limited partnership

[gentle music] Welcome to Swimming with Alligators.

The VC podcast from the LP perspective.

With your hosts, Alexa Benz...

And Ernest Law.

So, um, you know, I was born and raised right outside of Baltimore, and I, I came out of the womb immediately knowing I wanna allocate to venture and private equity funds.

You know, my, my first word was, uh, actually it was an acronym.

It was LPA.

Um, no.

So that's the direct secondary market, much like the NASDAQ, right? You can buy a single stock or you can buy multiple stocks at once.

And then there's the LP part of the market, which is buying limited partnership interests in the venture funds.

And so the venture funds hold the same stocks that are being sold on the direct secondary market, but they're held in a fund in a commingled structure.

Sometimes there's one company left, sometimes there's 50 companies left in the fund interest.

you know, stop paying their allowance.

So, you know, that that was our first phase.

And then I think the second phase was go execute and build out the business really well and get it to be have a nice growth rate, nice profitability, nice returns to all the LPs, nice repeatability with, you know, the investors re-upping.

nice repeatability with different counterparties with GPs, entrepreneurs and whatnot, and then kind of grow and scale it in a repeatable ways, which is what we did.

And then developing this whole sort of institutional platform approach is a completely different story because, I mean, we've had access to some of the most incredible managers, which has been awesome 'cause when you start as an LP and you are not in a massive, massive endowment-sized LP, you wonder, "Okay, well, some of these firms are impossible to get into.

Some of them are notoriously just never going to accept new LPs that they aren't familiar with.

How long is it gonna take us to get access to some of these firms?" And thankfully, and I think in large part our huge client base that has a lot of resources to provide, but also just who we work with, um, it's been a lot easier than we thought to be able to get, uh, access to these managers, which has been great.

And then it's allowed us to actually take a really strategic approach to, okay, we're not just gonna say yes because it's this brand's name, um, but now we have this slew of brand names to be able to compare and benchmark against one another, and we actually are in a r- a really great position of, of choice.

It's not only how you get customers, but it's how you get talent, and it's how you retain talent, and I think that that is so, so, so difficult to do.

And having talent retention, not only as a startup with, eh, your underlying portfolio companies, but also as a general partner, is completely make or break to your ability to succeed.

And so having those eyes on you, it brings you more money, it brings you more LPs, it brings you better founders.

It wins you deals at more disciplined prices.