I just shared this verbally on a podcast and a talk recently, and realized while I’ve shared this friends, I’ve never shared it publicly explicitly or made a graphic for it.
What is it? And this was helpful when I was in IR, but also hopefully helpful as a GP pitching LPs, what are the types of LPs that exist?
I never really liked the line, “If you know one family office, you only know one.” Or if you know 1 LP, you only know one.” Probably true in a lot of circumstances, but feels odd that there are 100,000+ types of family offices or LPs.
Short blogpost, but I’ll probably elaborate on each in a future one, but sometimes a picture speaks a thousand words.
This is not all-inclusive, just like Myers-Briggs or OCEAN/Big 5 or the enneagram isn’t. But hopefully a good orienting framework in the first few meetings with LPs.
I borrowed a little bit of the nomenclature my buddy Matt Curtolo used as my original segmentation of LP archetypes was not as well-worded.
X-axis is if they own / create the wealth or not. Y-axis is Maslow’s Hierarchy of Needs.
P.S. This is not a framework you brag about to your LPs. You don’t tell any LPs how they’re bucketed. Just like you as the GP don’t like to get bucketed, no LP wants to. But in this case, when fundraising, you need to eat your ego.
P.P.S. Honestly, you should probably eat your ego while investing, but no one usually listens to this latter comment.
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“The question at Fund IV is, ‘Okay, you’ve proved that you’re a great firm builder. Congratulations, you’re raising Fund IV. Are you still a great investor?’” — Zach Ruchman
Zach Ruchman joined HB Wealth in 2025 as a Shareholder after working with WMS Partners since 2023. In his role as Managing Director, Private Markets, Zach leads the team responsible for research and due diligence of private market investment opportunities across a variety of asset classes, including private equity, growth equity, venture capital, private credit, infrastructure, and real assets.
Before joining HB Wealth, Zach was a Senior Vice President at RockCreek and a Vice President at BlackRock, where he led direct co-investment transactions as well as manager research for both primary and secondary commitments in the Americas, Europe, and Asia on behalf of both institutional and family office clients. He began his career as a consultant with Alvarez & Marsal. In this episode, we also talk about how he worked out of the National Democratic Institute’s DC office writing grants and tracking political regimes in the Middle East, including the Arab Spring.
In the community, Zach serves as a member of the finance committee for the Howard and Geraldine Polinger Family Foundation.
I’m also including my reactions to Zach’s comments here.
OUTLINE:
(00:00) Intro (03:04) When 9/11 entered Zach’s life (12:20) Interest in the Middle East (15:00) Returning to the US (17:49) What’s in the foreign service exam? (22:29) From pursuing the state department to consulting (25:39) Consulting to allocating (32:20) Business school and mentors (36:34) The ask (37:07) How Zach makes re-up decisions? (40:15) The difference between a Fund I and Fund IV (43:26) Alignment between senior and mid-level investors (45:33) Deal attribution at big VCs (46:40) Questions to ask to references to find deal attribution (49:12) Avoiding a reference’s scripted answer (52:14) Top 1% performers leaving organizations (53:45) The hardest Fund I to underwrite (1:00:57) Does radical transparency work? (1:06:15) “Private assets work best when they’re inefficient.” (1:09:20) Does AI change VC investing? (1:11:33) Sourcing that AI cannot do (1:14:26) Can AI write good memos? (1:19:11) Pattern vs exception recognition (1:25:03) An example of how a GP proved he worked hard (1:28:00) Best advice for action photography
“Consulting is almost like the liberal arts degree for the beginning of your career. You get to see a tremendous number of different business problems in a tremendous of different geographies. It’s like you have distribution requirements for your career.” — Zach Ruchman
“There are plenty of great investors that are not great firm builders.” — Zach Ruchman
“The question at Fund IV is, ‘Okay, you’ve proved that you’re a great firm builder. Congratulations, you’re raising Fund IV. Are you still a great investor?’” — Zach Ruchman
“If it was as easy as, ‘Hey GP, send your attribution spreadsheet,’ and I say, ‘Ok, great, that’s the attribution,’ my job would be so easy.” — Zach Ruchman
“If that person is an on-sheet reference for a spinout firm, the question then is, ‘Ok, you have a great relationship with this person, did you really do the deal with the person because you liked the person so much and you thought they were bringing something of value to you and that their money was a little greener than everyone else’s because there was a value-add or was it you really liked the name on the back side of the business card—the name of the firm?” — Zach Ruchman
“The hardest Fund I to underwrite is a brand new team. The easiest thing to underwrite is a team that lifts up together.” — Zach Ruchman
“Private assets work best when they’re inefficient.” — Zach Ruchman
“The more money you have going at a limited opportunity set, the more the perfectly priced that opportunity set will be.” — Zach Ruchman
“AI is only going to write what you tell it to write. So an AI memo is only going to be as thoughtful as the reasoning that you put into it, at least here in 2026.” — Zach Ruchman
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, bus
I was at an annual general meeting (AGM) the other week, and during one of the fireside chats, Scale’s Rory O’Driscoll said, “Having to deal with the psychological burden of having an anti-portfolio is a privilege. If you never have the psychological tax of passing on multiple generational deals, you shouldn’t be in venture. Passing on 20 great companies out of 40 great companies you see is always more preferable than investing in 2 great companies after seeing 40 average companies.”
