A few of the possible reasons LPs do not shout from the roof-tops! – or even provide good feedback…
Benefit
Many LPs would ask you what is the benefit? Why speak out? I’m overwhelmed with interesting deal flow and the last thing I need to do is generate YMI (yet more inbound)? Why do this at all? I can’t even respond to the inflow as it is….
For me, writing something down forces me to a finer level of detailed thought. I think it also helps to provide potential partners some transparency and to make yourself more approachable. I also hope that I generate some content along the way that helps others in the ecosystem. Finally, I hope to save myself some time and write down answers to questions I’ve been asked multiple times so I can point back to the blog posts.
Platform
Many LPs work at institutions that would prefer they never generate headlines. I find that any organization with a general counsel has a pretty strong bias against blogging, social media, even public speaking. LPs often have to jump through multiple approval hoops to get permission to speak or attend events. Regular blogging becomes a step too far. Many of these entities manage public monies and are subject to political “noise”. Others may be private corporations that hope to stay that way.
My last platform, UTIMCO, was pretty open in this respect. We were already so “public” that there was not too much sensitivity around my usage of social media, panel speaking, and I just needed to navigate ethics policies and political winds in my public comments. Occasionally, a blog comment or panel statement would bubble up but overall wasn’t a problem. At Foundry, the guys have encouraged me to raise my profile and provide content in matching their #givefirst mentality. I do need to run any marketing or fund specific content by our CCO but we’ve really tried to make it less painful. We all really just try to keep up with Brad’s prodigious content!
Agency Risk
LPs have little to gain and much to lose. Certainly, it could benefit their individual profile but I think that many fear a potential conflict between their platform and their own brand. This is really one of the reasons that some of the more naturally outspoken LPs don’t chime in too loudly. I think many platforms discourage individuals from brand-building, as some of that brand can walk out the door. A short-sighted view in my mind.
Natural Selection
Through natural selection, LPs generally aren’t your most outspoken group of individuals. Many have chosen their platforms with an eye toward removing career risk, not taking on more risk. You find many recovering accountants & lawyers (we have both on my team) and many people that have come to the role through a treasury or other service provider role. You do find a few ex-bankers, ex-GPs and are seeing more of these in the organizations that pursue co-investments. Generally they are the more outspoken of the bunch.
Bandwidth
LPs are way understaffed in most platforms. You will find many organizations with a single person, or percentage of an FTE dedicated to the PE portfolio. You often see organizations with large legacy portfolios and generally too much diversification, limiting the bandwidth available for specific asset classes or positions. You’ll usually only see private equity teams that focus on private markets writ large, with very few focused on venture capital in even in the better-staffed entities. Fund-of-funds have tended to be more prolific in their messaging/writing because they have motivation to build a brand (fundraising). They are also better-staffed on a FTE/AUM basis and often focused on a specific part of the market.
Parting Shots / Conclusions
We can do better. I’m really proud of my friends Beezer and Douvos for taking up the #OpenLp torch with good support from a number of other LPs (too many to list separately). I suggest we all try to provide an #asktheLP forum in much the same way my partners created an #asktheVC opportunity for others in the ecosystem.
We could get more support. I spent a good amount of time with ILPA, Institutional Limited Partner Association, and I think they are a valuable resource (check out ILPA.org templates) but they could provide a lot more focus on venture capital rather than buyouts. I also think that the NVCA really left venture FoFs out in the cold when they created the registration carve-out so it would be nice to see them spend more time on LPs too!
Finally, I hope entrepreneurs and GPs find it worthwhile as a number of us try to find time and voice from the LP side.