Earnest Sweat 00:03
Welcome to Swimming with Allocators, the VC podcast from the LP perspective, with your hosts Alexa Binns and Ernest. You ready? Let’s dive in. Van, it’s great to have you on the show. Thanks for being on. Of course. One thing that I wanted to talk to you about. I was interested in our pre conversation about how you came from Baltimore. I’m not going to stop there because it’d be like, how did you get out of Baltimore? No, how you know your background from Baltimore to Cornell and how you first got pulled into finance and private markets. I just want you to share that story.

Dan Fordyce 00:45
Yeah. So you know, I was born and raised right outside of Baltimore, and I came out of the womb immediately knowing I want to allocate to venture and private equity funds. You know, my first word was actually an acronym. It was LPA. No, in all seriousness, I have always loved the kind of classic story you know about math and science and reading kind of sci-fi and all of that. My dad was recently retired actually, but he was for 37 years working for the DoD as an engineer. So you know blowing stuff up would blow stuff up and seeing what happens is literally about all I know of his job. So I kind of always been, you know, cognizant of you know the kind of you know tech broadly. So you know everything from the computer games and RuneScape back in the day to you know my dad being an engineer. You know I had always kind of thought about that, and then you know somewhat also my mom being a public school teacher, also really respecting you know kind of folks that are doing things that are a little bit more you know call it you know selfless or you know kind of the more humanity side of things. So you know the long winded way of saying I got to Cornell and I originally actually applied into the arts and sciences program and then decided to be kind of econ or econ math or something in that vein. And you know, I kind of realized after I got to campus that I really, you know, I wanted to kind of marry, you know, the quantitative background, but also, you know, I’m much more of a people person. But also, you know, I knew I eventually wanted to do something that, in some way, shape, or form, makes the world a better place. You know, one of my great mentors is the CEO of a very large construction company, and you know he grew up in East Baltimore, son of I think seven or eight, and you know kind of classic American story, pulled up by the bootstraps. And something I learned from him was you know not necessarily having to go out immediately and you know working for a nonprofit or whatever, but there are other ways to kind of go into this you know kind of lead the world to a better place, so to speak. So I know I’m pulling on many threads there, but I ended up you know joining or kind of transferring into the operations research engineering department at Cornell, which you know is kind of the you know if you know math, statistics, computer science, business all kind of had you know a love child, so to speak. That that would be what OR is, and you know I really enjoy kind of the quantitative side of things, but always you know was able to you know think that okay I’m going to do something more on the people side of things. I want to you know be able to go into a career where I can, you know, make enough money where I can give back in some way, shape, or form over the long term.

Alexa Binns 06:05
The Cornell endowment, I think it’s about 10 billion. You were there at this inflection point over those four years. Is there a favorite story you can share? You’re talking about sort of the human side of this, and like just just any favorite memory or something that comes to mind?

