Pinned
Venture funds discussing distribution timelines with their LPs.
Endowment Eddie
2,000 posts
Endowment Eddie
@endowment_eddie
Investment generalist seeking elite asset managers. Unlimited time horizon. Views are my own, some parody.
Joined November 2024
- Scariest place in venture isn’t the megafunds. It’s the GPs spinning out of megafunds raising $40-100M. Minimal right to win, can’t really lead, not yet aware that your seed friends change when you don’t have the brand/follow-on checkbook. Founder/operating experience is ~2
- Heard from a former Coatue investor this week: “You don’t understand. We were starting to beat Sequoia in deals.” No you weren’t. Doing 168 deals in 2021 while pricing indiscriminately is not winning—it was setting money on fire.
- A big shift across the venture ecosystem is increased belief in the power law. Not just in companies but in people. VCs are increasingly backing solo founders. LPs are increasingly backing solo GPs. LPs especially are looking at big teams and saying it’s GP dilution.
- When you say privates haven’t kept up with publics, you should really say privates haven’t kept up with the Mag 7. There are 493 other S&P companies that have barely gone anywhere. If you want to hold 7 stocks, go for it. PEVC v. R2000/S&P493 is a diff story. Source: Goldman
- One of my closest MBA friends was a solutions architect at Databricks. She wanted to become a VC and deadass took a job offer from Deloitte consulting. The MBA mind virus is so real. Nothing I said would change her mind—I even suggested moving to corp dev (I know, don’t hate
- Met two VCs who invested in Wiz last week: VC1: “Nobody knew Wiz would be Wiz 4.5 years ago. It was a great team but they hadn’t fully set their eyes on visibility in the cloud. We made the bet.” VC2: “We absolutely knew from day 1 this was going to be a big company. It was
- Best job in finance? GP at megacap secondaries—Ardian, BX, Lexington, GS, etc. - Fees: 1.5%/15% - Product: levered PE beta with no return dispersion, v scaleable - Selection: do whatever PJT/Evercore/Jefferies send your way - Competition: meh. Stuff the RIA/pension channel
- “Harvey isn’t some breakthrough in legal AI—it’s ChatGPT with a law costume. Lovable isn’t revolutionizing code—it’s Claude with pretty buttons.” - @rodriscoll on @twentyminutevc Not enough people talking about this.
- My favorite IC questions are the left tail, “what if we go to war with China” type questions asked by someone in their 70s who has never used excel. I try to be prepared—“thanks for the question, Frank. We sensitized our model to a WW3 scenario w/ advanced weapons and nuclear
- LPs love: - small funds - postinvestment value creation - rigorous investment process - emerging vc brands Founders love: - big funds - GPs who mostly stay out of the way unless asked - fast processes - brands that land hires/customers Generalizing but am I wrong?
- Most institutional LPs underwrite venture funds to 1.7-2.0x net and a 12-13% net IRR. In the back of your mind, yeah 3x net is great and that’s the goal. Most know that terminal 3x net is <10% of funds. If you’re a VC and your LPs deadass expect 3x net from all their fundsHeard from VC LPs. Cambridge Q2 VC benchmarks are out. Here's what stood out: '00 & '02 are the worst VC vintages in the data. The Top 5% TVPI/DPI threshold is 1.9x & 1.8x net; Upper Q is 1.3x. Puts this in perspective for what one should expect from top '20 or '21 vintages
- How to create a sense of urgency with your fundraise: 1) You don’t. This is reserved for the top 2% of funds. Very, very few firms are capable of driving LPs to 4-week close. 2) If LPs don’t have a prior relationship, they need to go through a process. They need multiple
- Whether investing in a company or fund, I see tons of memos that call out key person risk as a primary consideration. That is bananas. I want as much key person risk as I can possibly find. The absence of key person risk means you’ve already lost.
