Capital Decanted: “Growing Up: How Growth Equity Is Defining Its Place in Private Markets”

Season 3, Episode 2 | Released: November 7, 2025
Hosts: John Bowman & Aaron Filbeck
Guests: Suzanne Gorin (General Atlantic), Steve McCourt (Meketa Investment Group)

Episode Overview

This episode delves deep into the rise of growth equity, charting its evolution, blurred boundaries, and newfound prominence within private markets. Shunning the noise of market clichés, the hosts offer a historical perspective, dissect definitive attributes, and debate its fit in institutional and wealth portfolios. The conversation is grounded by expert insights from Suzanne Gorin of General Atlantic and Steve McCourt of Meketa Investment Group.

Key Themes & Discussion Points

1. Growth Equity’s Identity Crisis & Recent Surge

• Definition Confusion: Growth equity’s definition has long been muddled, especially in the wake of 2021 and the Zero Interest Rate Policy (ZIRP) era.
  • “So maybe it's time for a full rebrand.” – John Bowman [00:00]
  • “The growth equity market got confused with late stage venture capital… and pre IPO momentum investing.” – Suzanne Gorin [00:15]
• Market Boom & Blurring: Growth equity is positioned as the ‘middle child’, misunderstood and often mislabeled, but now among the most dynamic strata of private equity, with industry heavyweights and new entrants flocking to the space.

2. Historical Vignettes: The Roots of Growth Equity [09:07–19:31]

Three Founding Narratives

• TA Associates & Peter Brooke (Founded 1968): Started as a VC affiliate, shifted to later-stage, high-growth companies; significant for hiring Jackie Morby—one of the first women in PE.
• General Atlantic & Chuck Feeney (Founded 1980): Embedded philanthropy, patient partnership, cross-border scaling, and “capital with a purpose” as early pillars of growth equity investing.
• Summit Partners (Founded 1984): Specialized in “bootstrapped” (no outside capital) companies; respected founder control and flexible deal structuring—culture of true partnership.

Memorable Quote:
“…growth equity firms were intent and are intent on investing in what's already working. And to help make them even better, it's not so much about reinventing the wheel, but trying to make that wheel spin a bit faster.” – John Bowman [16:56]

3. Growth Equity’s Evolution: From Hybrid to Headline

• Post-GFC (2008): Risk aversion led LPs to seek alternatives—growth equity offered companies with “real revenue and real growth” but less volatility/leverage than buyouts or VC.
• Migration & Convergence: Buyout firms moved downward; VC firms scaled up. Result: further confusion but greater legitimacy for growth equity.
  • “By the mid teens, growth equity was no longer a niche, it was a core allocation.” – John Bowman [19:00]

4. Market Sizing & Current Landscape [22:32–27:15]

• AUM: Estimated $1.7 trillion, about 10% of total PE funds (2025).
• Growth Spurt: Post-Covid, with changing monetary policy, growth equity’s asset allocation differentiates clearly from VC (early stage, high risk) and buyouts (debt-heavy).
• Key Players: Insight Partners, TPG, General Atlantic, Summit Partners, Warburg Pincus; new entrants include Blackstone, Blue Owl, Goldman Sachs, and Andreessen Horowitz.
• Wealth Channel Expansion: Wealth managers (not just institutions) are productizing growth equity for individuals, driving a structural shift.

“The biggest and most dynamic opportunity for growth equity is in bringing the broader private markets to the individual investor marketplace.” – Steve McCourt [27:34]

Definitional Deep Dive: What Sets Growth Equity Apart? [29:21–39:34]

Five Key Attributes

1. Ownership & Control

   • Typically minority stakes (20–49%)
   • Partners, not controllers; founders retain significant autonomy
   • Distinct from buyouts (majority/control) and VC (small but outsized governance)
   • “The influence of growth equity…would (not) be greater than a buyout strategy… or a venture company that's provided all of the financing…” – Steve McCourt [32:11]

2. Stage of Investment

   • Targets companies with proven models: profitable or nearly so, strong product-market fit, looking to unlock the “next level” (geographic or product expansion)
   • Not as early stage as VC, not as mature/operationally optimized as buyouts

3. Leverage

   • Minimal or no debt; focus is on organic growth, not financial engineering

4. Value Creation

   • Playbook centers on scaling—accelerating market entry, new products, upgrading systems/talent
   • Vs. buyouts (cost-cutting/optimization) and VC (product/market fit, early hires)

5. Risk & Return Profile

   • Moderate risk: below VC’s “binary” risk, less financial leverage risk than buyouts
   • Offers a route to access strong upside with more stability

Suzanne Gorin’s “Five Qualities” [37:43]

1. Companies are high growth (often 25–35% per year)
2. Near profitability or already profitable
3. Little or no leverage
4. Multi-sector focus (tech-enabled, not just tech)
5. Still “occasional hits”—opportunity for outsized returns

Growth Equity Manager Playbook & Value Add [39:34–45:45]

• Strategic Expansion: Funding international growth, new products.
• Operational Enhancement: Systems upgrades, recruiting key executives.
• Go-to-Market Acceleration: Marketing, sales, professionalizing customer acquisition.
• Governance: Building boards, reporting, compliance frameworks.

