The Exchanges

Q I mean, I'm so glad that we're aligned there. I do want to dive into my favorite element, Lowe, being the quickfire round. As you can tell, I've loved this. Completely flunking the schedule, but always a good sign. So let's start with my favorite. What's the favorite book and why, Lowe?

A I thought about this a lot, and the book that I always go back to is a throwback, and it's called Why Should White Guys Have All the Fun. And it's a book about Reginald Lewis, who was a lawyer turned LBO person way, way back in the eighties. And he bought Beatrice international, which is a diversified food holdings company. And it was the first billion dollar transaction done by an African American. So it talks a lot about his path, his journey. He unfortunately died prematurely of brain cancer, but it's an amazing book. That not only has been inspirational to me, but it also covers a lot of the history around what was happening back in the go-go eighties with all the LBOs, Drexel Burnham Lambert, Michael Milken writing the highly confident letters to be able to finance these transactions with high-yield or junk bombs. So it's an amazing, an amazing book.

AI assessment note: “the book that I always go back to is a throwback, and it's called”

Q in terms of the thesis in terms of diversity and inclusion there, but you, as we said, LP and GP. One of my favorite men in this industry is Chris Duvost, and he said on the show, you know, about the hybridization of LPs and GPs, and I guess my question is, why is the hybridization of LP and GP right, and why is this optimal in terms of returns?

A For us, it's really about leverage. We have the ability to be able to work with a phenomenal set of GPs that we believe are going to be the next generation franchises. We've been very fortunate to have a roster that includes folks like Base 10, Kindred, Mac Ventures, ATO Ventures, Investo, Equal Ventures, Workbench, Bold Start, the list just goes on and on, and the ability to be able to have GPs that are building world-class franchises, well-respected and known in the entrepreneurial and venture community, looking at a bunch of deals and curating that down to their portfolio, I mean, that's a great screening process for us. I mean, it's extremely helpful. It Will allow us to see deals that we likely would not have been able to see for consideration to invest directly into. So for us, it's about the ability to be able to, to bring in some leverage and then being able to think about the model that an LP only capital allocator would make, and then to be able to increase the potential for returns while kind of keeping some of that risk adjusted LP investing in as well. And I just would also add, Harry, that when I think about our model, even though Fund One is focused on just doing LP investing and direct investing, our vision is to be a capital allocator across the entire stack of the ecosystem. So when I think about the future vision for where we're going with Plexo Capital, I do…

AI assessment note: “increase the potential for returns while kind of keeping some of that risk adjusted”

Q I mean, I'm so glad that we're aligned there. I do want to dive into my favorite element, Lowe, being the quickfire round. As you can tell, I've loved this. Completely flunking the schedule, but always a good sign. So let's start with my favorite. What's the favorite book and why, Lowe?

A I thought about this a lot, and the book that I always go back to is a throwback, and it's called Why Should White Guys Have All the Fun. And it's a book about Reginald Lewis, who was a lawyer turned LBO person way, way back in the eighties. And he bought Beatrice international, which is a diversified food holdings company. And it was the first billion dollar transaction done by an African American. So it talks a lot about his path, his journey. He unfortunately died prematurely of brain cancer, but it's an amazing book. That not only has been inspirational to me, but it also covers a lot of the history around what was happening back in the go-go eighties with all the LBOs, Drexel Burnham Lambert, Michael Milken writing the highly confident letters to be able to finance these transactions with high-yield or junk bombs. So it's an amazing, an amazing book.

AI assessment note: “the book that I always go back to is a throwback, and it's called”

Q frankly, gives me cold shivers, but I'm thrilled that that works out for you. I do want to start, though, though, with a little bit on you. So tell me, it's a very weird world venture, but Plexo is also slightly unique in its form. So how did you get into the world of venture first, and then Plexo, obviously being this unique beast, what was the founding moment there?

