Sandahl Austin Ventures Sept 15
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Mr. Brian Sandahl, an analyst at Austin Ventures, spoke to the Texas Economics Association about careers in private equity investing. He provided an overview of Austin Ventures, including that it is a venture capital and growth equity firm that has been in business for over 25 years and manages $3.9 billion across 10 funds. He described the firm's investment approach of providing capital to companies at every stage from seed to growth. Sandahl also outlined the typical path to obtaining a career in private equity investing, noting the competitiveness of breaking into the field.
Sandahl Austin Ventures Sept 15
- 1. Texas Economics Association Meet one another! Please greet the people around you! Ask them what their majors are, make “casual conversation” The meeting will begin shortly.
- 2. Texas Economics Association General Meeting #2 Today’s speaker: Mr. Brian Sandahl Analyst
- 3. Sign-ups going around • Adopt a Kiosk Community Service • HS Tutoring Community Service • Coed Volleyball IM Sports • Committee Interest
- 4. What is the TEA? • Social • Philanthropic • Professional • Academic
- 5. What’s new this year? Tutoring high school students • Garza HS needs tutors Economics Company Night • Professional committee will lead Research advising contacts • Online research guide and professor network • Dallas Federal Reserve Conference Committees, leadership positions • For your resume/sharing the load!
- 6. How to join? Membership dues: • $30/semester, $60/year – the YEAR option is with t-shirt Active membership: • 8 points throughout the year (meetings/event attendance) Committee membership: • Apply to individual officers, more info coming Officer elections: • Open to active members only Join
- 7. Questions?
- 9. And now… Mr. Brian Sandahl Analyst
- 10. Texas Economics Association Meeting September 15, 2010 Brian Sandahl Analyst Austin Ventures
- 11. Page 11 Agenda – Private Equity Investing Overview – Firm Overview – Firm Structure – A Career in Growth Equity Investing
- 12. Background • BBA, May ’09 • Finance / Business Honors • Minor: Spanish • Orgs • Freshman Business Association • Undergraduate Business Council • Work Experience • Austin Capital Management Page 12
- 13. Page 13 • Total Portfolio: Public Equity, Fixed Income, Cash • Alternative Investments Hedge Funds, Private Equity, Real Estate Strategies, Energy & Natural Resources, Distressed Securities, Special Situations, Emerging Markets • Private Equity Leveraged Buyouts, Secondary Funds, Growth Equity, Mezzanine Capital, Venture Capital • Venture Capital Seed/ Startup Capital, Expansion Capital, Growth Capital Investment Asset Classes In Perspective Venture Capital Private Equity Alternative Investments Total Investment Portfolio
- 14. Page 14 An Overview of the Private Equity Industry • VENTURE CAPITAL – Early Stage – Growth Stage – Later Stage • PRIVATE EQUITY INVESTING – Growth Capital Firms – LBO Firms
- 15. Page 15 Overall, Private Equity Fundraising Remained Strong US Venture Capital Fundraising (peak $104.3B) US Buyout Fundraising (peak $281.6B) Source: Thomson Financial $12 $18 $26 $33 $38 $52 $79 $72 $88 $78 $51$49 $79 $155 $200 $282 $252 $88 $54 $0 $50 $100 $150 $200 $250 $300 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1H '10 (US$Billions) $5 $4 $9 $10$12 $20 $30 $56 $104 $39 $9 $11 $20 $29 $32 $35 $28 $16 $8 $0 $20 $40 $60 $80 $100 $120 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1H '10 (US$Billion)
- 16. Page 16 Austin Ventures Overview • A venture capital and growth equity firm • Over 25 years of venture capital/growth equity experience – Growth equity businesses are more established, growing rapidly and can be modestly leveraged to enhance returns – Venture capital investments are riskier, but investors can strike out on 5 deals and hit 1 home run and still provide a great return – The combination of both investments in AV’s portfolio meets the needs of LPs wanting to invest in both asset classes – Allows AV to invest at every stage of the funding lifecycle, from initial seed investments, through startup and growth capital, to management-led buyouts and recapitalizations • $3.9 billion under management across 10 funds • Invest nationally but maintain a particular focus on Texas, where we are the region’s most active investor
- 17. Page 17 1984 1987 1991 1994 1997 1998 1999 2001 2005 2008 Austin Ventures Overview Vintage Fund I II III IV V VI VII VIII IX X Cumulative Committed Capital • 25+ years of venture capital/private equity investing • Nationally-recognized, regionally-dominant • 325 investments and 81 active portfolio companies • 100 IPOs and acquisitions • 27 investment professionals28M 88M 163M 278M 448M 768M 1.6B 2.9B Annual Totals: 2.4B 3.9B 1984 1987 1991 1994 1997 1998 1999 2001 2005 2008 2008 2005 2001 1999 1998 1997 1994 1991 1987 1984 = $900M = $525M = $830M = $825M =$320M =$170M =$115M =$75M =$65M =$28M
- 18. Page 18Page 18 Funding Every Stage of Innovation Growth Equity Practice • National investment sourcing effort • Partnering with leading industry executives on high potential investment theses • Focused on recurring revenue and asset-light business models • Preference for the following industries: — Supply Chain and Logistics — Integrated Media — Software — Information, Financial, and Business Services • Capital for acquisitions, growth, purchasing stock from owners, liquidity with leverage, management buyouts, PIPEs and take privates Venture Capital Practice • Partnering with innovative entrepreneurs and founding teams • Seed and Series A lead investor • Leveraging extensive talent network of experienced executives • Focused on: Internet; Enterprise and Infrastructure Software; Data Center / Com Systems; Alternative Energy, and Semiconductors • Capital for new product and service innovation
