In a non-control deal, an investor cannot fire management. Therefore, the primary diligence focus must shift from the business itself to the founder's character and the potential for a strong partnership, as this relationship is the ultimate determinant of success.

Limited Partners, much like VCs searching for outlier founders, are often looking for fund managers who are "a little off." They value investors who think differently and don't follow the consensus, as this non-traditional approach is seen as the path to generating outsized returns.

To truly understand a potential financial partner, the Chomps team went beyond the supplied references. They found a founder whose company didn't succeed under the PE firm's investment. His positive review of the partner's character, despite the negative outcome, provided the most powerful signal of trust.

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.

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.

Investor Mark Rampolla argues that a brand's potential is capped by its leader's personal development. His firm seeks self-aware founders committed to "inner work," believing this psychological resilience is a key predictor of building a billion-dollar company.

Venture capital returns materialize over a decade, making short-term outputs like markups unreliable 'mirages.' Sequoia instead measures partners on tangible inputs. They are reviewed semi-annually on the quality of their decision-making process (e.g., investment memos) and their adherence to core team values, not on premature financial metrics.

David Cohen reveals that some savvy LPs investigate a General Partner's personal life, such as their marriage. While seemingly invasive, this is a strategic move to gauge stability and de-risk their investment, as significant personal disruptions can detract from a GP's focus and fund performance.

Lara Banks suggests that emerging fund managers should proactively ask LPs about their specific criteria for success. This conversation aligns expectations early, clarifies performance benchmarks for future funds, and prevents misalignment between the GP's strategy and the LP's evaluation framework.