E8: Apurva Mehta of Summit Peak on Why Fee Sensitivity Leads to Adverse Selection in Venture

David Weisburd sits down with Apurva Mehta, the co-founder of an early stage fund of funds at Summit Peak and formerly an institutional investor at endowments (Juilliard, Cook Children’s Hospital) to discuss power laws in portfolios, alpha in early stage investing, and what differentiates a great LP.

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(0:00) Overview of portfolio companies' fair market value (0:32) Introduction and journey of Apurva Mehta (1:38) Early stage venture program at Cook Children's Hospital (2:18) Competing with major platforms in early-stage investing (3:26) Alpha vs. beta in early-stage investments (5:11) Comparing seed firms to multistage firms at seed stage (6:59) Market inefficiencies and sustainable alpha extraction (9:33) Identifying top solo GPs and their strategies (13:15) Generalist vs. specialist firms in portfolio construction (15:24) Sponsor: AngelList (16:45) Ray Tonsing's network-driven approach (18:39) Diligencing emerging managers and key success factors (20:45) Signals for reupping in subsequent funds (23:29) Effective questions between GPs and LPs (26:01) Current market state and its impact on solo GPs (28:14) Ranking asset classes by desirability (30:20) Fee structures and carry for top quartile managers (33:13) The future of high-capital firms (35:18) Power laws and return dispersion in venture portfolios (37:43) Ownership models at seed stage (40:25) Summit Peak's unique aspects (41:28) Venture capital as a unique asset class (41:56) Closing remarks and acknowledgments