Dan Fordyce 06:24
Yeah, I’d say there are two. One kind of reflects back on my past, and one kind of ties in with summation. Now, you know, it kind of goes without saying, and it’s almost table stakes that I got to meet incredible people, you know, from all walks of life, some of the you know most successful investors you know in the world at a very young age. I mean you know the fact that you know when you’re an LP you’re meeting typically with the heads of firms you know the managing partners and GPs and IR folks you know incredible exposure for a relatively young age. But something that I really enjoyed was also you know getting to know other folks kind of in my shoes you know on the LP side of things, and one of the you know personally most gratifying moments was I got to meet the head of the Baltimore County Public School Teachers Pension, and I got to you know we were at I think it was a credit event, but I got to meet him and shake his hand and say thank you for you know what you and your team do. Like my mom is a 30 year veteran of the system, and you know because of your work, you know was able to put me through Cornell without too many student loans, and now being a position where I am today. And that was, you know, kind of a full circle moment. Even if I, you know, still to this day struggle to explain to my mom what private equity actually is, but that’s another whole story. You know, the other one, and I think it speaks to not only just kind of the you know kind of the what the core of being an LP is, but I think also just a little bit on kind of the you know luck and serendipity and kind of nonlinearity of of you know the world broadly. Roger, the the head of Sumation, who was the head of private equity at Cornell when I was there, we were doing a lot of work on the European growth equity space and went over to a trip over in London and met with a number of managers, and then over into Munich as well. And one of the managers was a gentleman who had spun out of a you know large growth equity firm he had found at their London office, and it fit pretty well into the kind of the you know kind of thesis that we you know were looking for. Ultimately, we didn’t end up committing. I believe now he’s still doing it in kind of an independent sponsor way, but got very very close and you know did a lot of the work etc. But was interesting is you know the first meeting we had there he had Baltimore Orioles cup flinks on and we started chatting and of course you know I you know as a proud Baltimorean Baltimorean if you will always like to you know bring up you know those references but he mentioned that you know he that was where he’s from. He went to high school there, and he actually named his firm called Far Vue after the street that he grew up on in Baltimore. And you know that kind of hung out in the back of my mind. And then you know we still keep in touch, and he’s a good friend of the firm. And you know fast forwarding to summation, and I’ll get into it in a little bit. But I effectively helped to kind of help Roger co-found the firm. He’s the founder, but I kind of helped on you know from negative day negative one, and you know as the first employee, you know I helped with everything, but including hiring my now colleague Quinn, who runs our IR and Biz Dev efforts, and you know by happenstance she also happens to be from outside of Baltimore and you know around my age, but we didn’t know each other. But essentially, it turns out as we you know we were chatting and you know speaking through the you know the the recruiting process.

Earnest Sweat 10:24
That’s what I love in that story. Is it kind of puts together both what I’ve known from you and Roger is that like you guys have the mathematical and analytical brains, but also really understand things are this business is about relationships and how you marry the two, and you even noticing people the cuffings and and all that stuff and seeing how oh how do we build rapport is we’re seeing it we talk about this on the GP side a lot but like it’s definitely also needed on the LP side of like as things get faster faster break nick pace

Shane Goudey 11:00
can

Earnest Sweat 11:00
Do you still cultivate strong relationships and notice things as everything else is moving fast? So that’s awesome. You know, we’ve spoken to a lot of people on this podcast about starting new things and having all the experience. Could you talk about kind of like when the summation opportunity came up, what you had learned from previous stops, and what made this like, oh, I have to jump onto this opportunity.

Dan Fordyce 11:31
Absolutely. So to help kind of round out and kind of set the stage, I spent a great four years at Cornell. I primarily worked under Roger, the head of summation now, but also you know did the rest of the you know allocating across you know credit hedge funds etc. I joke that I leave all of that to people much smarter than I am. You know I did the CFA etc. and then I ended up moving over to a firm called Summit Rock, where which is a large outsourced chief investment office OCIO here in New York, which did very similar work, but instead of one client being, you know, Cornell, it was 40 clients, you know, ultra high net worth families, smaller foundations, etc. And you know, I was there for about two years, and also saw, you know, kind of the more commercial side of the business. And you know, I wasn’t directly interfacing with clients all that often, but you know, understanding, you know, a business that doesn’t have a single captive pool of capital, you know, raising money, you know, kind of all of those things, the tax implications, etc. You know, I kind of got to you know see that, you know, to to seal one of Rogers’ phrases, you know, there’s more than one way to skin a cat, and I had a great experience there, and I portaways with them at the end of 2022, and you know, at that time, of course, it was you know not the world’s best market. You know, especially if you’re an early mid-career allocator with a lot of venture and growth experience. You know, when the markets had tanked, etc. And you know, I was looking out all over the place, and you know, I’d always you know kept in touch with Roger, and you know, obviously thought very highly of him. And one day he called me up and said, “Hey, let’s grab a coffee and catch up. It’s been a couple months, and you know I went into the city and I realized he actually had an ulterior motive, which was, you know, “Hey, of course, obviously want to, you know, here are things that are going on with you, etc. But you know, I actually have this you know idea I’ve been incubating, which is the you know this idea of okay, I’ve done a great number of things at Cornell, really helped a great institution, but I’ve seen this kind of gap in the market for you know a new kind of breed of allocator, kind of innovation at the you know allocation layer, and you know he you know was explaining to me kind of this grand vision and said you know it’s still very early days you know the the board and CIO have signed off on it so it’s not you know and anything not kosher internally.

