How I Invest with David Weisburd

E24: Joshua Berkowitz of Berkocorp on Why LP's Should Care about IRR% not TVPI

Nov 30, 2023

Joshua Berkowitz, an investor in venture capital as a family office, talks about the importance of IRR over TVPI as a metric for investors. They also discuss capital allocation, GP strategy fit, predicting fund returners, qualities of GPs, supporting emerging managers, effective portfolio construction, strategy creep, early-stage investing, and the benefits of family offices.

01:02:48

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Episode guests

Joshua Berkowitz

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Episode notes

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Quick takeaways

LPs primarily evaluate investments based on the internal rate of return (IRR) metric as it allows for consistent evaluation across different asset classes and emerging managers.

LPs strategically redistribute cash between public equities and private investments to maintain a continuous presence in the market and sustain their investment portfolios.

LPs value diversification in their portfolios, investing in various stages, geographies, and sectors to reduce the impact of underperforming investments and maintain a strong relationship with GPs through effective communication and transparency.

Deep dives

Importance of IRR for LPs

LPs primarily evaluate investments based on the internal rate of return (IRR) metric. IRR allows for comparisons across different asset classes, ensuring a consistent evaluation method. It also helps LPs assess the performance of emerging managers who may not have a long track record. IRR is viewed as a key factor in determining the success and profitability of a fund or investment strategy.

Introduction

3min

Capital Allocation and Investment Metrics

12min

Understanding GP Strategy Fit and Kevin Carter's Unique Investing Style

2min

Predicting Fund Returners and the Importance of Existing Fund Returners

7min

Qualities of General Partners (GPs) in Venture Capital

16min

Supporting Emerging Managers and Effective Portfolio Construction

2min

Strategy Creep and Effective Communication with LPs

8min

The Importance of Early-Stage Investing

11min

Discussing family offices and the benefits of being an investment committee of one

2min

Joshua Berkowitz of Berkocorp, sits down with David Weisburd to discuss investing in venture capital as a family office and why all investors should care about IRR (and not TVPI). We’re proudly sponsored by Bidav Insurance Group, visit lux-str.com if you’re ready to level up your insurance plans. (0:00) Episode Preview (1:27) Joshua’s background (3:25) How venture fits within a family office (4:22) “Everyone’s an IRR investor” (5:41) How to invest in venture and manage capital calls (8:02) Why time diversification is important (10:42) The importance of always being in market (12:44) How to find and evaluate venture managers (14:41) GP strategy fit (15:52) Episode Sponsor: Bidav Insurance Group (16:45) How to predict whether a manager can pick a powerlaw company (17:34) Joshua’s powerlaw GPs (18:48) Messy (or diversified) portfolio (21:04) Aiming for 20% IRR (22:22) Why Joshua likes diversified over concentrated (24:01) GPs need to be “rough around the edges” (26:25) The difference between early and late stage collaboration (27:27) The different ways to win (29:09) Can anyone beat Sequoia and Andreessen? (29:45) Generational transfers (31:05) Founder vs Operator CEOs (32:44) How Joshua diligences emerging managers and what you need in a dataroom (40:41) Portfolio construction (41:25) How to communicate with LPs (48:56) Joshua’s view on follow-on strategy (52:05) The difficulty of succeeding across all stages (54:30) Change in graduation rates (56:17) Venture investing mistakes to avoid (57:50) How to approach co-investments (1:01:31) Dexa.ai (1:01:54) Why Joshua is a great LP

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How I Invest with David Weisburd

E24: Joshua Berkowitz of Berkocorp on Why LP's Should Care about IRR% not TVPI

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Importance of IRR for LPs

Managing Capital Calls and Asset Allocation

Diversification, Strategy Creep, and Communication

Key Point 1: The importance of articulating a clear GP strategy in the data room

Key Point 2: The need for thoughtful portfolio construction and co-investment decisions

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AI-powered
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Discover
highlights

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How I Invest with David Weisburd

E24: Joshua Berkowitz of Berkocorp on Why LP's Should Care about IRR% not TVPI

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Importance of IRR for LPs

Managing Capital Calls and Asset Allocation

Diversification, Strategy Creep, and Communication

Key Point 1: The importance of articulating a clear GP strategy in the data room

Key Point 2: The need for thoughtful portfolio construction and co-investment decisions

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Save anymoment

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