The Ledger
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Lacaillade: Founders Fund, a16z, Greenoaks, and Thrive proactively marked down valuations
“In my core relationships Founders Fund's the most extreme, because Peter Thiel's very contrarian and he wants to reset the mindset of his team. Which I think is great. But Andreessen Horowitz, Green Oaks Thrive, they've all proactively marked down their compan…”
Lacaillade: Top PE funds never list on investment bank platforms
“But if you think of like, if you're a Goldman Sachs or Morgan Stanley or whatever, like the funds they put on their platform are large cap funds that are having trouble distributing They need, like, we invest in ADVENT in the large cap bio. We invest in ADVENT…”
Lacaillade: Single family offices require at least $5B net worth to justify
“Like, I mean, I think it's definitely not a billion dollars. Like, I think it's, you have to be maybe worth ten billion. At least five.”
Lacaillade: Banning co-investment carry incentivizes fund size over alpha
“By saying you can never charge carry on a co-investment means that they're just going to solve for a bigger fund and become asset managers and not deliver the alpha that we all want as investors.”
Lacaillade: Track record ranks fourth or fifth when evaluating fund managers
“Track record is important. Like it tells you, do these people know how to invest? Like, are they smart? But for me, and I say this often, it's like, maybe it's number four or five on my list of things that are important, like the quality of the team. And we ca…”
Lacaillade: SCS halves commitment sizes for VC funds deploying within 6-12 months
“So I would size my commitments accordingly. So it's like, if you tell me you're going to put out your fund in six to 12 months, I'm just going to size you at a half bite.”
Lacaillade: Access to top VC managers will remain open over the next few years
“It's a really good time to start a program. If you want to get into badass, like, Really good managers right now, you can do it. And that probably, and that will probably be the case in the next few years.”
Lacaillade: Lower middle market buyouts will generate venture-like returns
“I'm spending like, the vast majority of my time on lower middle market buyouts. And I'm so excited about like the opportunities that I'm seeing. And actually, I'm going to generate like venture-like returns. In small cap, EBITDA positive businesses, right?”
Lacaillade: Seed fund baskets deliver 5x net vs 2.5-3.5x for franchise funds
“The basket I think can do five X of those seed funds versus what do I think? Like a franchise firm can do two and a half, three X net, maybe three and a half.”
Lacaillade: Big secondary investors avoid venture capital, creating a market gap
“Most of the secondary people are not really comfortable in venture... I think all the big secondary players skew towards heavily towards buyout portfolios. So there's a gap in the market.”
SCS Financial Took 25-30% Venture Write-Downs But Maintains 29% Net IRR
“I feel like we've written down our portfolio In the venture, when I say we, our managers, I don't know, it's like, 25%, 30%? After having years of hundred percent IRRs. So it's still good. It still looks good. I think it's a 29% Net IRR after all that, and the…”
Lacaillade: Venture portfolios have absorbed 70-80% of valuation write-down pain
“And I don't think we've taken all our pain. I think there's more to come, but I think we've taken like 70, 80% of it.”
Lacaillade: SCS exited manager at 104 cents due to ethical issue
“I also sold a manager that we got out of because of some ethical situation at one Oh four.”
Lacaillade: Lower middle market buyouts offer a repeatable 3x-5x return model
“So you buy a founder led business, you professionalize it, you buy it at like six to eight times EBITDA. You put on like maybe three turns of debt, maybe three to four, depends on the business, but you professionalize it, you grow it, say it had five million E…”
Lacaillade: Using placement agents is a terrible sign for venture funds
“I'm not saying I would, Completely rule out a venture fund that had an agent, but it's a terrible sign.”
Lacaillade: Optimal private equity portfolios require 60 to 70 active GP relationships
“I think it's the diversification piece in, in private equity, the way to build an optimal portfolio, which I think is, I have 60, 70 active relationships in private equity. I think there's a lot of people out there that say it should be like 20 to 30.”
Lacaillade: In a 10-fund LP portfolio, 3-5 exceed expectations and 1-3 underperform
“If I do 10 funds, what I've found is three to five exceed expectations, three to five meet expectations, one to three underperform.”
Lacaillade: Charter rules block large state pensions from sub-$1B funds
“They have a rule in their charter that they can't be more than 10% of a fund. And they can't write less than a hundred million dollar check. Therefore, they can't invest in funds that are smaller than a billion dollars.”
Lacaillade: 95% of LP peers rely solely on manager-provided reference lists
“I think 95% of my peers just like do the reference list.”
Lacaillade: My past prediction that 85-90% of SPACs would fail was too generous
“At the time, I said SPACs were gonna, I made the comment, like, I was like, 85, 90% of these SPACs are gonna be a disaster. And it turns out I was wrong. I was too generous.”
Lacaillade: SCS's 2020-2021 co-investments will yield 2-3x instead of 4-6x
“If I look back and I did a bunch of co-investments, like in what I believe to be like great, in some cases, great companies. Right. But they're going to have to grow into their multiples. So rather than making four to six acts, we'll make two or three acts.”
Lacaillade: Multiple billion-dollar-plus venture funds have achieved 5x-plus returns
“Founders Fund, like, there, if you, I mean, I'm saying some of the data, like, there's, I, there's a number of examples of big funds being five X plus, right?”
