Does a venture firm's network of LPs provide a genuine, durable competitive edge in winning access to the best startups?

Harry Stebbings · Mar 28, 2025

Venture is an asset class where supply chooses demand — the company picks its source of capital — so any firm targeting the best companies must be chosen by founders who have many options

Companies that meet every criterion will have plenty of alternatives

38:57 Supply chooses demand so firms targeting top companies must differentiate to be chosen

Mitchell Green · Mar 28, 2025

A new firm without operating pedigree should manufacture its edge by making its LP base the competitive advantage — raising from world-class executives it can deploy into deals

Mitchell and his partner had no operating background to sell, only cold-calling experience, so the only believable pitch to companies was access to LPs who have built and run the world's largest companies, who also serve as their diligence network

39:49 Lp base of operating executives as manufactured edge for new firms without pedigree

Harry Stebbings · Mar 28, 2025

A network of successful founder-LPs is no longer differentiating, because Index, Sequoia and every great firm now has the same weaponry

He uses the same tactic with $65B of founders in his funds, and founders respond that the top firms all have it too

41:17 Founder lp networks are no longer differentiating since top firms all have them

Mitchell Green · Mar 28, 2025

Lead Edge's LP edge is differentiated because its LPs are executives at plain, non-software companies and because the firm actually delivers and tracks the introductions it promises

Everybody says they help and very few do; 80+ portfolio company execs they backed have invested in the funds, which is evidence they do what they say

41:46 Differentiation comes from non tech executive lps and actually delivering tracked introductions

Mitchell Green · Mar 28, 2025 · hedged

Most funds that claim incredible networks don't actually help their companies, probably because the model doesn't scale and their LPs aren't people who want to be involved

Lead Edge's LPs are mostly non-Silicon Valley execs near or past retirement who actively want to help, and they are pulled into diligence before investing

42:39 Most claimed vc networks dont actually help because the model doesnt scale and lps dont want involvement

Kyle Harrison · Oct 21, 2022

A well-run family office should combine disciplined diversification with allocating to managers who have access to concentrated pockets of high-quality people and build deep long-term relationships with them

Founders gravitate to halo effects regardless of prior affiliation, so access to communities of high-quality people is the durable source of returns

18:29 Concentrated access to high quality people communities is the durable source of manager returns