A It's a great story that probably a lot of folks have. When I was in grad school, I went to Cal for my MBA. When I was there, it was during a very exciting period in time. Netscape, Had gone public. The ability for Cal to tap into the entrepreneurial community as well as the venture community meant that we were able to have classes that were specific to venture capital and entrepreneurship. In fact, I did a joint program with the school of engineering management of technology and also did the entrepreneurship program. And I was fortunate to be able to meet a lot of venture capitalists that came through And the eager beaver that I was, I would ask them about the industry and how I could get into it. Formerly, I had wanted to go into investment banking and was enamored with firms that you might know. Hambrick and Quist, Robertson Stevens, Tom Weisel, Alex Brown. Those were the folks that were taking all the tech companies public because the larger firms typically wouldn't do them. That's where I thought I wanted my career to go until I started to hear all the great things that venture capitalists were doing, and I thought to myself, wow, investment banking is really on the back end of the process, whether it's taking a company public or executing an M&A transaction. Venture capital is on the front end. That seems to be a little bit more interesting to me. So I would talk to the VC…

AI assessment note: “When I was in grad school, I went to Cal for my MBA.”

Q this segment is actually, you mentioned kind of first close being say, 30% or a good chunk. Closing strategies aren't often discussed enough, I didn't think, and it's a weird passion of mine, but I always kind of think like, hey, every 10% you get, close. Take money off the table. Close it. People churn when you leave it going too long. What would your advice be on closing strategies?

A Normally, before the crisis happened, that was my feedback. It's exactly what you said. It would be that if a GP has the ability to close with an LP, if an LP wants to give a GP money, take the money. That's always been my philosophy and approach. It runs contrarian to some other GPs that would say, no, you should only do a close if you have a significant You know, some say up to 50%, but a third, 30% seems to be the line of demarcation for those that think there needs to be a significant amount closed. We should also point out that often if there's an anchor LP, they anchor themselves might actually negotiate into the limited partner agreement, the LPA, that a close cannot happen until a particular threshold relative to the target size has been met or absolute number. And that's a negotiation. Typically, a GP would not want that. I've actually seen a GP self-impose that, which that's a topic for another podcast. I don't understand why someone would do that, but I think that what I would recommend for GPs, if there is a threshold stated in the LPA that's required for the first close, to go back to the LPs, and if the GP knows they're not going to be able to meet that, understand what What the close is looking like, what the timing is looking like, and if there are LPs that are ready to close, I would talk to the anchor and see if there's any flexibility in that. Talk to the law…

AI assessment note: “if an LP wants to give a GP money, take the money.”

Q this segment is actually, you mentioned kind of first close being say, 30% or a good chunk. Closing strategies aren't often discussed enough, I didn't think, and it's a weird passion of mine, but I always kind of think like, hey, every 10% you get, close. Take money off the table. Close it. People churn when you leave it going too long. What would your advice be on closing strategies?

A Normally, before the crisis happened, that was my feedback. It's exactly what you said. It would be that if a GP has the ability to close with an LP, if an LP wants to give a GP money, take the money. That's always been my philosophy and approach. It runs contrarian to some other GPs that would say, no, you should only do a close if you have a significant You know, some say up to 50%, but a third, 30% seems to be the line of demarcation for those that think there needs to be a significant amount closed. We should also point out that often if there's an anchor LP, they anchor themselves might actually negotiate into the limited partner agreement, the LPA, that a close cannot happen until a particular threshold relative to the target size has been met or absolute number. And that's a negotiation. Typically, a GP would not want that. I've actually seen a GP self-impose that, which that's a topic for another podcast. I don't understand why someone would do that, but I think that what I would recommend for GPs, if there is a threshold stated in the LPA that's required for the first close, to go back to the LPs, and if the GP knows they're not going to be able to meet that, understand what What the close is looking like, what the timing is looking like, and if there are LPs that are ready to close, I would talk to the anchor and see if there's any flexibility in that. Talk to the law…

AI assessment note: “if an LP wants to give a GP money, take the money.”

Q people ask me, given my very weird path in, how should I think about entering? And I always say, if you want to be a VC, Just be a VC. There's no such thing as like the path to it. Like just do it. And I know that sounds quite blunt, but like, how do you feel about that? And what would your advice be now, especially given stay's environment?

