a job in growth equity in the first place... In a world filled with analysts, VP's, principals & partners, why would a growth equity firm need a software engineer, let alone the four we have on staff? This short article begins to answer that question.

I'll warn you before we get started in earnest - there's a substantial amount of "secret sauce" & confidential information I'll have to elide here for competitive & company policy reasons.

Custom Software Powers Our Sourcing Team

The tech team is responsible for building & maintaining a few tools, but today let's focus on the biggest & most important one - a sort of second brain for our deal sourcing team we call Mercury.

Mercury does much of the heavy lifting for our firm's sourcing team, helping them find prospective investments more efficiently than they otherwise could. How? Glad you asked.

We pull together many millions of first-party & alternative data points from a wide range of sources. Many of those sources, we compile ourselves, and others we pay vendors for.

Those data points all get fed into a proprietary model that estimates the company's revenue & growth rate - that plus a few smaller factors are how we determine what "candidates" to relay to the sourcing team through our custom web UI.

"What's in the box?"

The "box" of companies that are potential investments is defined mostly by two metrics: $5-$50 Million in annual revenue and a growth rate north of 50%. That might sound like a huge window... and in certain contexts, it is.

However, we rarely have access to first-party financials for the companies we're indexing - that means a substantial (but shrinking) portion of our recommendations are "misses" - being too big, small, or slow-growing for the "box".

Even so, giving our sourcing team a list of companies to work their way through & reach out to creates big efficiency gains. The proof is in the pudding - a meaningful portion of the overall companies we look at each week in our "deal pipeline" meeting are sourced from Mercury.

The Bottom Line(s):

Growth equity is (more or less) a dealflow game. If your firm is able to consistently find opportunities your competition isn't aware of, you're more likely to succeed. Mercury allows us to find those opportunities at great scale & with ever-increasing accuracy.

Thanks for reading! I hope you enjoyed this as much as I did.

I don't do comments on this site, but if you have thoughts or questions, feel free to email me. I can't promise I'll answer, but I'll do my best.