Why Growth Equity? How to Ace This Common Interview Question
Table of contents
- What Growth Equity Interviewers Want to Know
- Crafting Your “Why Growth Equity” Response
- Interviewing for Growth Equity or Venture Capital Jobs?
If you’re interviewing for growth equity roles, you should expect to have to answer the question “Why are you interested in growth equity?” This is a very common interview question aimed at assessing your motivation and knowledge of the industry. With the right preparation, you can craft a compelling response that positions you as a strong, knowledgeable candidate and one that is truly interested in pursuing a career in growth equity. You should be excited to answer this question and view it as an opportunity to set yourself apart from other candidates. This article will help you understand what interviewers look for with this question and how to craft a response that will put you ahead of your competition.
What Growth Equity Interviewers Want to Know
Growth equity is a specialized investment role combining aspects of venture capital and private equity. When interviewers ask “Why growth equity?” they want to see that you have intentionally chosen this career path because it aligns with your skills and interests and that you have put in the time to truly understand the role of a growth equity investor. Interviewers expect you to demonstrate genuine enthusiasm for the work of growth equity, along with an in depth understanding of the career.
Specifically, you should convey:
- Awareness of what growth equity firms do – Growth investors provide capital, guidance, important connections, and industry-specific expertise to help growth stage companies reach the next level of their progression. The role of a growth equity investor requires exceptional relationship building, the ability to identify and source investments, analyze companies, understand market dynamics and trends, structure deals, secure financing, add strategic value to the business, and eventually help develop the exit strategies.
- Interest in working with growth-stage companies – Unlike venture capital, growth equity focuses on more mature startups that already have an established product/market fit and initial traction. While venture capital is higher risk and VC firms typically make more investments, growth equity firms make fewer investments and cannot afford to make a bad decision. Growth equity investors should enjoy this pressure and excel at finding and identifying the best businesses.
- Appreciation of the balanced risk-reward profile – Growth investing sits between high-risk venture capital and lower-risk buyouts. Your answer should note how this dynamic appeals to you.
- Belief in the industry’s future growth prospects – Convey confidence in the ongoing strength of technology, healthcare, consumer products and other sectors fueled by growth equity.
- Understanding of how growth equity aligns to your background – Tailor your response to explain why your experience makes you well-suited to this field.
Crafting Your “Why Growth Equity” Response
With the criteria above in mind, you can create an authentic, thoughtful answer to stand out. Structure your response using some of these impactful points:
Introduce Yourself Briefly
Summarize your academic studies, previous internships/jobs and other relevant experience. This context is crucial for interviewers to understand what drives your interest.
Explain When/How You Discovered Growth Equity
Describe when and how you initially learned about growth equity and why the field appealed to you. Explain how aspects such as the risk profile and business stage attract you. Specific details tell a more compelling story.
Spotlight Aspects of Growth Equity That Align to Your Skills/Goals
Connect the dots on why growth equity aligns well to your competencies, aspirations and personality. If you enjoy thorough due diligence (one of the key traits in growth equity), explain why. For example, while the diligence process for private equity may be more focused on future cash flow, the due diligence process for growth equity is more focused on growth potential and market dynamics. Share professional development goals that growth equity could foster (e.g., negotiation skills, sourcing, relationship management, due diligence, deal execution, advisory). Give real examples of how your soft skills match growth investing.
Share Specific Companies or Deals You Find Exciting
Naming particular growth equity firms, deals or portfolio companies you admire demonstrates genuine interest. Do some research on the firm’s most recent investments before the interview. Mention that you’d be excited to work with companies in a specific sector based on trends or innovation in that industry.
Express Enthusiasm for Growth Equity Firms’ Value-Add
Articulate what excites you about how growth equity firms guide portfolio companies by offering strategic and operational support to achieve outsized growth, not just capital.
Ask Thoughtful Questions
If time permits, consider closing your response by thoughtfully asking the interviewers what originally attracted them to growth equity. This shows your curiosity to keep learning about their unique journey.
Interviewing for Growth Equity or Venture Capital Jobs?
Practice. Practice. Practice.
There are many similarities between growth equity and VC investing, and many firms will invest in both growth stage companies as well as earlier-stage companies. Because of the overlap between these two professions, the interview process is typically very similar as well. The best way to prepare for a growth equity or VC interview is to spend ample time preparing. First, you will need to nail down your understanding of the interview process itself and what to prepare for. Then you will need to ensure you have an in-depth understanding of the investment process, technical aspects (e.g., deal structures), and responsibilities of an investor. Next, you will need to learn how to analyze a business from an investors perspective including financial modeling, returns modeling, and business diligence. Finally, you will need to work on your ability to present your findings in a clear, concise, and confident manner.
Leverage our free resources or complete VC & Growth Equity interview guides to help you prepare for all of these items.
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