20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 18 October 2023

⏱️ 50 minutes

🔗️ Recording | iTunes | RSS

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Summary

Beezer Clarkson leads Sapphire Partners‘ investments in venture funds domestically and internationally. Beezer has invested in some of the best firms of a generation including USV and Point Nine to name a few. Beezer began her career in financial services over 20 years ago at Morgan Stanley in its global infrastructure group. Prior to joining Sapphire in 2012, Beezer managed the day-to-day operations of the Draper Fisher Jurvetson Global Network, which then had $7 billion under management across 16 venture funds worldwide.

In Today's Episode with Beezer Clarkson We Discuss:

LP Landscape: WTF is Going On:

Are LPs really all closed for business?
What has changed in what LPs want to see from managers they are looking to invest in?
What has changed about the size and pace of new commitments for LPs?
Are all LPs moving away from growth?

2. 2020-2022: Years in Review:

Are LPs frustrated by managers who reduced deployment timelines to 12-18 months?
Are LPs frustrated with managers who did not take liquidity when they could have done?
How does Beezer advise managers on when and how to take liquidity in their best positions?
Are managers accurately marking their portfolios to their LPs today?
Why does Beezer believe the incentive mechanism for LPs is broken today in many ways?

3. How To Build a Top Decile Firm:

Why does Beezer believe if you want to have the best returns, you have to have one company that returns the fund? Can you not do it with multiple half-fund returners?
Is ownership core to all the best firm's top performance? Is it the size of outcome or the size of ownership that drives the best performance across the board?
What does data show on how the best funds take significant risk? What are their loss ratios?
What are the core tradeoffs to Beezer between scaling AUM and providing top decile returns?

4. LP Markets: The Times They are a Changing:

Does Beezer believe LPs will remain cold on large $1BN+ growth firms?
Which segments of the market are hot? Which are cold?
What are the most significant changes we will see in the LP markets moving forward?
Is today the new normal or are we in a downturn that we will come out of?

Transcript

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0:00.0	Let me tell you another thing. LPs, some get paid on DPI, some get paid on TVPI,
0:04.8	meaning that how they're holding their portfolio is relevant to how they are viewed, not just
0:09.1	for their personal paycheck, but how they might be measured by an external US News and World
0:13.0	Report. A lot of LPs also pre-spent future budgets. If you were raising a fund every 18 months
0:18.1	and I thought you were raising every three years, I had two choices.
0:24.3	Either I pull from future year budgets or I reduce my check.
0:28.2	Right now, given what's going on the markets, a lot of LPs are feeling liquidity strains.
0:30.9	I wouldn't say a crunch, but there's different demands on those dollars.
0:31.7	Welcome back.
0:39.7	This is 20VC, The Memo with me, Harry Stebbings. Now, the memo is the monthly show where we focus on a specific topic or company and really go deep on that one area.
0:44.1	Today, we go deep on the core topic of our LPs close for business.
0:51.9	Order has changed in what they want to see from managers that they look to invest in, and how do LP markets change over the next 12 months?
0:54.7	Joining me is a dear, dear friend, Beza Clarkson.
0:56.2	I've known Beza for eight years.
0:58.2	She's one of the best LPs in the business.
1:02.0	She leads Sapphire Ventures both domestically and internationally, and she's back in the best funds of our generation.
1:03.8	This was so much fun to do.
1:05.6	Beza was amazing, and you can watch the full episode on YouTube by searching for 20VC. But before we dive into the show today, I've always been a big history man,
1:13.9	and so I want to talk about Cooley, the global law firm built around startups and venture capital.
1:19.0	Since forming the first venture fund in Silicon Valley,
1:22.3	Cooley is one of the most active firms in advising in both early and late stage financings, handling more than 1,600
1:29.5	private financings every year, with an equal split of investor and company clients.
	...

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