Alexa Binns 15:53
No, I would love to hear the summation model today. You are about three years in, and also if that’s shifted since what you thought you were joining, you know, like what has the market taken? Where has the market taken you? And what is Sumation today?

Dan Fordyce 16:09
Yeah. So at Sumation, we know the overall vision is we are trying to bring what we call true endowment style private equity out to the real world in heavy air quotes, and you know, of course, that you know, endowment investing can mean many things to many different people. But for us, you know, we think that it’s more than just being a you know long term kind of time horizon or kind of you know view of the world and having you know permanent capital, etc. It’s a number of other things that kind of really kind of go into you know kind of sum up into kind of one you know exact model that you know we didn’t necessarily see you know reflected out there in the real world, but what was being offered internally to folks like a Cornell or a Ford Foundation or a Princeton or you know pick your you know endowment foundation, and so that being said, you know at the end of the day, we are a private equity fund investor primarily. You know we are investing globally in venture capital, growth equity, and buyout funds. We’ll do some direct co investments alongside them as well, but you know primarily the vast majority of our capital will be in the funds themselves. And we are a single a single fund, a single commingled entity that it’s in an open-ended structure, and our job is to go out and find the best VCs, growth equity, and buyout firms in the world, and partner with them, and you know build a really you know interesting you know portfolio, and you know kind of the best way that we can think of for asset owners to access private equity

Earnest Sweat 23:28
Yeah, that’s definitely a headline grabber, and I think it really speaks to you and Roger’s desire to like find this true kind of alignment with your investors because Alexa and I have been, you know, since we I don’t know. Hopefully, we’re not the signal, but since we’ve been doing these interviews, our friends who are, you know, fund of funds and OCIOs and consulting firms have been having a hard go at it in fundraising, and it comes back to a lot of times people saying fees on fees. Also, there’s kind of a pendulum swing of like entities thinking they can do the direct investing into funds or or direct assets themselves. So yeah, I was going to ask how this is being received, but it sounds like it’s going pretty well. Any pushback you guys have heard, or or questions that have come up that have really kind of made you think.

Dan Fordyce 24:26
Um, good question, and I’ll tie this into the you know kind of what’s changed since launch. So I would say that you know across the board, you know, be it small endowments, pensions, you know, foundations, sovereigns, ultra high net worths, family offices, and any flavor of LP you could possibly talk to, you know we we you know we met with you know one or many of them and I would say that our model really has resonated with them. I think the question is especially and you know to the benefit of us all as private markets have become more and more important, and then of course all the dynamics around you know kind of. A jam up in the liquidity coming from you know venture and private equity markets, lack of distributions, etc. You know there are a number of groups that say, “Wow, I you know I really really like this model. I just can’t do it right now. You know I already have too much you know in my you know pre existing portfolio or some other need, and then you also have the kind of the whole or slew of you know groups on the you know on the kind of arguably more conservative you know end of the spectrum that say hey this is a really great idea but give us a call in three or four years once you’ve you know scaled to X amount of money you know you’re a going concern you can you know raise money on your own etc and then we’ll give you a look but you know I think really for us it’s you know we really find you know when we find the right LP that you know has the desire you know for you know and recognizes kind of the value and differentiation differentiation that we bring, it can be a very very quick you know sales cycle per se. I think, and it’s don’t hold me to this, but I think something along the lines of the largest non founding check that we’ve ever gotten, I think, was written after you know a 20-minute phone call, which you know, which just speaks to, and it was a very sophisticated person, you know, much wealthier than I will ever be. I think very highly of them, and it just speaks to you know when sophisticated people kind of understand the nuances of you know these markets and the you know the incentives and dynamics at play, and they you know, and they see our model. It’s you know, it’s very kind of quick, kind of almost no brainers per se.