A It's interesting. There was actually a gentleman that was a VC that were very successful and had retired and was an investor in a company that I co-founded. And I remember talking to him about VC and that was his advice. He said, just go do it. And then I had these other folks telling me, well, Get some operating experience. I don't think that there's any set path. Whenever I give someone feedback, I always tell them when someone gives you feedback, think about the context that they're giving it to you. You could have two equally successful people and they could provide diametrically opposed views on the topic and they can both be right. It's just, they come from different contexts. So my context was, I thought that having a good understanding of product would be helpful at the early stage because the Playbook for product management is very similar to early stage BC. The ability to understand a market and where opportunity might exist because of a problem. How many of those people or enterprises have that problem? What are the current solutions they're using? What could be a better solution? And then how would you distribute it and make money from it? And then being able to empathize a little bit with startup CEOs. If the person across the table that's raising money knows that The VC has actually been in their shoes. I thought that was a pretty good model and approach. That sai…

AI assessment note: “I don't think that there's any set path.”

Q What's the biggest challenge with your role of Plexo today?

A The biggest challenge that I have is Saying no to so many great GPs. We're in the business as LPs and GPs of saying no, and I see so many amazing GPs where, Harry, I just know they're gonna go on and return great multiples to their investor base, but we have a very specific profile that we're looking for with regard to fund size, stage of entry, percent of deals led, reserves. Portfolio construction type of companies that are invested into. And so every GP is just not going to be a fit for us. So that's the hardest thing is having to say no to so many amazing people. And we just hope that when we say no, it can be quick, productive, and be able to provide some assistance in other areas.

AI assessment note: “The biggest challenge that I have is Saying no to so many great GPs.”

Q people ask me, given my very weird path in, how should I think about entering? And I always say, if you want to be a VC, Just be a VC. There's no such thing as like the path to it. Like just do it. And I know that sounds quite blunt, but like, how do you feel about that? And what would your advice be now, especially given stay's environment?

A It's interesting. There was actually a gentleman that was a VC that were very successful and had retired and was an investor in a company that I co-founded. And I remember talking to him about VC and that was his advice. He said, just go do it. And then I had these other folks telling me, well, Get some operating experience. I don't think that there's any set path. Whenever I give someone feedback, I always tell them when someone gives you feedback, think about the context that they're giving it to you. You could have two equally successful people and they could provide diametrically opposed views on the topic and they can both be right. It's just, they come from different contexts. So my context was, I thought that having a good understanding of product would be helpful at the early stage because the Playbook for product management is very similar to early stage BC. The ability to understand a market and where opportunity might exist because of a problem. How many of those people or enterprises have that problem? What are the current solutions they're using? What could be a better solution? And then how would you distribute it and make money from it? And then being able to empathize a little bit with startup CEOs. If the person across the table that's raising money knows that The VC has actually been in their shoes. I thought that was a pretty good model and approach. That sai…

AI assessment note: “I don't think that there's any set path.”

Q unprecedented times that we're in today with regards to kind of the different profiles raising and how to think about raising today. And so if we start on managers that are in the middle of their raise, COVID has obviously hit all fundraising markets insanely hard. So for those in the middle of their raise today, how do you feel they'll be impacted on an immediate basis? Let's start there.

A I think there are a A few things to think about. Number one is, is it a first-time fund, or is it a fund two? The size of the fund, the area that the fund manager geographically is in, but also the areas of focus for their fund. And to answer your question, I think that GPs in the middle of fundraising, number one, need to understand that in this unprecedented time where people are now working from home, think about and extend it Timeline for fundraising. If the manager has successfully completed a first close, hopefully for a meaningful portion, I would say somewhere north of a third to a half, that's a pretty good position to be in. We have one manager in the market that is past the halfway point, and I am highly confident we'll be able to get across the finish line, although it will be an extended period of time. For them, the good news is there's continued demand for The introductions to prospective LPs haven't changed, and the only thing that is happening, again, is this extension of the timeline. If the manager has a prospective LP institutional that has already gone through the approval process, what I'm hearing from institutional LPs is they already have their budgets and plans in place. They will complete those deals. And by the way, that scenario that I just described, if it is an institutional manager, and they have a budget, that probably means that the fund manager…

AI assessment note: “think about and extend it Timeline for fundraising.”

Q What's the biggest challenge with your role of Plexo today?

