When managers violate mutually agreed-upon risk parameters, the exit conversation is straightforward and expected. This removes the emotional guesswork and surprise common in traditional fund redemptions, preserving relationships.

For LPs, the primary benefit of pre-fund co-investments with emerging managers isn't just financial returns. It's a critical diligence tool to observe intangible qualities, such as a sponsor's discipline to abandon a flawed deal, which strongly correlates with long-term success.

Unlike many VCs who hold winners indefinitely, LeadEdge has a formal disposition committee that meets monthly. They constantly underwrite the forward IRR of each position and proactively sell, even in secondary markets, if a target return is met early.

Combat indecision and emotional attachment by pre-committing to sell an investment if it fails to meet a specific metric (the state) by a specific deadline (the date). This creates a pre-commitment contract that closes long feedback loops and prevents complacency with underperforming assets.

To avoid emotional, performance-chasing mistakes, write down your selling criteria in advance and intentionally exclude recent performance from the list. This forces a focus on more rational reasons, such as a broken investment thesis, manager changes, excessive fees, or shifting personal goals, thereby preventing reactionary decisions based on market noise.

Instead of making emotional decisions, establish "kill criteria" for each investment: a specific KPI (a state) that must be met by a certain time (a date). If the company fails to meet the predefined metric, you sell. This provides a disciplined, objective framework for portfolio management.

To combat personal bias, allocators should use a pre-defined framework for manager selection, like the show 'Married at First Sight.' Without clear criteria, it's easy to pick the 'shiny object' that resonates personally ('what you want') instead of the manager who fills a specific portfolio gap ('what you need').

Instead of simply redeeming from a struggling manager based in Singapore, the allocator flew there to explain the decision face-to-face. This respectful, human approach preserved the personal relationship, recognizing that how you exit a partnership is critically important.

To avoid emotional decision-making, especially with losing positions, write down the specific criteria for any investment. Then, backtest those rules against historical data. This replaces emotional struggle with a systematic, data-driven process.