- 19. Page 19Page 19 Growth Equity: Providing “Flexible” Capital and Structuring Alternatives Founder / Management Buyout Incubated Deals Thematic Rollups Expansion Capital Take Private Transactions Example Deals What We Look For Business attributes: • Revenues: $20 to $100MM • EBITDA: $5 to $15MM • Demonstrated growth • Recurring revenue • Scalable business model • Higher execution risk • Lower market risk • Founder led; not for sale • Asset light Opportunity for: • $20 to $100MM equity commitment • Conservative use of leverage
- 20. Page 20Page 20 Venture: Partnering with Visionaries to Build Category-Defining CompaniesRecent Deals What We Look For Target characteristics: • Proven entrepreneurs with deep domain experience Transaction / Company Size: • Seed and Series A • Growth capital Investment Size: • $100k-$10MM Industries: • Business Services & Supply Chain • Financial Services • New Media, Internet, & Information Services • Software • Texas Special Situations Lo Software New Media Financial Services Business Services
- 21. Page 21 What Service Do We Provide? Limited Partners (“LPs”) Our Customers AV raises $ from LPs AV Portfolio Company AV invests $ on behalf of LPs in private or public companies LP $ LP $ and AV Partner $ AV identifies, executes and manages investments in companies and seeks to exit the investment at a profit– our ability to profitably exit in turn affects our ability to attract more money from LPs
- 22. Page 22 How AV Makes Money $900 Million AV Fund X Management Fee Carried Interest % % • A fixed % of fund assets • Used to pay salaries, bonuses, rent, utilities and deal related expenses • % of Profits • This is where the real money is made
- 23. Page 23 Exit Portfolio Company Exit Strategy IPO Leveraged Recap Sale Wind Down Sell a portion of AV’s ownership through a public offering of stock Put more debt on the company and take a dividend Sell the company in its entirety to either a strategic or financial buyer Stop funding the company and eventually close the operations Return of Capital AV LPs
- 24. Page 24 A Career in Growth Equity Investing I-Banking Consulting Public Accting Exit Opps Experience Competition Commitment Private Equity Hedge Funds Corporate Development Graduate Business School Highly Competitive Top Accounting Majors 2 – 3 years 2 – 3 years Various Highly Competitive Valuation, M&A, Capital Raising Business Strategy, Operations Auditing, Financial Statement Analysis Popular Career Choices Post-Graduation
- 25. Page 25 A Career in Growth Equity Investing • Constant learning curve • Relatively few job openings • Competition among “the best of the best” • Investment banking and consulting are the closest analogs • You touch every aspect of company creation, growth and value maximization • Strategy consulting; transactional / investment banking; operational involvement; team building; recruiting • Unlike other types of investing, you can influence the outcome • Regardless of AV’s ownership % in a specific investment, you are in the “power of persuasion” business • Be patient: very long term business with lots of uncertainty
- 26. Page 26 Next Steps: Positioning Yourself for a Job in Private Equity • Do your homework (READ, talk to people, self-reflect) and decide what your short-term career goals are • Have a diverse array of experiences through internships to see what fits you best; work hard and maximize your experiences • Challenge yourself to get the most out of school; don’t be afraid of tough classes • Pursue “tried and true” investment banking analyst program (preferably bulge bracket bank with M&A exposure) or management consulting at top firm (McKinsey, Bain, BCG) – Investment banking is the easiest path to a job in private equity due to the analytical / modeling foundation – Consulting is a solid path due to its strategic emphasis – If you pursue a career outside these two fields, getting into private equity will be more challenging because you will not be a “known quantity” • What are we looking for? – Excellent academic record (BHP and/or MPA with high GPA and A’s in accounting classes) and high standardized test scores – Strong professional experience in investment banking or consulting – A demonstrated hard work ethic, proven extracurricular leadership and involvement in activities outside of school – Someone with a clear idea of (1) why he/she wants to pursue growth equity investing and (2) why a position at AV would be right for him/her – A general knowledge of how private equity investing works – Strong fundamental understanding of financial accounting and a track record of success in Intro, Intermediate and Financial Statement Analysis courses – A curious mind with a knack for problem solving and comfort dealing with ambiguity – A fun person who has a good attitude, is easy to work with and good to be around in social, non-work settings – Broad interests and a passion for learning in fields beyond just finance and accounting • Questions ???
- 27. Thank you!