A The biggest challenge that I have is Saying no to so many great GPs. We're in the business as LPs and GPs of saying no, and I see so many amazing GPs where, Harry, I just know they're gonna go on and return great multiples to their investor base, but we have a very specific profile that we're looking for with regard to fund size, stage of entry, percent of deals led, reserves. Portfolio construction type of companies that are invested into. And so every GP is just not going to be a fit for us. So that's the hardest thing is having to say no to so many amazing people. And we just hope that when we say no, it can be quick, productive, and be able to provide some assistance in other areas.

AI assessment note: “The biggest challenge that I have is Saying no to so many great GPs.”

Q It's dirty years and has built up a huge ton of liquidity that massively prevents anyone diverse or with a non-obvious background coming into this industry from actually creating their own firm. How do you think about the right way to think about GP commits? And do you agree with me in terms of actually my concern and dislike of this while standard is X and it's prevention of diversity?

A I'm going to start by saying that at Flexo Capital, our thesis is around the fact that women and people of color have this non-traditional path Into venture capital. It's something that we started at GV when I was there as a way to get access to additional deal flow. And it's something that has been used structurally and institutionalized at a firm like Foundry. Lindell leads that portion, the LP investing. Lightspeed does it. Comcast Ventures does it. And it is, I think, a great strategy. Now, Going back to your question, when you think about the fund one for a lot of people, if it's a younger person, and in particular a woman or a person of color, it's likely that they may not have that three percent GP commit. I think a better way to think about it is, how much is the commit relative to what the nest egg is for the GP? How much is the GP going to actually feel this one, two, three percent? Because you might have An individual, and three percent is nothing to them. And so, in actuality, the interests actually aren't aligned, where for someone else, if you're talking about, especially once you get to a fund two or fund three, all of a sudden, this GP's entire nest egg might be part of that GP commit. I had a good anecdote from one of our GPs, and that GP was female. She was talking to a retired VC. And the VC was asking why her GP commit wasn't larger. She was looking at it, o…

AI assessment note: “a better way to think about it is, how much is the commit relative”

Q unprecedented times that we're in today with regards to kind of the different profiles raising and how to think about raising today. And so if we start on managers that are in the middle of their raise, COVID has obviously hit all fundraising markets insanely hard. So for those in the middle of their raise today, how do you feel they'll be impacted on an immediate basis? Let's start there.

A I think there are a A few things to think about. Number one is, is it a first-time fund, or is it a fund two? The size of the fund, the area that the fund manager geographically is in, but also the areas of focus for their fund. And to answer your question, I think that GPs in the middle of fundraising, number one, need to understand that in this unprecedented time where people are now working from home, think about and extend it Timeline for fundraising. If the manager has successfully completed a first close, hopefully for a meaningful portion, I would say somewhere north of a third to a half, that's a pretty good position to be in. We have one manager in the market that is past the halfway point, and I am highly confident we'll be able to get across the finish line, although it will be an extended period of time. For them, the good news is there's continued demand for The introductions to prospective LPs haven't changed, and the only thing that is happening, again, is this extension of the timeline. If the manager has a prospective LP institutional that has already gone through the approval process, what I'm hearing from institutional LPs is they already have their budgets and plans in place. They will complete those deals. And by the way, that scenario that I just described, if it is an institutional manager, and they have a budget, that probably means that the fund manager…

AI assessment note: “the only thing that is happening, again, is this extension of the timeline.”

Q frankly, gives me cold shivers, but I'm thrilled that that works out for you. I do want to start, though, though, with a little bit on you. So tell me, it's a very weird world venture, but Plexo is also slightly unique in its form. So how did you get into the world of venture first, and then Plexo, obviously being this unique beast, what was the founding moment there?

A It's a great story that probably a lot of folks have. When I was in grad school, I went to Cal for my MBA. When I was there, it was during a very exciting period in time. Netscape, Had gone public. The ability for Cal to tap into the entrepreneurial community as well as the venture community meant that we were able to have classes that were specific to venture capital and entrepreneurship. In fact, I did a joint program with the school of engineering management of technology and also did the entrepreneurship program. And I was fortunate to be able to meet a lot of venture capitalists that came through And the eager beaver that I was, I would ask them about the industry and how I could get into it. Formerly, I had wanted to go into investment banking and was enamored with firms that you might know. Hambrick and Quist, Robertson Stevens, Tom Weisel, Alex Brown. Those were the folks that were taking all the tech companies public because the larger firms typically wouldn't do them. That's where I thought I wanted my career to go until I started to hear all the great things that venture capitalists were doing, and I thought to myself, wow, investment banking is really on the back end of the process, whether it's taking a company public or executing an M&A transaction. Venture capital is on the front end. That seems to be a little bit more interesting to me. So I would talk to the VC…

AI assessment note: “When I was in grad school, I went to Cal for my MBA.”

