Oct 12, 2016 · 23m · 20vc
20VC: Why Many VCs Fail To Raise, Why LP Compensation Is A Massive Problem & Why Fund of Funds Will Become More Prominent with Lindel Eakman, Managing Director @ Foundry Group
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, host Harry Stebbings interviews Lyndall Eakman, Managing Director at Foundry Group, discussing institutional LP dynamics, GP selection criteria, flaws in LP compensation metrics, and portfolio construction strategies.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 38.8% of the talking time here. How this is scored →
Harry as informed peer 2.1 Guest teaching 2.7 Guest disagreement 1.4 Harry pushing back 0.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:56 Rejecting Mike Maples' premise
Lyndall directly refutes Mike Maples' assertion that LP investing is purely access while venture is picking, contending that VCs rely equally on access and sourcing advantages.
Hardest push from Harry ▶ 10:48 Challenging the guest with Maples' thesisHarry pushes Lyndall by presenting a contrasting viewpoint from high-profile VC Mike Maples regarding access versus picking.
Biggest teaching moment ▶ 16:44 Deconstructing LP compensation flawsAfter Harry admits he doesn't know how LPs are compensated, Lyndall breaks down institutional incentive models and explains why 3-to-5-year IRR metrics fail in venture.
Harry holds his own ▶ 11:36 Citing Chris Duvost on GP-LP hybridizationHarry demonstrates strong industry awareness by bringing up Chris Duvost's prediction about the hybridization of GPs and LPs to frame the discussion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Lyndall's Career Path into LP Investing | 1 | 1 | 0 | 0 | Harry asks standard, conversational questions about Lyndall's career path into LP investing and transition to Foundry. Lyndall politely details backing into institutional money and learning the discipline of saying no. | |
| Foundry Next Strategy and Seeking Alpha | 2 | 2 | 1 | 1 | Harry cites Michael Kim from Sendana to ask about VC alpha generation. Lyndall gently clarifies that outsized alpha fundamentally requires managing volatility rather than simple formulaic picking. | |
| Backing Union Square Ventures and Partnership Dynamics | 3 | 1 | 1 | 0 | Harry brings crowdsourced questions from Beezer at Sapphire regarding early investments in USV. Lyndall offers personal anecdotes on meeting Brad Feld and avoiding male posturing in venture partnerships. | |
| Generational Transitions and GP-LP Hybridization | 4 | 3 | 3 | 2 | Harry uses quotes from Mike Maples and Chris Duvost to prompt debate on access versus picking and GP/LP hybridization. Lyndall explicitly pushes back against Maples' premise, arguing access is just as crucial for VCs as LPs. | |
| Risk Management and Building LP Brand Value | 2 | 4 | 1 | 1 | Harry asks about risk strategy and LP branding. Lyndall educates on how emerging GPs frequently fail to understand portfolio-level risk characteristics and flail on strategy questions. | |
| Flaws in LP Compensation and Institutional Structure | 1 | 6 | 2 | 1 | Harry openly admits ignorance regarding LP financial compensation structures. Lyndall takes the teacher role, explaining cash-plus-bonus structures and pointing out how short-term IRR metrics misalign with venture timelines. | |
| Quick Fire Questions with Lyndall Eakman | 2 | 2 | 2 | 0 | Harry conducts a standard quick-fire round. Lyndall offers candid observations on GP hubris and the mistake of presenting 45-page pitch decks. |
Statements from this episode (16)
Eakman Managed UTIMCO's $35 Billion Endowment Pool
“Having successfully managed the private investment program for the combined 35 A billion pool of capital managed by the University of Texas Investment Management Company, otherwise known as UTIMCO. There, he was responsible for overseeing a portfolio of privat…”
Eakman: Highest Investment Returns at UTIMCO Were in Venture Capital
“And yeah, it helped that my best returns were in venture too.”
Foundry Next Allocates 25% to Fund Managers and 75% to Direct Investments
“In our case, we're putting 25% of the fund into the manager side of that. We are excited about that piece, and then 75% in directs”
Eakman: Separate Follow-On Funds Do Not Create Negative Market Signals
“And I, we just haven't seen it, but I don't think a separate fund has changed any market perceptions.”
UTIMCO Secured a 20% LP Position in Union Square Ventures' Early Fund
“I think we had the opportunity to get 20% ownership, and that's what we wanted, just like all the VCs do in companies. At UTEMCO, and frankly, today, we like being an important part of the capital base.”
Eakman: Male posturing inside VC firms undermines good decision-making
“There's often a bunch of male posturing nonsense in these venture capital firms. If you can get rid of all that noise, you end up with a way better chance of making good decisions.”
Eakman: Foundry Group Will Not Attempt Generational Succession
“Foundries on the record is saying that, you know, we're not going to transfer this through a generational transition.”
Eakman: Institutional LPs Do Not Make Great Direct Investors
“Traditional institutional LPs, I don't think they make great direct investors. And in general, they aren't able to attract the most talented direct investors to their platform.”
Eakman: UTIMCO Struggled to Attract and Retain Top Investment Talent
“It was always a challenge at UTEMCO to get the very best talent and keep them.”
Emerging GPs Frequently Fail on Portfolio Strategy and Risk Management
“I think many GPs miss on portfolio strategy. That's probably the place that when we ask questions, GPs just flail about, especially newer or emerging GPs. And they're unaware of the risk characteristics that are different, you know, in a total portfolio versus…”
Eakman: Institutional LP Turnover and Vacillation Elevate Fund-of-Funds Prominence
“I will say a challenge for venture writ large and a challenge for LPs is that institutional LPs are changing. They're all struggling with staff turnover. Many have vacillated in their commitment to venture. Because of that, I think you've seen venture funder f…”
Eakman: Engaged LP Model Mirrors Traditional VC Support for Emerging Managers
“Our engaged LP role really, to me, is no different than that of the traditional VC. I think of these newer emerging managers as a small company that maybe we could help in their progress.”
Eakman: North American institutional LPs fail to properly incentivize investment staff
“I don't think that I'll say writ large North American institutions do a great job of incentivizing their staffs.”
Eakman Advises Founders and VCs to Push Hard for Exits
“Absolutely. Get out if you're even close to the door.”
GPs Hypocritically Pitch LPs With Massive Decks Despite Advising Founders Otherwise
“When GPs come in, I think the mistake they make generally is putting too much in a pitch deck and not limiting and not taking their own advice. They'll tell a company to have a pitch deck with 10 slides in it, And yet they'll show up with a 45 page deck and ex…”