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Liam Donohue T'95
Co-founder and Partner, .406 Ventures

Center for Private Equity and Entrepreneurship (CPEE): How did you get started in the private equity industry?

Donohue: When I arrived at Tuck, I didn't even know what a balance sheet was. I'd been an undergrad chemistry major with no emphasis on business whatsoever. I had a great entrepreneurial experience in Eastern Europe after graduation, opening the first office in Budapest for Booz Allen Hamilton—but I really knew nothing about finance.

So it was a steep learning curve on the finance side when I arrived at Tuck. During the summer between first and second year, I wanted to bolster those skills, so I went to work for Solomon Bros. in London in their East European group and got some exposure to the banking world. I loved it—especially the transactional element. Booz Allen showed me how much fun it was to help companies solve problems, and Solomon showed me how much fun it was to help companies do transactions.

When I got back to Tuck for the fall of my second year, I began to learn more about the venture capital business. I realized that venture capitalists are part bankers, part consultants, and part entrepreneurs. Plus, unlike full-time bankers or full-time consultants, venture capitalists have a long-term equity perspective, and they have to live with the advice they give portfolio companies and with the transactions they help structure. From my perspective, this was an ideal combination.

CPEE: How did you go about pursuing a job in the venture capital business?

Donohue: The only venture capital firm interviewing on campus that year was Centennial. I bid all my points on them and got invited out to interview. They ultimately never hired anyone from campus, but the experience gave me an even better taste of what the industry is like. Like all good Tuckies, I had a job offer from an investment bank and an offer from a consulting firm, as sort of a security blanket. I probably hold the record for delaying feedback to that consulting firm; I just kept putting them off while I continued to feel out the venture capital job market. The firm was literally calling me every 20 minutes at one point to find out if I was accepting the position.

At the very end of the school year, Colin Blaydon sat next to John Foster at a board of trustees dinner. During dinner, John told Colin that he was looking to bring someone in to play a role at Novacare, one of the big portfolio companies at Foster Management, Foster's private equity firm. The position involved doing special projects within Novacare, which was a billion-dollar company. John asked Colin if he knew anyone who might be good for the job, and Colin said he'd get back to him.

By some completely amazing coincidence, I happened to run into Colin on campus shortly after this dinner, and he mentioned the position to me. So I pursued it, and John Foster flew me down to Novacare for an interview. When I got there, he told me that he was looking to fill two positions—one was the job at Novacare and the other was a principal position at his private equity fund, Foster Management. I think I was drooling all over the table when I heard about the second position! I met some of the partners at Foster Management during that visit. Two days later, I was offered the job, and I accepted it on the spot—without even hearing about the compensation. I went down there and started that summer.

CPEE: Now you have your own venture firm. How did that happen?

Donohue: In 1998, after a great experience working with John, I started my own private equity firm with my partner, Andrew, whom I met during my time at Foster Management. In my case, the Tuck network has been incredibly helpful, career-wise. Obviously, I got my start in the industry because of Tuck connections. But now that I am running my own firm, the Tuck network keeps on working for me. We have one portfolio company with four of my classmates on the payroll, another four classmates that are basically consultants, and another few that are clients. I get a much better response calling Tuck alums—even people I don't know—than my partner does when he calls alums from his business school. Colin remains a close friend and acts as director and advisor for several of our companies.

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