Q Absolutely love that, and I'd love to have him on the show one day, but I do want to finish with my favorite, which is your most recent publicly announced investment, either fund or direct, and why did you get so excited and say yes?

A I will say Play Versus. Play Versus is led by an amazing CEO, Delane. It's a company based in Los Angeles that provides the infrastructure of For high school e-sports, the ability to power their leagues and tournaments, and then be able to keep detailed stats that can be used for a promising e-sports athlete that is looking to get a scholarship at a university. By the way, there's over 200 or so universities that now offer e-sports scholarships. Just the compelling vision that Delane has for the company His ability to be able to recruit a world-class team and an area that given the current dynamics that we see today, you know, you can continue to play the e-sports, right? So that's going to be an interesting one to watch and one that we're really excited about.

AI assessment note: “I will say Play Versus. Play Versus is led by an amazing CEO, Delane.”

Q ownership or maintain the stage and reduce ownership if you want the same diversification levels. But that's a very different proposition to what the first set of LPs committed to if you're going to do pre-seed. So how do you communicate that? And as an LP, I'd be going bluntly, what the fuck, Lo? I committed to a seed fund, not a pre-seed fund. How should they think about that?

A That's exactly spot on, Harry. The challenge that a GP will Face is that they have sold a certain risk reward profile to the initial LPs that are now in that first close or whatever number of closes have happened prior to this crisis. And the model will now need to change if it is the case that the GP is not able to raise, which I think needs to be modeled out. And the first thing that needs to happen, and this is just general advice across the board for GPs at any stage, whether they've closed a fund or whether they're in the middle of Fundraising. It is critical to have clear, crisp, transparent communication with the LPs and the ability to be able to go back to the LPs and explain how the risk reward profile might change given that the portfolio construction model might need to be revised in the event that there is a smaller raise that needs to be communicated and what adjustments are going to be made and hopefully give that LP some comfort. That the strategy will still be able to execute. And if it's a new relationship, there has to be probably more communication to be able to build that level of trust. If it's an LP from a prior fund, then hopefully there already is that level of trust. Otherwise, presumably the LP would not be investing. But I think, yes, your point is spot on. The risk reward profile changes. The LPs need to understand what adjustments to the model the G…

AI assessment note: “It is critical to have clear, crisp, transparent communication with the LPs”

Q It's dirty years and has built up a huge ton of liquidity that massively prevents anyone diverse or with a non-obvious background coming into this industry from actually creating their own firm. How do you think about the right way to think about GP commits? And do you agree with me in terms of actually my concern and dislike of this while standard is X and it's prevention of diversity?

A I'm going to start by saying that at Flexo Capital, our thesis is around the fact that women and people of color have this non-traditional path Into venture capital. It's something that we started at GV when I was there as a way to get access to additional deal flow. And it's something that has been used structurally and institutionalized at a firm like Foundry. Lindell leads that portion, the LP investing. Lightspeed does it. Comcast Ventures does it. And it is, I think, a great strategy. Now, Going back to your question, when you think about the fund one for a lot of people, if it's a younger person, and in particular a woman or a person of color, it's likely that they may not have that three percent GP commit. I think a better way to think about it is, how much is the commit relative to what the nest egg is for the GP? How much is the GP going to actually feel this one, two, three percent? Because you might have An individual, and three percent is nothing to them. And so, in actuality, the interests actually aren't aligned, where for someone else, if you're talking about, especially once you get to a fund two or fund three, all of a sudden, this GP's entire nest egg might be part of that GP commit. I had a good anecdote from one of our GPs, and that GP was female. She was talking to a retired VC. And the VC was asking why her GP commit wasn't larger. She was looking at it, o…

AI assessment note: “how much is the commit relative to what the nest egg is for the GP?”

