The Ledger
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Selling management company equity to anchor LPs creates long-term GP resentment
“Giving up a piece of your management company, it makes that LP very expensive. And ultimately, I think, as a GP, you come to resent that.”
Founder references are the most important metric for evaluating early-stage GPs
“In early stage venture, the most important piece is references from founders.”
Early-stage investing offers the highest probability of generating venture-scale returns
“So we think that the ability to generate venture returns, quote unquote, you have the greatest chance at the early stage.”
Multi-stage VC bureaucracy makes their decision-making slower than solo GPs
“Look, I can help you build this, and it's not to say that brand name firms can't do that, but there's more bureaucracy, and there's more red tape for a multi-stage firm, for instance, to be able to make a decision as quick as a solo GP.”
The optimal venture fund-of-funds holds 12-15 GPs and 20-30 co-investments
“We think 12 to 15 GPs is sort of the optimal number of GPs or funds to back, as well as Anywhere from 20 to 30 underlying direct or co-investment, so direct investments into companies or co-investments.”
LP commitments to venture capital managers should span two to three funds
“I think the decision to invest in a GP Is generally a two or three fund decision”
First-time fund managers struggle most to clearly articulate their edge
“Clearly articulating their edge and differentiation. We see hundreds of pitch decks, and we walk away from some calls and walk away not having learned anything. You know, why are they different? Why are founders going to back them? That is the key thing that f…”