Limited Partner

“If you miss the frontier models, back to your first question as an LP, but you kind of were along the benchmark, maybe slightly below the benchmark, you're keeping your job.”

“The dirty secret to the relationship is that very few, some do, very few limited partners are actually Compensated on the returns that the general partner makes.”

“We operate much more like a GP in that way. And frankly, look to hire people that come from GPs or operators rather than just a traditional LP background.”

“Our large network of over 15,000 folks that, that are involved from an LP perspective.”

“Not just talking about what we, what has been done, which is such the playbook, you know, the sort of like the funding announcements are sort of like the we're in blank, and we're in X, and we're in Y, and well, so is everybody else. That kind of steady drumbe…”

“If you think about LP engagement as being the head of sales, and if you think about being a CMO as the head of marketing, we were very aligned, you know, and I think worked very closely to sort of make sure the narrative that we were developing and telling in …”

“The only difference is, you know, when they, when the investors give money to the fund, it's a blind pool of capital. They actually don't know exactly what you're going to do with it. When you invest in the company, you kind of know what the company does and w…”

“It's entirely plausible that 10 super big exits cover the entire nut from the LP perspective, such that it's still a good business.”

“The wrong reason would be if you do that, ah, to take capital off yourself, because then you're misaligning with your investors. Ok? The investors gave you money. Carry has some value. You sell it to the third party, monetize, but your investors didn't. That w…”

“LPs are uncomfortable with change. LPs say that they're looking at the new generation and the Vanguard. But they are comfortable when the old leadership is still actively involved in the fund. It does make LPs more comfortable whether they're writing, investin…”

“If I'm a limited partner and I have distributed my venture allocation evenly, I wouldn't sleep well at night.”

“I do think that investors are very, very, very focused on DPI now.”

“When times are a little bit tough, you lean in and you understand things, but you also show up with a real check. You have to be a meaningful investor. If you're a five million dollar investor, it's hard to be meaningful.”

“The sign of a good partnership is you help drive a change in your partner's portfolio that you don't get paid for.”

“I see that appetite having faded since 2021, and I do not see a resurgence of finding tiny new managers.”

“At that point we knew we weren't gonna be friendly with the industry, so we were not only not gonna be in the cartel, we were gonna be against the cartel because they hated that cover story. Oh my god. I mean, they went bananas. They called every LP, they're l…”

“For an investment, you do it with the family that has given you money to make investments. And you say, João, we're about to invest two hundred million dollars in this entrepreneur. You know his father, you know his grandfather. Do you think we should take thi…”

“If you're an LP and you want to be in the early stage fund, you will often, very often with top tier brands, have to put in two times that into another fund to get that one dollar in the other, and you don't get your pick of which fund. Very often you have to …”

“I just don't know that there's this massive DPI pressure. If you have a hot, if you have a hot hand.”

“In a normal deal, it's fees first to the general partners, then preferred return. And then you split the profits and the normal way to do that is 70% of the profits to The money people and 30% of the profits to the general partners.”

“That promotion, developing people, yes, for your organization, of course, but also seeing the people who are on your team grow to such a point where they're hired away. To a bigger opportunity. That's like a badge of honor versus on the GP side viewed as a sca…”

“And I think what we're going to find out in this kind of Particular interest rate change environment is that like the VCs who didn't treat their LPs like investors are going to be in for what that means in bad times.”

“Having a killer fund has zero correlation with your ability to then have a next killer fund as an LP.”

“Yeah. Yeah. Yeah. I mean, best case scenario, you don't have anyone more than 10%, but if you're raising a fifty million dollar fund or a hundred million dollar fund and you can, you know, secure a 10, 20, thirty million dollar check and they're long term alig…”

“The problem, from my standpoint, is we always thought at Yale, one of the reasons we hire these guys is because they know when's the right time to sell an asset. And we're sort of relying on them to do that. And then if they default that decision back to us an…”

“Oftentimes at that point you have a team that's just oversaturated, way too large, and you're paying ultimately harvesting fees to kind of feed that large ecosystem and team that's been built out.”

“If the LP is asking for co-investment and the GP providing it and saying, I've just got this deal. Here's co-investment for you. I need an answer in a week. And you're an LP and you say, my investment committee meets once a month. It's next three weeks. That's…”

“I've spoken to a lot of LP groups over the course of the year. If I'm in person, I do show hands polls. And if I do webinars, I'm doing digital polls and two thirds of the hands that go up in the air or votes That get clicked are always, we want to see more, 1…”

“They're going to continue to write checks and invest in private equity, but it's going to be much more of a zero sum game. If I'm going to get an allocation from a certain LP, somebody else is probably going to lose their allocation from that LP.”