Lacaillade: SCS Financial's IC rejected under 5 deals in 12 years
“The investment committee I mean, I can count on one hand the amount of funds or co-investments that have been declined in my 12 years, and I remember them well.”
Lacaillade: SCS sold tail-end fund stakes at 94 cents in late 2021
“We sold, we were able to execute a secondary sale of, like, a bunch of, like, tail end stuff with managers we weren't continuing to back at, like, 94 cents in the fall of 21.”
Lacaillade: Bureaucracy and low pay depress competition among institutional LPs
“A lot of the big pools of capital have very bureaucratic structures and low pay.”
Lacaillade: Fund of funds act transactionally to optimize short-term optics
“Funded funds are transactional. They're trying to raise their next funds. You know, they're often, like, trying to, like, cut a deal, like, get, like, a, like, they want to look good early”
Lacaillade: Subscale single-family offices pay higher fees for worse portfolios
“If you're subscale, it's probably going to have, you're going to have a less sophisticated investment portfolio and you're going to pay a lot more.”
Lacaillade: Venture Capital Displays Stronger Return Persistence Around Brand Than Buyouts
“Although that's probably more true in buyouts, I think, ah, where the track record piece, because in venture there is brand, right? And there is, I think, more persistence of returns around brand.”
Lacaillade: LP capital scarcity creates ideal window to build investment programs
“I mean, I think probably in 2016, 17, like a lot of funds were really oversubscribed quickly, but being in that moment where the power shifts, where there's a dearth of capital on the LP side, and there's that, that is a ideal time to scale a program. To build…”
SCS Financial manages money for partners of Accel and Greylock
“And we manage money for the partners of founding partner of Excel and Greylock. So I knew that it was tough to get into those funds because I had it in and it still wasn't like”
Lacaillade: SCS Financial was one of few early institutional LPs in Founders Fund
“We were one of the only institutions in it. I mean, there were not that many institutions. Now everyone wants to get into it.”
Lacaillade: Tenzing co-investment is on track for a 4x-plus return
“Mentioned a situation with a London manager, Tenzing, where there was a co-investment. I was on the LPAC and basically very track. It's going to work out. It's going to be like a Forex plus deal.”
Lacaillade: SCS Financial holds ~130 co-investments at 10bps fee, 7-8% carry
“Well, first of all, like from a fee perspective, and we have like over a hundred, it's maybe a 130 or so direct investments. I think, I mean, essentially no management fee, like 10 basis points blended. And the carry is like seven or eight percent, which is th…”
SCS Financial Writes $20M-$100M Fund Checks and $5M-$15M Seed Checks
“My typical investment is somewhere between kind of 10 to 25. I'll go up to 50, I'll go down to five. Funds, I will write checks between 20 to like a hundred million. And actually in the seed venture, it's like kind of like five to 15.”
SCS Financial uses 48-hour memo approvals to bypass formal IC meetings
“We do standing investment committee Every other Monday, right? But for co-investments, there's no, we don't need to convene investment committee. You send out a memo, and the investment committee has 48 hours to reply.”
Lacaillade: Deploying $30M annually in private equity lacks necessary LP scale
“There's a minimum scale. Like, if you're investing thirty million dollars a year, like, that's not enough money. Unless you want to do something, like, really concentrated, but I don't recommend that.”
Lacaillade: LPs stopped investing post-GFC and missed top vintages
“Going back to the start of our conversation, like, you know, six and oh seven, like, a lot of people poured a bunch of money into, like, large cap buyout stuff, and then, you know, didn't commit after the goal for, like, oh nine, 10, 1112, and they missed some…”
SCS Financial tightens LP commitments, force-ranking venture managers
“We are very tight. But we make exceptions for exceptional managers, but it is causing a force ranking of things right now.”
Lacaillade: SCS is currently a buyer, not seller, of venture assets
“And right now I think if we wanted to sell some of our venture stuff, it'd be very unattractive. So it's, yeah, we'd be a buyer right now. I'm a buyer, not a seller”
Lacaillade: Over-indexing on interconnected endowments creates severe LP run risk
“If you get money from endowment A, endowment B, endowment C, endowment D, that all, like, are very close to each other and talk to each other, and then one of them leaves, Then they might all leave. So having diversity of, like, mindset”
Lacaillade: SCS Financial accounts for 50% of capital in select funds
“I'm like half a couple of funds.”
Lacaillade: Fund managers at scale should cap single LP exposure at 20%
“If you're asking me, you're raising a fund, I think you don't want to have too many LPs, but you also want to have diversity. So I think probably max out ideally at least at scale at call it like 20% would be a lot.”
Peter Lacaillade allocates about 70% of personal capital to private equity
“I'm probably like 70, but I eat my own cooking.”
Lacaillade: $100M family offices should use multifamily offices or fund-of-funds
“You should probably, in that scenario, you should either partner with a multifamily office like SES, or you should invest in a fund of funds.”
Lacaillade: Emerging managers should target 20 LP meetings with high yield
“I'm a big proponent of doing targeted, like not meeting like a 120 LPs and taking the first dollars, but like having like a thoughtful, like do 20 meetings and try to have a, you know, 40, 50% yield.”
Lacaillade: SCS Financial does not accept cold email outreach from managers
“I don't do cold emails”