“We have a 90%+ win rate.” Personally, I don’t care. Some LPs do. But I know of a lot of institutions who have a dedicated venture team do not as well. Win rate can be engineered. There are funds that only offer verbal commitments with no term sheet that claim a very high win rate, so only the ones they offered a term sheet “count.” Also, no one will ever say they have a 50% win rate (even if they do, I don’t care as much as the other metrics that you could optimize for). No one will also say 100% win rate. And if they do, THAT is the thing you need to double click on and be wary of.
This past weekend, a friend heard a comment. “100% win rate means you’re not targeting the right founders.” Which is…… true. Many of the best founders, and especially true if they’re serial founders, are picky. They know exactly what they want, who they want. I give some grace to first-time founders who eventually become mainstay names because their early days are still full of rejections.
If you’re a VC with a specific thesis who has a stake in the ground, you’re probably not the VC that every founder wants. Only a very specific founder. But every so often you’ll come across a founder who you think will make it big, but they don’t see you as someone who can help or has the know-how to help them get to the next stage. And that’s okay. As Rory said, “the psychological burden of having an anti-portfolio is a privilege.” At least you’re in the right rooms. And as a VC, that’s the first half of the battle.
To come full circle, if you have a 90%+ win rate writing $500K or less checks, that’s to be expected. Assuming you know a founder beyond an acquaintance and you’re not an asshole, it’s hard to lose out on these opportunities, especially if you’re betting in non-obvious, illegible founders in the early days.
The larger your check, the more your win rate should technically decrease, and at some point, quite dramatically, where it no longer becomes a metric worth optimizing for.
And, if you ever have a 100% win rate, I dare say you have never had the privilege of the psychological tax of seeing multiple outlier founders and companies.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“Our best GPs are talking to their founders all the time. And our best GP relationships, we talk to all the time.” — Apurva Mehta
“If you can’t handle something going to zero, then you shouldn’t do one.” — JD Montgomery
Apurva Mehta is the co-founding Managing Partner of Summit Peak Investments, a fund-of-funds that boasts a portfolio of both venture fund investments and direct investments, including the likes of Affirm, Anduril, Airtable, Opendoor, and Wish, just to name a few.
Prior to starting Summit Peak in 2018 with his co-founder, Patrick O’Connor, he previously served as Vice President and Deputy Chief Investment Officer for the Children’s Hospital Endowment Portfolio in Fort Worth, Texa. From 2008 to 2011, he was the Director of Portfolio Investments at The Juilliard School in New York City. Apurva began his career in investment consulting and investment banking at Citigroup and Lehman Brothers. He was recognized for his expertise when he was named to aiCIO Magazine’s Top Forty Under Forty in 2012 and 2013 and honored as a Rising Star by Institutional Investor. He holds a BBA in Finance from The George Washington University.
JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.
(00:00) Intro (01:53) How did this episode come to be? (06:56) What do LPs get right/wrong with co-invests? (12:06) GP best practices for co-investments (14:35) How do you know a GP is capable of pre-empting a round? (16:37) How often should GPs be talking to their portfolio founders? (17:52) Why Apurva goes to AGMs (18:17) How Apurva/JD stays in touch with GPs (23:33) The ask (24:01) Solo GPs (31:42) Types of solo GPs who join multi-stage firms later (34:32) What’s the skew in the benchmarking data? (39:22) What lawyers don’t tell you about carveout capital in LPAs (44:46) LPA terms that LPs redline (45:44) Carry ratchets that LPs hate (48:15) How higher fees impact IRR (49:39) Outlandish fees on SPVs (50:49) How much should a GP’s salary be? (52:56) Cashless GP contributions (53:59) Do $1T outcomes change venture math? (59:17) Should private market investors be public market investors? (1:04:30) What made Apurva nervous? What does he love? (1:07:57) What does JD love?
