162. LP Value Creation, Why DPI is King, and Secondaries as a Means of Exit (Sarah Anderson)

Sarah Anderson of Cintrifuse joins Nick to discuss LP Value Creation, Why DPI is King, and Secondaries as a Means of Exit. In this episode, we cover:

• What is the investment focus/philosophy at Cintrifuse? Can you tell us a bit more about the Cintrifuse model?
• What impact has the Cintrifuse Syndicate Fund had?
• Can you explain how this benefits large corporates?
• What about startups-- what's in it for them?
• Are the corporate LPs hesitant to invest directly in funds-- Is that why they come to you?
• Does your diversified portfolio preclude certain vertically-focused corporates from investing in a fund of funds model?
• Does Cintrifuse work w/ other types of financial institutions, aside from insurance? If so, how have you seen them react to the explosion in crypto and disruptive fintech?
• Tell us about your role as matchmaker-- how do you get involved and facilitate between VCs, startups and corporations?
• What's the strategic value-add to a VC fund manager?
• What industry disruptions have you observed and what are the impacts on large corporate companies?
• Advice for entrepreneurs-- whether underserved spaces or where they should be focused that they're not? What message do you want to send to founders?
• In Rob Go's recent study on fund metrics, he said "In the early days of a fund, VCs tend to optimize for TVPI. But in the long run, DPI is king. You can’t feed your family with TVPI, and you can’t spend IRR." Is he right and what do you suggest to Fund I and Fund II managers that have attractive paper gains but no distributions to paid-in (ie. a DPI of zero)?
• Let's discuss reinvesting in startups, I want to talk about doubling down on firms and investing more in their new funds. When Chris Duovos was on we discussed the concerning stats related to persistence. And Antoinette Schoar, of MIT did a notable study on fund returns, which showed persistence of returns from private-equity funds has gone down in the last decade. She said: “If LPs are not vigilant, we'll start seeing persistence at the bottom. So many LPs want so much to get into PE that they are not sensitive enough to poor perf and keep reinvesting in partnerships that are not deserving” Sarah, what's your take on the study and her position here?"

 

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