Limited Partners should resist pressuring VCs for early exits to lock in DPI. The best companies compound value at incredible rates, making it optimal to hold winners. Instead, LPs should manage portfolio duration and liquidity by building a balanced portfolio of early-stage, growth, and secondary fund investments.

A common mistake for emerging managers is pitching LPs solely on the potential for huge returns. Institutional LPs are often more concerned with how a fund's specific strategy, size, and focus align with their overall portfolio construction. Demonstrating a clear, disciplined strategy is more compelling than promising an 8x return.

Many fund managers approach capital raising by broadcasting their own "unique" story. However, the most successful ones operate like great listeners, first seeking to understand the specific needs and constraints of the Limited Partner (LP) and then aligning their value proposition accordingly.

Many LPs focus solely on backing the 'best people.' However, a manager's chosen strategy and market (the 'neighborhood') is a more critical determinant of success. A brilliant manager playing a difficult game may underperform a good manager in a structurally advantaged area.

Limited Partners (LPs) value fund managers who are willing to listen and internalize market feedback, even if they ultimately follow their own strategy. This openness is a key positive signal, while a refusal to listen is a major red flag that often appears early in the relationship.

Professional fund managers are often constrained by the need to hug their benchmark index to avoid short-term underperformance and retain clients. Individuals, free from this 'career risk,' can make truly long-term, contrarian bets, which is a significant structural advantage for outperformance.

Large, contrarian investments feel like career risk to partners in a traditional VC firm, leading to bureaucracy and diluted conviction. Founder-led firms with small, centralized decision-making teams can operate with more decisiveness, enabling them to make the bold, potentially firm-defining bets that consensus-driven partnerships would avoid.

A fund manager's fiduciary duty incentivizes them to trade potentially higher, more volatile returns for guaranteed, quicker multiples (e.g., a 3.5x over a 7x). Unlike a personal investor who can accept high dispersion (big winners, total losses), a GP must prioritize returning capital to LPs like pensions and endowments.

The best investment opportunities are often with managers who have strong demand and don't need any single LP's capital. The allocator's core challenge is proving their value to gain access. Conversely, managers who are too eager to negotiate on terms may be a negative signal of quality or demand.