“But beginning in 2022, where liquidity really dried up in the market, limited partners recognized the value of the secondary market to drive liquidity in their portfolios. So, rather than saying, we don't feel like we're getting top dollar, I think a lot of li…”

“The returns mightn't be three X venture returns, but you know, the competition is the small cap return of 11%. You know, if you're delivering high, mid, high teens, it may be that the LPs think that's great, and that's the bet they're taking.”

“Nothing feels better than looking good to your boss, and you want to arm your investors with the data points that make them look great to their boss.”

“What you tell your LP is, just make sure you stick to it and do it. That's actually the best advice I can give for any emerging fund manager. It's like, look, define what you're gonna do, and do exactly that, and don't go out, don't go, don't stray from it at …”

“It feels like there wasn't A ton of reckoning for sins that were made in 2022 1021. It feels like people were able to get a mulligan and say, Hey, you know what? Like, yeah, we got a little crazy, but now we've really doubled down and focused on what it is tha…”

“And I said, when you do that, zero LPs in the room believe that you have a succession plan.”

“To be an LP in a venture capital firm, so you need to put at least a hundred K investment. So to be part of the angel syndicate to be an LP invested in the venture capital firms, you need a hundred K minimum. But to be an investor with an angel syndicate, so y…”

“Every person who works at Lead Edge, once you've worked here six months, you can sit down with any LP.”

“I'm pretty worried for venture as an asset class. I think 21 will be some pretty bad numbers and a really shitty vintage, and I think people are artificially keeping numbers high, and I don't think LPs have quite the understanding of how bad it is.”

“That becomes a critical analysis piece, because you cannot structure your way into alignment if it is not inherent to the person you're across the table from.”

“And the reason, so the reason that, that, that, that is important is it increases the performance of the fund, right? So if you call the billion dollars, if you have a billion dollar fund, you call that capital on day one but then you deploy it over four to fi…”

“No longer do you walk into a pitch meeting and show your multiple and invested capital and, or even like TVPI, like you have to like, just show DPI and be really clear what that number is.”

“If we don't get these companies to go public in my opinion, we are as an industry gonna have to face really hard questions with the ultimate funders of our industry, who, by the way, are not our funds, but are the investors in our funds, right? And eventually,…”

“And like the hot take is this is the most difficult time of all time to be this category as an LP GP or founder.”

“Now, if you asked an LP, do you care about the GP's brand? They'll say no, but when you unpack it, do you care that they have a great culture? Do you care that they have distinct advantages? Do you care that so-and-so wrote this amazing op-ed piece that you to…”

“For early stage, I think, you know, you, the LP coming in or whatever, they have to take like a 15 year view. It's not of a fund, but of a fund family.”

“We went from four LPs in our first one that made up, like, 90% to eight in the second one that made up about, like, 97%”

“Why are the investors, right, very careful right now? Part of it is the distributions have been low. What that means is they haven't In the last 18 months, we turned a lot of money back to their investors, and so if they deploy more money, their investors are …”

“From an LP's perspective, the way that you're able to do that is to make sure that you are investing consistently across every vintage. You're not trying to time the market.”

“Unless the GPs have engaged with an LP for seven hours. This is hard to convert because you need that kind of a time and depth to understand the whole thing very well. And it's not that you do a morning, evening, seven hour thing. The seven hours has to come s…”

“There is so much having worked at three firms that no LP would ever probably unearth, even if they tried. Firms are organic organizations, and no matter how much we think we know, we don't actually know what motivates them.”

“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…”

“You can imagine if they're in an institutional conversation with an LP, they're reluctant to be a bit vulnerable. On the areas they're not necessarily have been exposed to in their prior work experience.”

“So our mandate is to deliver high teens net returns to our LPs.”

“The last thing, and they'll, they'll cut corners, and they'll invest in someone that didn't finish high school, and they'll invest in the 10,000th, whatever, but if they're, if they perceive an edge, they'll take the risk at the, rather than the person that sl…”

“That's not true. I think LPs are being more selective and making new investments. I know we are, I know others that are, They're absolutely making new investments.”

“A lot of LPs also pre-spent future budgets, if that makes any sense. If you were raising a fund every 18 months, and I thought you were raising every three years, I had two choices. Either I pull from future year budgets, or I reduce my check so that I stay co…”

“And I've heard LPs that used to say, hold on to all your winners all the time are now saying, well, I meant that. But in context, there are times when it could be useful.”

“If you're an LP that has a, as a sort of existing book of venture business, and you've got it over different times, you will a hundred percent see that people will value their companies differently.”

“And I'd say, two thirds of the meetings I'm having, people are saying, we're not adding managers, we're cutting managers, and we're cutting commitments to managers, but we'd love to meet, you know, just to start the relationship, you know.”

“When people do the calculations on what the true alpha of venture capital is, they're going to come back with answers like this, which is, it's not that great. And I do think it will impact how limited partners have an appetite To give all of us, or you guys, …”