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, bus
First off, this post has nothing to do with mining or minerals. If you’re curious as to why this post is called “Pyrite,” you’ll get it if you find out the nickname for pyrite.
Secondly, if I had a dollar for every time the below are said in an AGM, I’d be rich.
This was inspired after I read Brendan’s post from a few days ago. “Things we all already know that you can stop writing on LinkedIn about.”
As such, these are all the things we, as LPs, already have heard a million times at AGMs from GPs who believe these statements mean something real, but either (a) want to hear something different, or (b) is in many LPs’ eyes and ears, straight bullshit:
“This is the best time to be investing. AI is going to change the way we live, work and play.” We get it. We likely wouldn’t be at the AGM if we didn’t think so.
“These are the best entrepreneurs we’ve ever seen.” Or “Founders today are higher quality than we’ve ever seen before.” Or “Our top of funnel/(quality) deal flow is as robust as we’ve ever seen.” All to relate to “Entry valuation increases are to be expected because quality entrepreneurs and the growth they can achieve are unmatched in history. Historical prices shouldn’t be a tether.” Then should we anchor ourselves on anything you initially pitched LPs? Is the promise we invested in the same as the fund that currently exists? What are exceptions to the rule and when do exceptions become the norm? Assuming you did invest in higher priced rounds, what is the venture math necessary to 5X the fund? What are the possible exit paths for that exit to be meaningful to you? Citing Chris Douvos’ old blogpost here that elucidates that.
“The portfolio is really trending in the right direction.” We want to hear the lowlights on top of the highlights. Not everything is sunshine and rainbows. So let’s not pretend it is. Also let’s not forget to talk about the performance of older funds that may or may not have zombie companies. Are you proactive with new marks?
“Trillion dollar IPOs are here.” Twitter and LinkedIn and any major publication has already informed us of such.
“Venture arrogance score (Shoutout to Josh Kopelman for the initial nomenclature) for big funds”, and/or “small emerging managers outperform” and/or “venture math is broken” and/or “multi-stage funds have raised 50%+ of this year’s dollars.” Yes to all of this, but with a caveat. The dispersion of returns at the emerging manager level is far higher. Higher risk of ruin, and higher chance you return less than 1X your fund size. As an asset class to “index,” emerging managers are realistically a bad bet. Moreover with emerging managers, in the words of a large institutional LP who told me this, “we invest in venture because we like taking company-level risk, but not fund-level risk.” All the above statements are technically true, but I’ve also seen so many emerging managers “forget” to move their warehoused deals into the fund, call more capital than they promised their LPs back-to-back, drift from their strategy, move their final close date 5+ times, leak sensitive LP information to their intern/associate, get kicked out of their own fund by a fund platform, breakup the partnership mid-fund, and the list goes on. I’m not saying established funds are immune to this, but it is important for an LP and a GP to be aware of the whole package that’s getting pitched. Usually most institutional LPs in emerging managers are already well aware of the above, which is why to then, LPAC seats matter to get on top of the matters.
“We believe the company is growing into its valuation.” More often than not, that’s not the case. This is just a version of sugarcoating really high last round valuation (LRV) marks. This usually indicates a flat or down round at best, the next raise, assuming the company can raise.
“We consistently get allocation in competitive rounds.” Probably. But also introduces the question of what does “competitive” mean. Does your definition of competition and the LP’s definition match up? AND is competitive or hot always good? AND are you outsourcing your decision-making to other firms? Unfortunately, the answer to the last question is often yes for a lot of emerging managers.
“We beat other investors and at lower prices.” Probably again. But is it adverse selection? There’s a massive graveyard of companies that raise once and never get traction in any direction (i.e. customers, investors, etc.). So rather than saying that, show us why said companies are generational talent and ideas. Who else did you talk to and have a chance to invest in before you picked this one? Is their revenue growing in a direction that suggests it isn’t adverse selection? Admittedly, this one you have to do more work to show most LPs why. Otherwise, doubt will always linger.
