As a student pursuing private equity at Booth, I could not imagine a better education and introduction to this hard-to-enter industry than the PE/VC lab class at Booth. The depth and detail in which we have explored every aspect of PE has been invaluable to my future career and how I think about investment opportunities. I sat down to discuss the growth of private equity at Chicago Booth with adjunct professor Chris McGowan, who is a 23-year PE industry veteran and also a faculty advisor and an Entrepreneur-in-Residence for the Polsky Center for Entrepreneurship and Innovation.
1.) You’ve had a long and successful 23-year career in Private Equity; how did you first become involved with the PE/VC community at Booth?
My involvement began with SPITC program (the Sterling Partners Investment Thesis Challenge) as the faculty advisor in 2012. SPITC is an investment idea generation and live deal sourcing exercise in which a team of Booth student interns craft a written proposal focusing on one industry that they believe would be productive to take a deeper dive into to find investable sub-sectors and eventually investable company targets for private equity investment. That process takes place over a 10-12 week period in which the students bounce weekly between me, as their faculty advisor in the Polsky Center, and the host PE firm in Chicago that has chosen to sponsor that team. We have had great support and participation from the Chicago private equity industry, who for seven years has seen SPITC as a valuable source for investment ideas. See the list of firms.
2.) What other types of private equity programming are you involved with at Booth?
After I got involved with the SPITC program, I was asked to do some lecturing for the PE/VC Lab Class at Booth. Then, three years ago, I was invited to co-teach the course with professors Ira Weiss and Jason Heltzer. The class has continued to grow and evolve. I am also an Entrepreneur-in-Residence at the Polsky Center and I talk with students about a wide range of topics interesting to them from how to raise capital and pitch your business to compensation issues, career searches, and how to position yourself when career switching into or returning to the PE industry.
3.) I’m fortunate to have taken your PE/VC lab and it was one of my absolute favorite courses. Can you talk a bit about the interaction between students and firms in the course?
Students start the process of joining the class by applying for an internship with a Chicago-area private equity/venture capital fund through the Polsky Center. It’s a competitive process—about 300 students apply every year for 110 seats in the class. Once you secure an internship, you are required to work 15 hours per week at a minimum for 10 weeks and attend our class on Tuesday nights every week during the Spring Quarter. Hopefully, for many students the 10-week internship turns into 12 or 15 weeks during the year and sometimes into a summer internship offer, and we’ve even had some become full-time post-MBA offers.
4.) Can you describe the growth Booth has seen in terms of firm interest and participation?
The class started nearly 20 years ago with about 15 firms, and now we have grown to 65+ private equity and venture capital firms here in Chicago supporting the program. The repeat rate for the firms is above 95% and firms will often ask for a second, third, or even fourth intern. These are great key indicators of success for the program. We are quite proud of the fact that roughly 25% of the class will end up working in PE or VC at some point in their post-MBA career.
5.) What do you hope students in the PE/VC Lab draw from both the internship project and the class portion?
Based on feedback we get from students, the internship projects vary by host firm, their stage in their investment cycle/fundraising process, etc. At times, you may help your host firm look at a new transaction, or help them monitor and grow a portfolio company that they’ve purchased in the past. Other times there is research to be conducted around industries the firms want to understand better or an industry they may have not looked at before. In that case, your job is to get them up to speed on all of the things that an educated investor would want to know about a target sector.
In the classroom, we introduce a series of experiential topics that normally wouldn’t be covered in other academic courses. We start by going through the basics of the industry, including how firms fundraise, the legal structure of their funds, documentation, etc. We examine the post-fundraising process for firms, and in particular how they plot a strategy to intelligently invest their funds. We talk about strategies firms will employ to grow the companies they purchase and eventually exit. We lace in a number of guest speakers to share what they are doing in real-time in terms of sourcing, adding value to a company, fundraising, and ways in which they’ve tackled growth problems and opportunities with assets and people.
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