Charles HudsonFounder and Managing Partner, Precursor Ventures

Funds need to be legible to LPs

1 Oct 2026 · 1 min

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In this brief commentary, Charles Hudson argues that venture funds must be legible—that is, understandable and transparent—to their limited partners (LPs). He notes that emerging, unproven fund models pose evaluation challenges for LPs. Hudson explains that "super‑compounder" strategies, which focus on high‑profile companies that appear in the news, make a fund more legible because LPs already recognize those firms. However, when a fund holds many solid but less‑visible companies, it requires LPs to invest significant time, energy, and focus to assess them deeply. He also highlights the operational strain of expecting a single individual to manage all private‑investment responsibilities, suggesting that such a model may be unrealistic.

Chapters

I think funds have to be legible to LPs. And I think the challenge with some of the models that Rob mentioned is they're new and unproven. So if you do the super compounder thing, you end up in the companies that LPs have heard about from the other big funds that they've read about in the news and whether you own, you know, 1 basis point in those companies or whatever, you're, you're on the cap table and the things that you're in feel of the moment. If you have lots of other great companies that are maybe doing well on the business metrics, You actually need limited partners who have the energy, time, and focus to go deep to get to understand those companies. And if you're one person responsible for all privates, maybe that's too much to ask of that individual.