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The prevalence of “groupthink” among prospective LPs is one of the most frequent complaints I hear from fund managers actively seeking capital. It is generally understood that “groupthink” in investing refers to a group of investors clustering around one viewpoint or theme without any of its constituents offering critical discourse or taking opposing positions. I […]

A few weeks ago I wrote about the critical role placement agents play in conducting the intricate orchestra of GP messaging, LP requests, and fundraising herding. Although many placement agencies are gradually evolving into a holistic business model that assists GPs in establishing long-term and ongoing relationships with prospective LPs, their primary use can still

Competitive Landscapes We know you think your baby is the cutest, smartest, and most infallible ever to live. We also realize that asking you to critique your baby is difficult, as it would be like criticizing yourself. Outsiders, however, do not bear the burden of genealogical bias when assessing the perfection of other people’s babies.

In the movie Heat (1995), Robert De Niro’s character says to Al Pacino’s character “Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner”. Although it may sound melodramatic and self-aggrandizing, most well-trained investment analysts share this attitude.

A natural and very understandable insecurity expressed to me by many emerging managers is how their strategies compare to other funds in my portfolio. Through individual reconnaissance and the assistance of a motley crew of advisors, emerging managers usually have some basic understanding of what LPs are looking for and which recent fund launches they

Despite holding positions that champion flexibility of thought, investment analysts on the allocator side still, admittedly (or not), are plagued with several dogmatic habits. Many of my past writings have self-servingly accentuated the plight of allocators and accusingly cried foul about specific GP behaviors that irk LPs. However, despite the pain it causes, introspectively turning

A complex, sometimes abstract system of changing/evolving power dynamics lies beneath the consequential high-stakes interactions between LPs and GPs. In GP/LP exchanges, the human element, at points, can convincingly obscure business realities, but power flexing at critical stages of engagement inevitably reveals the harsh truth. My first career experience with this reality made me feel

Analysts often use the concept of “repeatability” to support an investment thesis and demonstrate conviction in an investment opportunity. By believing that “repeatability” exists, you can feign protection (or create a sense of security) against the greatest investment threat, the “unknown future”. Despite being incessantly reminded of the golden investment CYA rule that states “past

For emerging and established managers alike a “first close” comes with a profusion of sentiments. A first close is a multiheaded chameleon that harbors many characteristics and uses – it can be an existential marker, a customary show of fundraising progression, a necessary action to allow for deal execution, a timekeeper and barometer of the

After the warm or cold initial LP solicitations, introductory meetings (virtual or in-person at the allocator’s premises), and ongoing communications, but before the full consummation of a commitment, the prospective LP visits the GP’s office. This is an opportunity to view the sponsor in its natural habitat, where hopefully, home-field advantage numbs the GP’s inhibitions