Earnest Sweat 29:36
Now we’re going to take a quick break to speak with our sponsor

Alexa Binns 29:39
On the show today, we have our stellar partner and industry expert Shane Goudie, leader of Sidley’s venture funds practice, and now host of the podcast Talk VC. We highly recommend you listen. The interest in secondaries, particularly in these specific names, seems like a fantastic carrot to sort of. Be dangling in front of your LPs. What is that? What when people have packaged that together? What’s an example of what that looks like?

Shane Goudey 30:08
Yeah. So it’s whether it’s secondaries or whether it’s actually primaries. Obviously, in the world of venture, there’s a lot of regulatory implications, in particular on the SPV side, about having an SPV composed of secondary securities, because then that could blow your exemption, and now you have to become a fully registered advisor. But just given the wealth of opportunity, there have been a number of intra firms who have just, you know, kind of stopped kicking the can down the road and decided that they’re going to become registered advisors so that they can take advantage of these. I don’t want to say once in a lifetime because we’ve seen not quite to this order of magnitude, but before cycles in nature where there had been attractive SPV opportunities, but not quite like this. So the packaging really is just kind of giving an LP a view into what the relevant investment capacity and investment opportunity scope looks like for this fund, and that for an LP is almost the holy grail of you know what deals am I going to get into, not only obviously through and as a LP in the main fund, but if I can be economically advantaged to either get direct you know access to deals you know with some portfolio companies where you know frankly given the size of these these deals, it’s just rare is it that many of the main funds can take the whole opportunity available. So there’s just a lot of excess deal opportunities for so many firms that they’ve got to, you know, have a pass the hat approach to getting their key LPs additional ability. And you know, LPs are smart and they’re taking advantage of you know that kind of access and that kind of opportunity to be able to you know structure a relationship that is obviously pointed and mindful about their commitment to the main funds, but looking more broadly to a more holistic relationship and you know when those do those excess deal opportunities do come up, making sure that they’re at the right spot in line to be able to invest in those deals, and that the GP has them in mind to do that, and that can include, you know, we’ve seen a lot of increasing requests about transfers of LP interest. So if you’ve got other LPs who are interested in getting liquidity by selling their interest, you know, we’ve seen a lot of new LPs and venture funds not only be interested about you know direct opportunities into the portfolio companies themselves, but if there’s secondary opportunities to pick up interest in this fund, in particular, if it’s got a great portfolio, you know there’s no better way for them to get more access than to you know pick up another LP’s commitment at a discount. So you know that that for them has been. That’s also been a little interesting nugget of at least not necessarily. I wouldn’t say there’s an overwhelming amount of that activity, but I think interest level has risen for very sophisticated institutional LPs to start asking those kinds of questions as they’re coming into the main fund program. It’s been fascinating , you know, the past year plus to kind of have these kinds of discussions.

Alexa Binns 33:03
Yeah, these later stage deals definitely feel like they are garnering the majority of people’s attention, capital hype. Are you seeing that slow down at all? Is it, you know, a narrative of the beginning half of the year, and as we go into 2027, you know, are those opportunities still attractive?