Q ownership or maintain the stage and reduce ownership if you want the same diversification levels. But that's a very different proposition to what the first set of LPs committed to if you're going to do pre-seed. So how do you communicate that? And as an LP, I'd be going bluntly, what the fuck, Lo? I committed to a seed fund, not a pre-seed fund. How should they think about that?

A That's exactly spot on, Harry. The challenge that a GP will Face is that they have sold a certain risk reward profile to the initial LPs that are now in that first close or whatever number of closes have happened prior to this crisis. And the model will now need to change if it is the case that the GP is not able to raise, which I think needs to be modeled out. And the first thing that needs to happen, and this is just general advice across the board for GPs at any stage, whether they've closed a fund or whether they're in the middle of Fundraising. It is critical to have clear, crisp, transparent communication with the LPs and the ability to be able to go back to the LPs and explain how the risk reward profile might change given that the portfolio construction model might need to be revised in the event that there is a smaller raise that needs to be communicated and what adjustments are going to be made and hopefully give that LP some comfort. That the strategy will still be able to execute. And if it's a new relationship, there has to be probably more communication to be able to build that level of trust. If it's an LP from a prior fund, then hopefully there already is that level of trust. Otherwise, presumably the LP would not be investing. But I think, yes, your point is spot on. The risk reward profile changes. The LPs need to understand what adjustments to the model the G…

AI assessment note: “explain how the risk reward profile might change given that the portfolio construction model might”

Q in terms of the thesis in terms of diversity and inclusion there, but you, as we said, LP and GP. One of my favorite men in this industry is Chris Duvost, and he said on the show, you know, about the hybridization of LPs and GPs, and I guess my question is, why is the hybridization of LP and GP right, and why is this optimal in terms of returns?

A For us, it's really about leverage. We have the ability to be able to work with a phenomenal set of GPs that we believe are going to be the next generation franchises. We've been very fortunate to have a roster that includes folks like Base 10, Kindred, Mac Ventures, ATO Ventures, Investo, Equal Ventures, Workbench, Bold Start, the list just goes on and on, and the ability to be able to have GPs that are building world-class franchises, well-respected and known in the entrepreneurial and venture community, looking at a bunch of deals and curating that down to their portfolio, I mean, that's a great screening process for us. I mean, it's extremely helpful. It Will allow us to see deals that we likely would not have been able to see for consideration to invest directly into. So for us, it's about the ability to be able to, to bring in some leverage and then being able to think about the model that an LP only capital allocator would make, and then to be able to increase the potential for returns while kind of keeping some of that risk adjusted LP investing in as well. And I just would also add, Harry, that when I think about our model, even though Fund One is focused on just doing LP investing and direct investing, our vision is to be a capital allocator across the entire stack of the ecosystem. So when I think about the future vision for where we're going with Plexo Capital, I do…

AI assessment note: “increase the potential for returns while kind of keeping some of that risk adjusted LP”

Q You mentioned the anchor, and I speak to many, many emerging managers, and I'm seeing quite often a lot of anchors wanting part of the management company. How would you advise managers when it comes to that? And often there's not a lot of options. How do you think about that and how you advise them when they do get requests from management company as part of a big check?

A It's actually something that I'm glad we're covering. I've spent a lot of time over the past year doing some deep analysis on GP stakes at the private equity level. And just for those that don't know, what we're discussing is the ability for An investor, it could be an LP, or it could even be a separate entity that's not an LP, that is looking to make an investment into the management company of a GP. So as people may know, there typically are three entities. There's the management company that actually receives the flows of cash, including the management fee. There's the LP, and that's set up for the vehicle that typically is a venture fund. And then there's the GP, and then the GP is what receives the performance and also presumably management fee from the management company. So everything, all the cash flows flow through the management company. So what happens in the world of private equity is that often a firm will look to take an investment into their management company for a number of reasons. Typically, it's to help facilitate a transitional Change within leadership, so the GPs that founded the firm might be exiting. Younger GPs are coming up within the firm. It helps to provide some liquidity for the GPs that are walking out the door. It also can be used in this world of ever-increasing fund sizes where a GP has to commit. That commitment can range, but they typically h…

AI assessment note: “I've spent a lot of time over the past year doing some deep analysis on GP stakes”

Q You mentioned the anchor, and I speak to many, many emerging managers, and I'm seeing quite often a lot of anchors wanting part of the management company. How would you advise managers when it comes to that? And often there's not a lot of options. How do you think about that and how you advise them when they do get requests from management company as part of a big check?