Evaluating True Growth Equity Managers

• Questions for diligence:
  • Is the company truly bootstrapped or just an extension of previous VC/PE rounds?
  • Real customers/proven model or still early stage?
  • Is growth capital efficient, or will large capital infusions be required?
  • Would the business remain profitable if reinvestment paused?
  • Is the GP taking a minority stake with limited/no leverage?

“Growth equity is becoming popular…you now have PE managers on both sides…who are adopting some of that growth equity language…but aren’t actually truly doing growth equity.” – Aaron Filbeck [43:58]

Portfolio Fit & Performance Insights [48:14–60:27]

Performance Profile

• Returns: Growth equity’s net IRRs have at times outpaced both PE buyout and VC, but underlying return distributions are key.
• Risk Profile: Lower loss ratios similar to buyouts; distributions are leptokurtic (thin tails, lots of clustering), meaning limited upside ‘home runs’, lots of moderate success.
  • “Venture capital…follows a right skew distribution…buyouts…normal distribution…growth equity…leptokurtic distribution.” – Aaron Filbeck [54:13]

Portfolio Integration

• Cyclicality: Less sensitive to economic cycles due to focus on secular growth, but more sensitive than VC (which is highly idiosyncratic).
• Overlap with Public Equities: Need to check for beta overlap; value is access to private growth stories rather than just premium pricing for public-like exposure.

Types of Players in Growth Equity

1. Hedge/crossover funds — highly thematic, quick movers, passive
2. Traditional growth equity — slower, valuation-focused, seek more company engagement
3. Buyout GPs in growth equity — prioritize control, often bring a buyout mentality

Notable Quotes & Memorable Moments

• On Growth Equity’s “Middle Child” Problem:
  “It's the asset class that gets the fewest headlines, is largely misunderstood, often mislabeled, but arguably is now the hottest segment in the PE universe.” – John Bowman [05:01]
• On Company Partnership:
  “We're not showing up with an army the day after we write them a check…this is about supercharging your best companies.” – Suzanne Gorin [49:31]
• On Market Opportunity for Wealth:
  “The biggest and most dynamic opportunity for growth equity is in bringing the broader private markets to the individual investor marketplace.” – Steve McCourt [27:34]

Famous Growth Equity Deals: Case Studies [60:27–end]

• Facebook (2009, General Atlantic): Capital fueled global expansion and pre-IPO prep.
• Uber (2013, TPG Growth): Funded rapid global expansion; crucial for overcoming regulatory barriers.
• Airbnb (2015, GA, Tiger Global, Hillhouse): Navigated legal challenges, scaled operations pre-IPO.
• Spotify (2016, TPG Growth, Dragoneer): Supported international growth and business model refinement.
• ByteDance/TikTok (2018, GA, Coatue): Scaled to global dominance, managed geopolitical risks.

“Growth equity provided the capital, the expertise, and the strategic support… Scaling without surrendering from a founder perspective, growing without overextending from an investor perspective. That's Growth Equity.” – John Bowman [62:08]

Timestamps of Key Segments

| Timestamp | Segment/Quote | |--|--| | 00:00 | Opening remarks; definitional confusion | | 09:07 | History: TA Associates, General Atlantic, Summit Partners | | 19:54 | Steve McCourt: Evolution from minority positions to today | | 22:32 | Market sizing; post-Covid acceleration | | 27:34 | Steve McCourt: Wealth channel opportunity | | 29:21 | Definitional comparison: buyout, growth, VC | | 37:43 | Suzanne Gorin: Five characteristics of growth equity | | 39:34 | Growth equity playbook: value add, scaling strategies | | 46:10 | Suzanne: Why institutional allocators wrestle with growth equity | | 54:13 | Return distributions (skewness/kurtosis) | | 60:27 | Famous growth equity deals; role in company growth stories |

Episode Tone & Style

The discussion is lively, thoughtful, and scholarly, with an accessible style. John and Aaron pull no punches on complexity, aiming for clarity without dumbing down nuance. Their analogies and guest perspectives make for a “masterclass” feel that still relates back to practical allocation and deal examples.

Summary Takeaway

Growth equity has evolved from an ambiguous hybrid to a core private market strategy. For founders, it’s partner capital for scaling without losing control; for investors, it’s a way to access high-potential, real-growth companies with less binary risk than VC and less leverage than buyouts. Still, assessing quality requires nuance—true growth equity is about partnering with proven, fast-growing companies when both are ready to accelerate, not just writing big checks with a new label. The future? Expect more growth, greater access through wealth channel innovation, and a continuing need to separate substance from spin as the asset class matures.