“We have a strong pipeline of LP interest ahead of our next fundraise.” Unfortunately, no one says the inverse. And so while it may be true for you (time will tell), no one can verify that statement outside of wired commitments, unless they dig deep.
“We have a 90%+ win rate.” Personally, I don’t care. Some LPs do. But I know of a lot of institutions who have a dedicated venture team do not as well. Win rate can be engineered. There are funds that only offer verbal commitments with no term sheet that claim a very high win rate, so only the ones they offered a term sheet “count.” Also, no one will ever say they have a 50% win rate (even if they do, I don’t care as much as the other metrics that you could optimize for). No one will also say 100% win rate. And if they do, THAT is the thing you need to double click on and be wary of.
And finally because of all the above, this is why junior people go to AGMs, as a box to check, as opposed to senior partners and CIOs. The same is true for Demo Days these days too.
Thanks to Chris (who actually first inspired this post ages ago on the pod), Asher, Youngrok, Dave, and a few other LPs who chose to stay anonymous for keeping me grounded on this post and making this post more robust. And to Brendan who re-inspired me to finish this one.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“In private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader
Julia Rees Toader is the Founding Partner of PrinCap, an independent investment portfolio strategy firm working with institutions and individuals on manager selection, asset allocation, and strategic advisory. Prior to PrinCap, she was the Head of Portfolio Strategy and Head of Relationship Management at Heritage Holdings, a multi-family office. Before Heritage, Julia was the head of Portfolio Strategy at Goldman Sachs Asset Management ($3Tr assets under supervision). She and her team advised sovereign wealth funds, pensions, financial advisory firms, private banks, and other long-term asset owners on asset allocation. She studied mechanical engineering and computer science at Princeton University and is a CFA charterholder. Before Goldman Sachs, she worked on M&A and business development for an early-stage medical device biotech firm.
(00:00) Intro (01:38) A ‘happy accident’ at 16 (04:03) Julia’s first startup experience (06:32) Why did Julia join Goldman Sachs? (07:30) When did Julia’s appreciation for finance start? (08:05) Conversations around the Rees and Toader dinner table (09:48) Finance vs mechanical engineering (13:26) On exceptional talent (15:18) How to keep a cool head when you’re successful (20:19) Do small emerging managers outperform? (22:27) How do you know if a GP is founder-friendly? (23:39) The bad pitch meeting (25:00) Value adds in PE vs VC (29:49) Difference between PE vs VC portfolio construction models (31:19) Timelines to return in PE and VC (33:17) Secondaries (34:34) The ethics of continuation vehicles (36:07) The subscription ask (36:40) Are all secondaries created equal? (38:30) What is 10+1+1? (40:32) Hedge funds looking like private market funds (41:16) What do you do when you have $3B? (44:43) What is home country bias? (46:40) How do you know you’re overweighted on allocation? (47:15) The endowment effect in secondaries (48:32) Leaderless investment committee sessions (49:52) The merits of GP stakes (54:10) Why private credit is interesting (56:21) The duration of GP stakes (57:36) The duration of hedge fund GP stakes (58:11) How much GP stake is worth it? (1:00:33) Hedge funds: How much is a good GP stake? (1:02:00) How much is the max an LP wants to own of a hedge fund? (1:03:12) Tax structuring is another form of alpha (1:06:52) Cheetos Pelotazos (1:09:15) Advice to women in finance (1:12:28) Post-credit scene: Age of Empires, Starcraft, and Zelda
“In private equity, you want to have that strong value creation playbook. It used to be that you could do quite well doing mostly financial engineering, roll-ups, that kind of thing. That still works, but I think a lot of the money in the next part of the cycle is going to come from improving the margins or increasing EBITDA, so making operational improvements. So private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader
“The providers of liquidity always get paid.” — Julia Rees Toader
“LPs and GPs both don’t want to be forced sellers.” — Julia Rees Toader
“Home country bias is the tendency of people to overallocate to their home market.” — Julia Rees Toader
“The endowment effect, which is the idea that if you own something, you think it’s more valuable than what anyone else is willing to pay for it.” — Julia Rees Toader
“Tax structuring is another form of alpha.” — Julia Rees Toader
“Alpha’s three things: information asymmetry, access, and, actually, taxes.” — Vijen Patel
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
I met Will Robbins in person this week, though I had loosely followed his writing over the years, which if you haven’t yet, would recommend. (Thanks CK for the intro) So I was likely more familiar with him than he was with me. And I was reminded as I went back into the archives to a piece he had written a few years back, inspired by this tweet, inspired by Lead Edge Capital.
