Are LPs facing a uniform liquidity drought, or does it vary sharply by LP type (endowments/family offices/sovereign funds vs. traditional PE-heavy LPs)?

Harry Stebbings · Aug 9, 2023

Whether LPs want liquidity is highly dependent on LP type — endowments with annual scholarship obligations need cash today and would take any liquidity available right now

Those LPs have fixed annual payment obligations to meet

Scope: said lovingly, as a qualification of Jason's view; he can't offer Andreessen- or Sequoia-scale liquidity himself

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Jason Lemkin · Jan 4, 2024

The LP base has split into two worlds: many university endowments, family offices and sovereign wealth funds are unaffected by the liquidity drought, while LPs deep in traditional PE are paralyzed by capital commitments and lack of returning cash

The unaffected pools have to reinvest their capital anyway, whereas PE-heavy LPs are used to getting cash back and recycling it

Scope: some endowments do lack liquidity

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Harry Stebbings · Jul 28, 2023

Funds with strong institutional LP bases have long enough time horizons that they can extend the fund period and hold for value appreciation rather than forcing liquidity

LPs that are great institutions can be told an asset is taking longer and grant a two-year extension

34:55 Institutional lp backed funds can extend fund life rather than force liquidity

Beezer Clarkson · Oct 18, 2023

With exit markets broadly shut, LPs lose the cross-asset liquidity they normally use to fund capital calls

Private equity isn't distributing, and they don't want to sell public stock when it's down if that isn't their strategy, yet endowments and foundations still have mandated annual payouts

9:30 Exit market closure removes lps cross asset liquidity for capital calls

Beezer Clarkson · Oct 18, 2023

Large LPs face hard liquidity-profile constraints — they cannot become too illiquid without violating their own rules

She has sat through multiple investment committee sessions with larger LPs wrestling with exactly this

10:20 Large lps face hard liquidity profile constraints limiting illiquid commitments