Shane Goudey 33:32
Yeah, they are. I mean, I just, I you know, given the tidal wave of interest in these just huge, you know, rounds that are going into these companies. Again, it’s the proverbial FOMO effect, not only at the VC level but at the LP level. You know, they want to never have to answer to their own constituents that they haven’t taken advantage and been a good fiduciary. And and I just think that the risk meter is not always there when it comes to these rounds because there’s there there’s no reduction in price and value happening to any of these companies and so if you’re missing out on that opportunity to be part of that even if it’s just a small part of some SPV and you know it’s been the bane of a lot of companies’ existence, of course, because everybody’s trying to throw up an SPV to invest in these companies, and you know they’re already they’re already very nervous about what their cap table looks like, and you can only imagine the proliferation and frankly the kinds of negotiations that have gone on between companies and SPVs, which never in the world had taken place 234, years ago, of you know that that they have the co sale rights on investors not only apply to the SPV selling its interest in the company but also the underlying LPs in an SPV. So that upward re. Of control by the underlying companies because they have such a significant leverage point when it comes to you know who gets what allocation in these deals they can almost ask for the world in in some of this way so it’s been really interesting to see ventures reaction to that because oftentimes that’s the way that the GPs respond to LPs and having that same kind of playbook put back on them, you know, it’s a bit uncomfortable. I think in certain situations, and in some ways, that’s just part of getting into one of these rounds. This is just what you got to do, and you know, it’s it’s also educating LPs along the process because I can remember the first time this happened, which was, you know, about a year ago when a when a company said that all these rights drag along and tag along and co-sale not only apply to your interest in the company but the LP’s interest in the these SPVs, you know that that just sort of blew people’s minds in trying to educate people. And it’s like if you want the access, these are the kinds of things you may have to agree to. And

Alexa Binns 35:55
yeah,

Shane Goudey 35:56
All of that has been a fascinating exercise to try and rationalize, and you know, kind of talk people off the mountain top from jumping off of it, and to just try to see what the value proposition is in some of these kinds of mega deals.

Alexa Binns 36:10
Yeah, you’re sort of maybe not on paper, but you are the equivalent of a common shareholder. You’re getting in line. You know your place a little bit. Yeah,

Shane Goudey 36:22
That’s right.

Alexa Binns 36:23
Interesting. That’s right.

Alexa Binns 36:24
And now back to our LP interview. There are two threads I kind of wanna. I wanna get some free financial advice right now, Dan. Fees on fees as a concept feels like it is out of control right now, particularly with the top 10 names. Like this, this is like the most extreme example of that we’ve ever seen, and you’re coming from working with a guy who managed to avoid a bubble. So, what are you all doing about that feeding frenzy? How do you approach this kind of situation? Do you need access to those hot names right now? Is there a way that you’re accessing them that makes more sense, or you know what’s what we should be doing to have Cornell’s outcomes where 2020 is not a bust of a year for private equity.

Dan Fordyce 37:22
Yeah, so I think, and of course, you know, all the legal disclosures. This is not financial advice, et cetera, et cetera. I am, I am no lawyer or anything like that. But you know, it’s a, you know, it’s a really, it’s a really tough time. And again, every institution individual is different, so you know it might wildly vary across the board. But I think you know our ethos is you know, and again, we are you know we are doing venture capital, growth, equity, and buyout. We’re roughly equally weighted to all three of those. So that being said, inherently there is somewhat of the counterbalance of you know in our buyout book we tend to not do you know software or tech within our buyout book because we’re already getting so much from the other two thirds, so you know there already is an inherent kind of hedge where you know you have you know in 2022 the best performing names were you know very boring you know lower bid market industrials and you know waste services businesses, for example, you know the opposite of you know your high flying you know you know private mag 10 or whatever it may be, but you know beyond that at kind of the you know I’d say that at kind of the the portfolio level, we really try to you know stick to our guns and you know say hey you know we are doing roughly two new names a year in venture, two new in growth, too new in buyout. Here is our ballpark check size. You know, here is the relatively small amount we’ll do in direct co investments as well. But we want you to kind of stick to that path and not let you know some of that you know momentum or you know the shiny chase the shiny object you know kind of takes us. So I would say that that’s part of it, as well as you know, speaking specifically kind of within more venturey world with some of these you know quadruple layered STVs and other things, you know, to be completely honest, I I’m disgusted by a lot of what I see, and I think that there are a lot of bad actors that will come out, especially post the rumor of SpaceX and Anthropic and OpenAI, you know, IPOs, and then you know you hear these crazy things about you know I didn’t know they existed, but forward contracts for you know employees’ equity that are done through an SPV that’s then syndicated elsewhere, and you know it just kind of makes the hair into my neck, you know, stand up. And I say this is a you know self derogatorily very wise 31 year old. A lot of it reminds me of the you know bubble bubbly mentality of 21 and 22. However, the challenge is this time it’s even more all-encompassing, and a lot of these businesses are real businesses. So it is a little bit of a catch and a balance. You know, I think the way that we’re thinking about it is you know we are. Alpha-seeking fiduciaries for LPs. You know we want to do true long-term out performance, and for us, you know we you know we have done a lot of thinking around who, what managers do we want to partner with that we think are going to be you know skilled or at least better than you know most of the other folks out there at investing in a hype cycle. So when we think about you knowing our venture you know managers and our names. We’re also being cognizant around you know how much exposure are we thinking we’re going to get in some of those you know later stage you know arguably overvalued very you know you know sexy names per se, and then also how much are you going to get in you know other areas that might be a little bit more contrarian or less in the vogue, and you know we you know I’ve alluded to it. We do some direct investments as well, primarily and for all intents and purposes, we’re doing it alongside our GPs in a relatively systematic way to essentially offset our own fee load.

