The “Approachable LP” Investing on Behalf of 120 Families
Oct 16, 2024
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Sean Warrington, Head of Private Investments at Gresham Partners, and Brom Rickey, Founder of Aduro Advisors, dive into the intricacies of private investments for families. They share insights on the importance of building relationships with managers and adapting strategies in a changing market. The duo discusses macro trends affecting venture capital, emphasizing data-driven decision-making and operational efficiency for emerging fund managers. They also explore the evolving dynamics of LP-GP relationships and the growing influence of AI on investment strategies.
Sean Warrington highlights the necessity of conviction in fund manager selection to achieve successful venture capital allocations.
Gresham Partners adopts a 'user-friendly LP' approach focused on fostering transparency and relationships with fund managers for better collaboration.
Warrington discusses the need for LPs to remain agile and adaptable in their investment strategies amidst evolving market dynamics.
Deep dives
Sean Warrington's Path to Private Investments
Sean Warrington shares his journey into the world of private investments, emphasizing the blend of preparation and fortuitous encounters. After initially working at Lockheed Martin, he developed a passion for investing and pursued further qualifications including an MBA and CFA. His luck turned when he received an important introduction to DuPont, where he first understood the significance of endowments and their deployment. The mentorship he received at DuPont instilled in him the importance of learning from experienced professionals in the field.
The Importance of Conviction in Fund Management
Warrington discusses what conviction means in the context of selecting fund managers, highlighting its critical role in achieving successful allocations. He elaborates on the necessity for venture capitalists to excel in deal sourcing, picking, winning, and adding value. By analyzing the unique edge that managers possess in deal flow, Warrington underscores sourcing as the most crucial attribute to understand. He also emphasizes the need for LPs to build their own conviction quickly to secure favorable terms in competitive funding environments.
Gresham Partners' User-Friendly Approach
The concept of being a 'user-friendly LP' is central to Gresham Partners' philosophy, which focuses on approachability and transparency during interactions with fund managers. To create a more relaxed environment, the team often opts for casual attire to nonchalantly blend in with the founders and private equity groups while discussing potential investments. By prioritizing open conversation and clear communication, Gresham aims to foster good relationships, even with those whose proposals do not align with their investment criteria. This approach not only enhances their reputation but also encourages deal flow from previously declined managers.
Adapting to Market Changes and Trends
As market dynamics evolve, Warrington notes the necessity for LPs to remain agile in their investment strategies. He points out the increasing specialization among GPs in sectors like B2B SaaS but acknowledges a new demand for generalist funds in areas like consumer technology. The ongoing influx of capital into venture capital has led Gresham to explore investments in earlier-stage companies to capitalize on potentially lucrative opportunities. This willingness to adapt, while maintaining a focus on edge and expertise, positions Gresham to navigate the changing venture landscape effectively.
Building Trust and Relationships with GPs
Warrington emphasizes the importance of fostering strong relationships between GPs and LPs as a key ingredient for success in the venture capital space. He suggests that GPs should carefully consider their LP base, opting for smaller, diversified groups to avoid the pitfalls of herd mentality in funding decisions. Establishing connections with multiple decision-makers within LPs can safeguard against personnel changes that might negatively impact ongoing partnerships. Through thoughtful networking and consistent communication, GPs can build meaningful relationships that enhance their chances for successful fundraises.
Influence of Families on Investment Strategy (19:52)
Capital Pool Structure (22:00)
Insider Segment: Best Practices for Emerging Managers (25:24)
Identifying Client Needs (27:34)
Distribution Trends (29:45)
Investment Process Transparency (31:55)
Adapting to Market Changes (33:48)
Miscommunication in LP-GP Relations (37:05)
Understanding GP-LP Dynamics (40:15)
Building Relationships in the LP Community (42:06)
Changes in Fund Strategies (45:28)
AI's Impact on Investments (48:17)
Final Thoughts and Takeaways (49:22)
Sean Warrington is the Head of Private Investments at Gresham Partners where he seeks to build portfolios of world-class private equity and real asset managers. His primary responsibilities include developing, sourcing and executing private investments around the world. Prior to joining Gresham, Sean served as co-head of private markets for the Alfred I. duPont Charitable Trust, a $6.5 billion foundation based in Jacksonville, FL. He previously held positions in corporate finance at Lockheed Martin as well. Sean’s personal interests include watching sports (including esports!), reading science fiction and regular workouts.
Aduro Advisors is a trusted partner for venture capital fund managers, offering comprehensive and expert fund administration services. Known for being agile, responsive, and focused on making fund operations seamless, Aduro enables fund managers to concentrate on investing. With deep expertise across a variety of fund sizes and strategies, Aduro provides a full suite of services, including fund accounting and compliance. The firm understands the fast-paced nature of venture capital and prides itself on being as innovative and driven as the funds it supports. Aduro doesn’t just manage operations—they help funds scale. https://www.aduroadvisors.com.
Swimming with Allocators is a podcast that dives into the intriguing world of Venture Capital from an LP (Limited Partner) perspective. Hosts Alexa Binns and Earnest Sweat are seasoned professionals who have donned various hats in the VC ecosystem. Each episode, we explore where the future opportunities lie in the VC landscape with insights from top LPs on their investment strategies and industry experts shedding light on emerging trends and technologies.
The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this podcast are for general informational purposes only.
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