What do institutional LPs actually want from a venture manager: maximum returns or a strategy that fits their portfolio?

Semil Shah · Nov 21, 2022

Bucketed allocation makes sense from the LP's own vantage point even if it looks irrational to insiders

Most LPs don't live in the Bay Area or the market, aren't talking to founders and VCs constantly, and have to present a strategy or map of the coverage they want

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Max Altman · Nov 21, 2025

The biggest surprise of fundraising was that LPs don't want to hear how much money you'll make them; they want a strategy that fits exactly what their portfolio needs

Despite the GP's job being to return the most capital, institutional LPs are allocating to fill a portfolio slot

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Harry Stebbings · Nov 21, 2022

Rigid bucket allocation gives LPs adverse selection; they should simply allocate to the best managers they see

If the mandate is 'we need a Series A fund in New York', they pick whichever such fund happens to be raising that quarter, and it's often bad

44:35 Rigid bucket mandates produce adverse selection lps should back the best manager regardless of category

Oren Zeev · Feb 2, 2026

A GP should not pass on a compelling company just to smooth deployment pace for LPs; LPs who dislike the inconsistency can opt out

He invests fast because he sees opportunities he wants, not for speed's sake; he won't change his approach for LP planning convenience

27:05 Gp should optimize opportunity and let misfit lps opt out

Max Altman · Nov 21, 2025

LP types require completely different pitches: family offices and funds of funds should be told how much money they'll make, while endowments and foundations want a strategy and story that fits their portfolio

Their incentives differ — fund-of-funds staff are paid on upside, while endowments and foundations mainly want brand safety and a good relationship and are indifferent between a 2x and 7x fund

42:10 Lp type decides returns pitch versus portfolio fit pitch