Dan Fordyce 40:51
So, you know, for example, if one of our managers came to us and said, “Hey, you know, in this fund that you’re in, we’re putting in X amount of money into SpaceX, or I guess I don’t want to say Andril. You know, we’re doing that. We’re voting with our feet. You know, we’ll look at that. We’ll underwrite the alignment and sanity check it, and make sure the thesis is there and isn’t something totally out of you know left field. And then we’ll probably write a small amount of you know direct dollars into that. Again, really at good economics to offset our fee load. You know we’re not asset pickers. It’s not my job to sit there and say you know you should have done you know Helling versus Andril or you know the valuation is too high. Like I leave that to the GPS. You know that all being said, I’ll take an anecdote from you know one of my family office friends. You know they met with a number of the you know call it the crossovery late stage folks, and on their tour of you know Silicon Valley on that trip, something like the same 10 names were in every single portfolio in different weights. And again, I’m sure that the returns will be just fine. But at the end of the day, sometimes when you start seeing that you realize that okay, access to just some of these names is great for some people, but at this point, I think we’re taking our foot off the gas a little bit. And of course, you know we’ll let our managers you know direct the capital where they think is smart, but we’re not trying to add our overlay on top of that. You know, that being said, if anybody wants to give me SpaceX stock when you know their Series A valuation. You know, call my number. But you know, besides that, you know, we’re not we’re not trying to you know get you know get cute with little you know short term pops or anything like that.

Earnest Sweat 42:32
When it comes to venture and even maybe growth equity. What are you looking for? I know you try to you know do the Rain Man and figure out all right how much exposure are we going to have in kind of the hypey late stage names. What’s going to be kind of counter cultural and non consensus? But then you’re meeting a person, so what do you like? How much is kind of prescribed versus like I’m also looking for these qualities in an investor?