Separately, it came to my attention, after I wrote the below, that Crest Capital did something similar recently. Great minds think alike, huh?
And call it more of a meme essay, but there is also a hierarchy of information when it comes to what emerging early-stage venture GPs tell us LPs.
If funds have realized IRR, this is what they report.
If funds don’t have realized IRR, they report net DPI.
If funds don’t have good net DPI, they report net TVPI.
If funds don’t have good net TVPI, they report gross TVPI or fund MOIC.
If they don’t have good gross TVPI or fund MOIC, they report gross TVPI, including SAFE marks.
If they don’t have good gross TVPI with SAFE marks, they report select deals MOIC or notable companies they’ve invested in.
If funds don’t have good select deal MOICs or notable companies in their last fund, they report angel track record.
If they don’t have a good angel track record, they report follow-on investor names.
If funds don’t have good follow-on investor names, they report co-investors.
If funds don’t have good co-investors, they report revenue growth in select companies.
If funds don’t have good revenue growth in select companies, they report their sourcing channels.
If funds don’t have strong sourcing channels, they report founders refer them deals.
If funds don’t have strong founders referring them deals, they report they started a podcast or newsletter.
If funds don’t have a podcast or newsletter, they report they spoke at a TechCrunch conference.
And of course, special thanks to Max, Irene, Dave, Asher, Christine, Youngrok, and Charlotte for making sure the above hierarchy of information is as accurate as it can be.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“GPs over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline
Stacey Kline and Ben Gallacher are co-founders of February Capital, a fund-of-funds dedicated to providing access to the best in venture. Prior to starting February, they’ve each held roles as professional athletes, corporate lawyers, startup founders, emerging managers themselves, family office allocators, just to name a few.
We spend much of this episode talking about their backgrounds that led them to where they are today, but also on why Stacey and Ben spend so much time underwriting emerging managers’ value-adds, as well as their controversial take on it.
(00:00) Intro (04:03) Why did it take 22 months to set up fund of funds in Canada? (07:22) Toughest moments when building February Capital (10:12) How did Ben know he wanted to be an LP? (12:58) How did Stacey know she wanted to be an LP? (16:53) The doctor’s advice no one expected (18:32) Ben’s first NO from Stacey (23:06) Why is it called February Capital? (23:58) What is the role of the LP today? (27:59) What Ben and Stacey look for in GPs (31:08) When does non-consensus thinking lead to portfolio divergence? (36:28) How much portfolio overlap is fair for February? (39:31) How large is February’s portfolio? (43:17) Picking an ecosystem vs picking an investor (46:24) What types of GPs did Stacey change her mind on? (47:56) Underwriting a GP’s story (49:44) Stacey’s controversial take on value-adds (53:07) Why value-adds affect sourcing (57:10) Examples of negative value-add (59:19) Refreshing your value add (1:03:36) An example of when GP and founder incentives are misaligned (1:05:12) The February Capital OS you don’t see
“What we’re looking for are GPs who are highly convicted in their strategy, where they’re focused on, how they articulate that, and then the proof points that tie the story together.” — Ben Gallacher
“At the end of the day, our job is to take risks.” — Ben Gallacher
“You have to refresh your network every seven years.” — Ben Gallacher citing Josh Kopelman
“It really is fundamentally our job to figure out not to uncover unobvious ecosystems, it’s to figure out who to back in the obvious ones.” — Stacey Kline
“If there’s someone in the operator seat, that’s amazing because they are boots on the ground. It’s really hard to see around corners and they’re the ones who are best positioned to see the world today super, super clearly and know what needs to be built.” — Stacey Kline
“[GPs] can potentially over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline
“Do you end up spending the most time with the companies that are performing really well or with the companies that aren’t? It’s often that companies in a portfolio that are doing really well don’t actually need that much help.” — Stacey Kline
“If I were to defend the GP here on value-add and helping, at the end of the day, you’re just trying to better your sourcing because if you really help a company that’s struggling and they decide it doesn’t work and they start another business, they want to look back and be like, ‘That GP was super helpful to me and they were with me during my hardest times. I’m going to call them because I’m starting a new company and I want them to back me again.’” — Ben Gallacher
“70% of VCs are not value-add at all. They’re just capital and that’s fine. 15% are generally value-add. And 15% are actually negative value.” — Ben Gallacher
“The question is say-do ratio. An old mentor of mine used to say that to me, ‘What’s your say-do ratio? And then our job is basically to audit that. Are founders telling us what you say you’re doing? And does that matter?” — Ben Gallacher
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
A few weeks ago, a friend and I hosted the first of a series of social experiments between LPs and GPs, which the placeholder name for all of this is Allocation Games. Within which, we have a set of Family Feud-esque events, which we’re calling “Investor Feud.” For those unfamiliar with Family Feud, the show asks 100 people a series of questions which then during the show, the two sides tries to guess the most common answers to those questions in efforts to generate points.
