LPs

“A GP can get fired for missing out, you know, the next, you know, Facebook, the next Uber, right? Like, that is error of omission, and like, that's fireable. But LPs on the flip side only get fired if you invest into a mentor. So in some respects, like, the in…”

“Because if you have an asset class where 20 firms out of 3000 do well, you should concentrate in those 15, 20 firms pretty consistently. So, when I see a portfolio with 50, 60, 70, Venture capital firms. It's very hard for me to imagine that the overall portfo…”

“So yes, I think the short answer is these IPOs will unlock a lot of liquidity. It'll be returned after lockup periods back to LPs. The LPs will then feel more comfortable reinvesting in future VC funds, which in turn should then unlock capital, allow more depl…”

“I speak to a lot of LPs now, and do you know what, honestly, we can say what we want. They've gone back to wanting TVPI. They've gone back to wanting big numbers. And yes, they want DPI, of course, they always want DPI. But they are still very impressed by TVP…”

“A lot of them, like, have minimum size checks now, so we're too small for quite a few of them. It's like, if I can't put fifty million dollars to it, and I think there's, it just reflects the inflation of the entire environment, and there are a bunch that real…”

“The thing about AI, we're no longer going to rely on the GPs or our money managers to tell us how the J-curve is operating. I can now look through our own portfolio and see where that J-curve is.”

“Where should I put my 500 grand check? You probably shouldn't put it into like, you know, marginal five billion dollar growth fund... If you're a principal that can't write like sovereign or institution size checks, you're a totally different customer and the …”

“Especially for an emerging manager, when you're truly just sort of underwriting the person, I think people still fail. They probably overweight the in my view, they overweight the investing thesis and track record and stuff and underweight just the like facts …”

“And I can't tell you, like, as a fact, how many LPs and other funders are financing off of a credit line, but I can tell you that it's not zero.”

“So LPs who wrote checks into climate funds in 2021 or 22 to 22 are looking at kind of a lack of returns that don't necessarily support re-ups today, which means that subsequently a lot of climate GPs, not all, but a lot, are then struggling to go out and raise…”

“If the safe part of the business takes some significant hits, it, you know, it's definitely going to reduce the appetite for risk.”

“So when COVID happened, We were the first firm to go to the LPs, and we wrote down our portfolio by 40% proactively for no other reason than saying this is not real.”

“LPs are not talked a lot about in venture, which is kind of interesting. Like we talked a lot about the founder. We talked a lot about the companies, but I would say for us, we are pretty clear that our customer at the end of the day is our LPs.”

“I probably spend 60% of my time with LPs. Now, again, that could be getting somebody to help a company, though, too, or coordinating with the team of people with us, like, hey, let's figure out a way to get into Exxon. And then I would say a third of my, 25, 3…”

“Well, I think they're trying to, in many ways, show their for one, show their LPs that they're being selective. And secondly, I mean, it's also true. I know as an investor, I get loads of inbound and we get so many decks from linked over LinkedIn, over email. …”

“Most VC pitches look the same. What you want to do is dig one level deeper and talk to the founders themselves and understand for each of the last five companies that they're invested in, why did this founder pick this firm?”

“If you go forward IRR at every liquidity opportunity is lower Then what you are basically promising your LPs or what you think your fund should have. I think you should sell. I think you have an obligation to LPs to at least sell.”

“The thing that we measure is being a net liquidity provider to our LPs. So we believe in alignment of interests, and we think about founders first, then LPs, then Sequoia, then our team, and then ourselves. And when you do that, we actually measure how much we…”

“LPs want money back, and the people that stay in, they're gonna be in business 1015, 20 years from now, are people that will continue to give money back to their investors.”

“When LPs go to the biggest venture funds in the world, and private equity funds, and say, we're not investing in your next fund until you get liquidity in these names.”

“At some point, investors are going to see the same company 20 times a month, and LPs is, is, is not going to pour a lot of money, and I get it.”

“The vibe is a lot of GPs and not very many LPs.”

“The LPs , they finally started charging some LPs that were getting a free ride, and then a lot of them backed out.”

“I told my LPs and COVID I'm not doing this. I'm not doing any more AGMs. I'm not standing up there with like, here's the numbers. I'll go talk to you. Like I'll drop by your office, but I'm done with this performative. All day circus of an AGM. It's not that I…”

“Since 2022, liquidity has been negative cash to LPs of about two hundred billion capital calls in excess of distributions.”

“It's gotten so prevalent to where we almost never trust the hard cap, and that's almost perverting the word at this point.”

“I do not think anyone should inject peptides that are labeled as for research purposes only because even if it says 99% purity, the one percent is likely to be something called LPS, lipopolysaccharide, which can cause inflammation. It's not a good thing to be …”

“By the way, from the LP perspective, diversification at the level of the GP makes no sense, because they have multiple GPs, so, so the diversification gives nothing to LPs.”

“I'm going to do my thing, and if it works for them, fine, and if not, they can opt themselves out, and some of them have, and it's fine. Good people opted out, and it's fine. I'm not going to do things differently.”

“But right now, there's been a drought of liquidity for most LPs for a long time, five, four, five years.”

