A couple LPs and I were discussing the GPs we met this week. All who spend most of their time looking at emerging venture managers. Well it’s RAISE week, so everything’s hot in SF. Except the weather. Heat wave was last week. And as we were trading notes, and do note, this is highly anecdotal… 50% of GPs mentioned were very quick passes. In fact at some of the network-y events, LPs were trying to help each other get out of conversations with certain GPs. But that’s to no surprise, the same is true for many VC-founder events. About 40% of GPs mentioned felt good enough for us to continue the conversation, but not enough for any of us (assuming we didn’t know them already) to take next steps with them. And 10%, maybe less, were worth further conversations. Some of my friends reading this may claim less in the last cohort.
Do note, almost every LP who came into town this week, asked the local LPs or just each other, who are the 1-2 GPs they have to meet. So every LP, minus opportunistic chats, knew exactly who they wanted to meet before the week started.
All that to say, there were enough strong candidates for LP capital around this week. There are more well-rounded GPs in markets than ever before. Folks with classic venture training, enduring relationships, and/or founding experiences. Rewind 15 years prior, most of these folks would have been great GPs and potentially household names too. They’re highly responsive. They’ve got a good track record. Founders like them, and for the most part, they do try to be helpful as early as possible and as much as possible. They don’t pretend to be someone they’re not (there are plenty still who do). They’re well-connected to downstream capital, customers and/or talent. And in their niche, they have a lot of trust. And some of them have even been historically great fiduciaries of capital (i.e. comms, exiting positions, etc.).
But in Q4 2026 (yes it’s Q4 already), they’re just good (not great) in a lot of LP’s eyes.
Another thing I’ve noticed is that when LPs introduce GPs they’ve invested in to me that they like, there’s always a story. A very specific incident where everything clicked. One thing a GP is known for that makes them unforgettable that no one else has. Something small that sparked that upon continued exposure compounds again and again and still something most GPs don’t have.
And I can’t help but think about spikiness.
Spikiness is memorability.
In one instance, a friend and I were discussing a GP that I passed on before, but he thought was interesting. The conclusion was that this GP will most likely be a top quartile GP, but she didn’t have an obvious edge. My friend said that he thought she was interesting because she had a “subtle edge.”
A bump, if I might translate for a second.
Are bumps enough? Is that enough to attract the best founders? Do bumps matter more than spikes after a certain AUM? Are spikes no longer as valuable past a certain AUM?
To define some terms really quickly:
- Spikes are edges. Absolute advantages. What you’re known for that very few other people are known for. What you can do that no one else can do. And that you’re in the top 0.0001%.
- Bumps are comparative advantages. May not be unfair, but you are better than at least half of your competition. Potentially top quartile.
- Dents are comparative disadvantages.
- Cavities are absolute disadvantages.
While many LPs will have different answers to the above, with respect to emerging managers, a common thread seems to be that:
- LPs like spiky GPs with no dents and no cavities. These GPs admittedly don’t exist. Or at least I haven’t come across.
- So instead, LPs like spiky GPs with dents, but no cavities.
- But they will take spiky GPs with cavities as long as the cavities don’t handicap their ability to create outsized returns.
- LPs hesitate on investing in bumpy GPs with no spikes. Even if they have dents and no cavities.
- LPs run away from GPs with cavities but no spikes or bumps.
And of course, the observations above come in lieu of track record and referenceable relationships that are easier for many allocators to underwrite.
Photo by assaf kakoon on Unsplash
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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.