A It's actually something that I'm glad we're covering. I've spent a lot of time over the past year doing some deep analysis on GP stakes at the private equity level. And just for those that don't know, what we're discussing is the ability for An investor, it could be an LP, or it could even be a separate entity that's not an LP, that is looking to make an investment into the management company of a GP. So as people may know, there typically are three entities. There's the management company that actually receives the flows of cash, including the management fee. There's the LP, and that's set up for the vehicle that typically is a venture fund. And then there's the GP, and then the GP is what receives the performance and also presumably management fee from the management company. So everything, all the cash flows flow through the management company. So what happens in the world of private equity is that often a firm will look to take an investment into their management company for a number of reasons. Typically, it's to help facilitate a transitional Change within leadership, so the GPs that founded the firm might be exiting. Younger GPs are coming up within the firm. It helps to provide some liquidity for the GPs that are walking out the door. It also can be used in this world of ever-increasing fund sizes where a GP has to commit. That commitment can range, but they typically h…

AI assessment note: “what we're discussing is the ability for An investor... looking to make an investment”

Q hard and so early. How do you think about Actually just getting allocation to the best when, as we said, with such transparent markets today, Sequoia come in harder than ever on front, or you name that company and benchmark do the same and your top funds do the same. How do you think about getting allocation to the best with such transparent markets and such aggressive players moving earlier?

A It's so true that there's differing opinions on how aggressive the multi-stage, multi-billion and AUM folks are, but I completely agree. I think that The signaling risk has, has really, you know, is, is not, maybe for a first time entrepreneur, they might care more. Second time entrepreneur, not so sure they care so much about signaling risk. And I agree that it is extremely difficult to get allocation because for funds of our size and a lot of the funds that we invest into, the math just doesn't work to be able to buy up ownership. Because even if Sequoia doesn't come in at the seed, they could just buy up ownership in the A and the We've seen that play out as well, which we are not set up to do at Plexo Capital. Our funds that we invest into as an LP are not set up to do. So I think you're right. I think it is really difficult and the ability to be opportunistic and to really make those bets and to really think about reserves to be able to get to a level of ownership where the reserve likely won't be enough to be able to cover pro rata, let alone buy up, I think is spot on. So there are challenges with the model. It requires a lot of discipline, and it requires the ability to be able to understand the elements that you've seen in the past and think exist in the future to be able to identify the best companies. Because in this market, in this model, it's a power law model, rig…

AI assessment note: “I agree that it is extremely difficult to get allocation because for funds of our size”

Q hard and so early. How do you think about Actually just getting allocation to the best when, as we said, with such transparent markets today, Sequoia come in harder than ever on front, or you name that company and benchmark do the same and your top funds do the same. How do you think about getting allocation to the best with such transparent markets and such aggressive players moving earlier?

A It's so true that there's differing opinions on how aggressive the multi-stage, multi-billion and AUM folks are, but I completely agree. I think that The signaling risk has, has really, you know, is, is not, maybe for a first time entrepreneur, they might care more. Second time entrepreneur, not so sure they care so much about signaling risk. And I agree that it is extremely difficult to get allocation because for funds of our size and a lot of the funds that we invest into, the math just doesn't work to be able to buy up ownership. Because even if Sequoia doesn't come in at the seed, they could just buy up ownership in the A and the We've seen that play out as well, which we are not set up to do at Plexo Capital. Our funds that we invest into as an LP are not set up to do. So I think you're right. I think it is really difficult and the ability to be opportunistic and to really make those bets and to really think about reserves to be able to get to a level of ownership where the reserve likely won't be enough to be able to cover pro rata, let alone buy up, I think is spot on. So there are challenges with the model. It requires a lot of discipline, and it requires the ability to be able to understand the elements that you've seen in the past and think exist in the future to be able to identify the best companies. Because in this market, in this model, it's a power law model, rig…

AI assessment note: “I agree that it is extremely difficult to get allocation because for funds of our size”