“Because of that, I think there is, I would say too much focus even, but understandably on DPI, and where, you know, people hardly talked about it three years ago, and now some LPs, oh, it's just DPI. It's just DPI. We don't believe anything.”

“And that's exactly why I don't tell LPs anything in terms of what I'm going to do, because I feel that if I tell LPs something, I would feel too committed to that specific strategy, which I may have thought it was the right strategy, but then there's a situati…”

“Sourcing to me, whether you're a GP or an LP, too few LPs, Take the GP mindset. As an LP, you better have a GP mindset, and you better source. You better be out there finding opportunities.”

“Building respectful collegial partnerships with LPs is really hard, harder than investing.”

“Starting in a model that's, that resembles a special purpose vehicle versus a fund may be easier. To start in the beginning because, you know, it gives LPs a lot more flexibility and it could be easy to get them over the line.”

“There are some secondary funds that are going to do really well because LPs are overexposed, don't have DPI, don't have returns of cash coming in from their managers, are going to divest from some of the ones that are wrongly positioned.”

“One of them said that we should just do, like, we'd never raise it from the LPs, so we should just raise the money from VCs and give the VCs who invested half the carry.”

“The thing that we all decided is like, we're just going to aim all of our communications at the entrepreneurs versus the LPs. Because we have their numbers, we, we're not a column, and you guys got great introductions to people, but it all needs to be very ent…”

“The key is, I, he said, I realized after a long career, I realized the key is you want to treat the LPs like mushrooms. So they treat mushrooms as you put, you put them in a cardboard box, you put the lid of the cardboard box, and you put it under your bed for…”

“We got one, we did one incredibly controversial block, it turns out. Like, a few LPs really hated the headline, and it was it was in the BioNHealth team, and it said, fuck cancer”

“Every Monday they said, I know there's a temptation to want to put more money in, but we told our LPs we have to invest over a three year time horizon. We're on that time horizon. We don't want to go faster. So we've been pretty judicious with how we do that.”

“I don't think Ravi or Hamant or even Ben and Mark at this point, I don't think that they can go to LPs and say, hey, we're going to get you five X net on that.”

“We're like, let's constrain our fund sizes. Let's be careful about what we do. So we don't get too over our skis, where we can easily weather a crash, and LPs aren't going to go fleeing once there's a crash, because we've been very careful with our capital, an…”

“For the first three funds, you know, there's no DPI. And then you return a shitload of DPI, and then LPs go, mm, but are they really hungry anymore? Cause they've made a lot of money.”

“My LPs have no rights to sell at all. Like literally nothing. There's no exceptions for, you If you're struggling or if you're, or, it's just, I'm shocked because a lot of the stuff is LP friend. This one is absolute. You have no rights to sell.”

“The frothiest sign is now LinkedIn LPs are bragging about their returns on LinkedIn LPs. When LPs are start bragging about their returns to me that that's the most, 20, 21 moment I've seen when LPs are LPs who are usually hide behind the wizard of Oz curtain a…”

“Because a lot of the LPs will have their public sleeve and their private sleeve. You give them stock, they'll sell it. And it's like programmatic for them.”

“But people do call me. LPs call me all the time, and they're like, is this a serious person? That is a question I get several times a year about venture capitalists from LPs.”

“When we did our last raise, there are a new breed of LPs that just want the micro funds, the like, 75 and 50 and under, because statistically, apparently they return the best multiples.”

“VCs will give money to what is a hot commodity, so then something can give them, someone will give them up round, and you can go to your LPs and say, hey, I'm up 90% on my portfolio.”

“By and large, managers have never been good at understanding the LPs. And by the way, I would say LPs have never been good at understanding the demands placed on managers. There's just a knowledge gap between the two.”

“In a purely consensus world, like it all just comes down to the cost of capital. Right. And so if my LPs want five X and yours want two X, you could pay two and a half times higher prices and the company's not better. It's just like, oh, like your cost of capi…”

“So you might bridge a company. For the express reason of having better marks to go and show your LPs when you go and fundraise. And so that might be the primary reason you did it. Even if you're like, I know this founders and probably don't get there.”

“There are a lot of reporting platforms out there that actually do this very similar data aggregation, but they are very focused on purely like saying, okay, yeah, here's what your position is today. Okay, now go and do whatever you want, you know. Then what do…”

“It'll still be the idiosyncratic headwinds of there's just no capital coming back from venture, right? That's the headwind to the asset class for LPs re-upping today.”

“I think certain LPs choose to just not even think about it, frankly.”

“Rules of thumb, our heuristics are in place because across cycles, they've been proven to be correct. And my guess is some part of this trend makes total sense. And some part of it, you look back after next down and turn and say, oh yeah, that's why we had tha…”

“Having some folks with some expertise looking at helping us out with diligence and looking over our shoulder on stuff. Not only is it helpful for us as the investment manager, it's also really strong validation for the rest of the LPs to go, oh man, ok, this l…”

“There's gonna, I think there's gonna be a lot of smaller funds that if they don't have that long-term track record and help trust with LPs you know, raising a new fund might be pretty challenging, and so I do think there is going to be a bit of a shift and sor…”

“Yeah, it's a big win, but hey, we also lost. Four hundred million dollars of their money over here.”