Dan Fordyce 43:33
It’s a good question. I’d say it somewhat depends. I’d say it’s somewhat top down and somewhat bottoms up. And you know, I’d say from you know the top down perspective, as you know, as I was mentioning around the you know the you know sticking to our guns as far as the number of new relationships a year, that was one of the learnings that came out of the you know 2122 time frame around vintage year consistency, and you know all every academic study. You know you can cut and slice any of the data any way you want. The number one thing to be a good private equity allocator is don’t miss a vintage year. Be consistent and also don’t necessarily know overallocate into years. You know that might be hot. You know not to try to time the market per se. And for us, I think that’s really important. And then, you know, adding on another framework around, you know, two in venture, two in growth equity, two in buyout. That’s our specific portfolio construction. And you know, that also forces us to keep the bar exceptionally high. You know, I, I, you know, I have the best job in the world. I’m a kid in a candy shop. I get to meet with, you know, I look at probably eight or 900 things a year. You know, spend time. You know, meet with 200 plus. Spend a lot of time with you know 75 to 100. And then it’s my job every year to get it down to a list of you know something like 20 to 30 really high quality names across the board, across strategies, every possible way you know how you could think. And then we have to do the hard work of putting you. Know portfolio construction together and figuring out you know does this make sense now versus this other name that might be coming later but then this we also have this exposure from here and that’s kind of the art of it and you know for us I think it’s when we go into a commitment you know it’s you know we do a traditional you know institutional underwriting process you know we’ll call all the references we’ll do background checks, etc. etc. You know, we’re really not trying. We’re trying to be kind of you know sober and thoughtful and measured, while also being able to be opportunistic and you know move when we see something that is exceptional. You know, for us, I think you know, and even thinking back to Cornell, probably the shortest time frame from meeting a manager to you know signing a you know a commitment was probably in the you know four months range, but I’d say it certainly tends to be much longer than that. And you know, with these you know with this industry, a lot of it is that pattern recognition and starting to recognize you know what is common and what is different in the world. So you know when you know I’m out there meeting with a number of you know interesting GPs, you know it can pretty quickly come to mind like okay, this is actually very very interesting. I’m gonna you know metaphorically raise it up the chain and rope Roger in if he’s not already in the meeting, and you know kind of get them started in that process. There, you know, as far as you know specifically what we’re looking for, I mean, a lot of it is the you know kind of what you’d expect. You know, we’re looking for you know professional you know fund managers that we could be with for hopefully multiple fund cycles, and you know that hopefully you know knock on wood are going to you know totally explode in fund size down the road, and and you know kind of you know cater to a different set of LPs. You know we’re very open to emerging managers and first time funds. We tend to lean more towards you know first time first time funds, not necessarily first-time fund managers, because at the end of the day, you know, when you are running a fund, it’s not just going out and doing deals. It’s also all of the back office. It’s raising money. It’s X, Y, Z.

Dan Fordyce 46:53
There’s a lot of other things that you know that aren’t necessarily kind of the obvious, sexy things you think about when you’re running a firm. And you know, if we’re already taking that, you know, that that risk of you know being a a newer you know a newer fund or firm, you know, having you know that understanding that the person you know has in some way, shape, or form kind of done some of those things, you know, helps us get comfortable there. And then finally, I think you know, in reality, you know, by definition, we are incredibly alpha seeking. You know, we think that there is alpha in, you know, every part of the you know venture and growth equity and private markets broadly. And you know, for me, what I really try to understand is, you know what is truly different and unique and interesting about you, know you as a person or you as a firm or you know what would you bring to my portfolio? And you know, frankly, you know, is that alpha or is that beta? At the end of the day, and you know, I think it’s something certainly that you know I’ve gained in you know over the years is you know getting a better lens on that, and you know, frankly, that can take so many different shapes and flavors. It’s hard to kind of put into one easy to you know safe sentence, but you know, I think, and you know? You can obviously cut this if you want. You know, there’s the classic saying about pornography, which is you know when you see it. Like when you are you know when you’re an LP and you find something that’s really interesting and you know you see that alpha potential there, you know when you see it. But yes,

Alexa Binns 48:14
I hear you.

Earnest Sweat 48:15
That we’re definitely keeping that, and it and it might be in the free trailer, just as like a cliffhanger. That’s fine with me.

Alexa Binns 48:29
As an interval fund, what does that end up? How does that end up affecting your decision making or your outcomes? Just like how does that adjust the math?

Dan Fordyce 48:41
Yeah, so I will get a little nuanced here. So technically, I’m putting on my CFA nerd hat. Technically, we are an open ended fund structure, not an interval fund. So obviously, like open ended evergreen interval funds are a very you know hot topic. One of my close friends, who’s also an LP, went to an event yesterday at a law firm on this topic. He was the only LP that showed up. There were over 100 different GPs there, so this is very much in the mind. You know, more so on credit and buyout, but like in the venture world as well. Like it is top of mind. You know, for all of the reasons why you know you know, folks are kind of going into this channel for fundraising. You know, for us as an open-ended vehicle, you know, we made that intention. We made that decision very intentionally. Again, going back to the whole idea of true endowment style, we wanted to replicate as close as we could what it would look like. You know, what it looked like when we saw what we were offering to the CIO at Cornell. And at the end of the day, endowment is an open-ended structure. You know, it’s an indefinite life, and you know because of that, you know we chose that model. The difference with you know open-ended versus evergreen, it’s a little nuanced. If evergreen automatically reinvests your dividends, and then at some point, you know you can elect to redeem, and there might be a gig. Or something like that, and you know, for us, it looks close, but it’s a little different.

