The Power of Investment Returns: How Asset Categories Determine Success

Name: The Power of Investment Returns: How Asset Categories Determine Success
Uploaded: 2024-04-11T13:00:26+00:00
Duration: 41 s
Channel: Jason M. Lemkin
Description: In this brief excerpt, Jason M. Lemkin recounts his first limited‑partner (LP) meeting as a venture‑capital general partner. He describes arriving with…

11 Apr 2024 · 1 min

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In this brief excerpt, Jason M. Lemkin recounts his first limited‑partner (LP) meeting as a venture‑capital general partner. He describes arriving with an 80‑page spiral‑bound notebook detailing the fund’s strategy and thesis, only for the LP to flip to the final page, study the reported returns for 90 seconds, and then ask whether the fund was focused on IT or biotech. The LP’s sole concern was the numbers and the asset‑category bucket the fund fell into, illustrating how LPs often evaluate venture funds primarily on historical returns and sector classification rather than detailed strategic narratives. Lemkin’s story underscores the importance for GPs to understand and align with LPs’ metrics‑driven decision‑making.

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What did you mean by that? Because I thought that was very interesting. As a GP? Yeah. I just remember I told you the story before we met, like when I first started in venture, the first LP meeting I went to was a huge entity in New York, in Manhattan, on the 48th floor of whatever. And we came with like an 80-page spiral-bound notebook of all the strategy and the thesis and all the best. And they just turned to the very end, the last page of the returns. Studied it for about 90 seconds, looked up and said, so are you guys IT or biotech? Like he only cared about the numbers and which of the two buckets of this asset category for a slot. Right. And so then I'm like, okay, I get it. We're, we're just a product.