We did the same.
So we asked about 30 LPs and 30 GPs 3 questions for a game we were going to play the next day. Having sent the email at 7:30PM, and needing responses within 12 hours, we only received responses from 38. 25 of which were LPs. So use that as the lens to interpret the responses below.
But given the responses, I thought it might be interesting to share some of the responses we got.
Admittedly, all the responses here are to be expected. So nothing more to comment on here.
I actually, didn’t think LP preferences would rank fifth. Given how many responses from LPs we got, I thought more LPs would have brought up the fact that many GPs don’t ask an LP what they choose to invest in. But alas, it’s still in the top 5 of responses.
Funnily enough, I was at an AGM yesterday where I heard an LP compliment the GP presenting that he was glad the GP didn’t just read the slides. But what I thought was the most interesting out of the responses we received was that many of those who responded gave actual examples of things they didn’t like. For instance, at one AGM, the team had caviar on tap. The LP who submitted the response then said, “I could see my dollars disappearing before my eyes.”
I also think the second and the sixth response, no time for networking and virtual AGMs go hand-in-hand, most virtual sessions leave very little time for networking and even those who do have it too structured.
Also, yesterday, in a separate catchup with a long-time LP friend, we were talking about the agenda for the best events out there. And he said, 50% of the time for structured panels and talks, and 50% for networking, and ideally smaller, more curated audiences, which he cited the Alignment Summit just last week as a great example of that structure.
P.S. For the rest of the responses that have intentionally stayed hidden, I’ll leave that to your imagination. Let’s just say the responses were… interesting.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“To whom much is given, much is expected.” — JD Montgomery
JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.
(00:00) Intro (02:00) The definition of family offices (03:01) Generation 1 vs 2 (06:25) Building a family office at Gen 1 (07:48) The 3 considerations for succession planning (11:14) The “why” of succession planning (12:59) Building self-esteem in children (17:14) How do you help children choose their long-term passions? (20:16) When should next gen of family offices know how rich they are? (23:35) How do next gen family office members first get exposure to VC? (32:25) When do you give next gens influence over the family’s capital? (35:28) What % of the family capital should you give a next gen? (37:42) The ask (38:09) The hard and soft issues of wealth (42:41) How often do next gens inherit their parents’ support system? (46:35) How does a GP know how sophisticated an FO is? (53:43) How does an advisor know an FO’s sophistication? (59:10) Sophisticated simplicity (59:50) When’s the last time JD’s OS changed? (1:05:23) Post-credit scene: Time is a construct
“[A family office] is a living, breathing organism that is built around people—a family—that’s there to serve them to accomplish their missions.” — JD Montgomery
“There are three considerations: When do I give the next generation visibility? When do I show them all of the zeros? Secondly, when do I give them influence? And lastly, when do I give them control?” — JD Montgomery
“To whom much is given, much is expected.” — JD Montgomery
“It’s impossible to wealth-transfer self esteem. There is some level of wealth that allows next gen to be able to do anything, and there is some level of wealth that allows the next generation to do nothing.” — JD Montgomery
“I don’t want to belong to any club that would accept me as a member.” — Groucho Marx
“I don’t view venture as an asset class. I view it as a methodology to allocate capital to every sector on the planet that’s changing. And oh, by the way, every sector on the planet is changing right now.” — JD Montgomery
“I call it the hard and soft issues of wealth. The hard issues are tax and legal and the economic side. The soft issues really relate to people. Is this individual mature in the development? Have they launched? Are they ready to be a good steward?” — JD Montgomery
“We do surgery with chainsaws, and just hire people to clean up blood.” — JD Montgomery
“Time is something man invented to be able to coordinate action. It doesn’t exist otherwise.” — JD Montgomery citing something a Navy Seal once taught him
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