Earnest Sweat 52:39
with so much like efficiency, efficiency, efficiency, um, with you know AI, I’m sure I’m sure in all those meetings, not only the same 10 names, but everybody had an AI strategy. I just want to know from your perspective, and we’ve spoken before. You always have said that how people you know treat others, especially when there’s no specific benefit, so like service providers, placement agents, you know, peers, the GP or LP side, you’ve always felt it is important. Why is it so much more important now than ever?

Dan Fordyce 53:35
Yeah. Well, I think a great question, and yes, if I hit $1 for every time I’ve had a you know conversation with a manager where you know the topic of AI came up, I’d probably be retired on a beach somewhere. But so it certainly is top of mind. But you know, in all seriousness, I think as you were implying, you know, as you know, knowledge and information gets more and more accessible and democratized, and other barriers fall. At the end of the day. What is truly durable and sustainable, and a lot of that, you know, other aspects too. But a large number of that is kind of relationships and the reputation that you have, you know, within your you know industry or with peers or whatever it may be. And you know, I think part of it, you know, on my side, you know, a lot of the times the perception of LPs can be, you know, LPs are sitting up in this ivory tower, and the managers must come grovel to them, and you know they are the you know the kingmakers per se, and you know you really have to suck up to them, and you know sure that can be the case at some places, and I very much don’t agree with that ethos. I think for us we kind of you know Roger coming out of the GP world, you know me coming from, you know, seeing multiple sides of the table, and now building a business, and also frankly, just the way I was raised, you know, it’s not just you know, can you do something now in a transactional way that can get you some kind of tangible benefit in the near term? You know, I personally had a lot of you know great mentors and friends and people who. Took a chance on me and a leap of faith for me and my you know personal development and career and whatnot, and I love paying that forward whenever I can. Be it you know you know a Cornell undergrad that’s asking for you know thoughts on X Y Z or you know a manager we’re not even committed to asks for an intro to somebody in my network, and of course within reason I will you know 99 times out of 100, I’ll jump to that opportunity.

Alexa Binns 58:28
My takeaway, Dan, I am cracking up that the stereotype of the allocators is that they don’t get the upside, and so you know that that’s what’s distinguishing the the LP from the GP, and meanwhile, all of the people who want to come work with you and give their money to you are the GPs who don’t want to pay two and 20. So this is not lost on me that if you want, if you want diversification across this asset class, and not to be paying two and 20, you’re gonna put your money with an alligator.

Dan Fordyce 59:08
It’s it’s it’s it’s true. I mean, you know, of course there are some people that you know can do it themselves, are very happy with their providers or whatnot. But you know, at the end of the day, the you know called the you know the fund of funds is a you know I think it was invented in the well before I was born the 70s or 80s. In what other areas of the world are we still using 70s or 80s technology, especially in one as important as you know the fundamental layer connecting who has the capital with the people deploying the capital? Like that’s that’s pretty insane, and you know it’s you know of course you know we are you know very proud of what what we’re building here and it’s great being you know an N of one you know I would not be surprised and frankly I think you know in some senses would welcome if other groups kind of take this idea you know I think our impression of leaving on the world is this is the right way to go as far as you know where. You know the pub is moving. You know the cost of equity beta has gone from expensive to basically free over you know Roger and certainly my lifetime. And hopefully by the time that you know I’m you know retired sitting on a beach somewhere with my you know 15 Bernese Mountain Dogs, that you know the the cost of allocation will be you know have broadly moved to something in this kind of general direction because I think it just sets everybody else up for success, and you know, across the chain, all the way from the portfolio companies to the you know to the GPS to the LPS to the asset owners.