Earnest Sweat 00:13
Today’s episode. We’re blessed to have Vivek Jindal. He is the CIO at CAP rock a leading multi family office serving ultra high net worth families through multi asset class portfolios across traditional and alternative investments. He has an amazing allocator background with stops at core, the Schusterman family office and prior roles at Blackstone and Corbin capital. Today, we’re going to chat with him about how to build a truly customized all weather portfolio for families and institutions, the lessons he’s learned from managing through multiple market crises and what it means to compound capital and culture over decades. So with that, we welcome

Earnest Sweat 01:11
if you could share with us just some of the key points in your career that got you to this point?

Vivek Jindal 01:44
Honestly, I had no idea what I wanted to do. I mean, we’re going way back now, but coming out of college, I was at NYU, I was at stern and, you know, it’s not like that as much today, although there’s still a segment of it, but, but Tech has obviously creeped into it as well. But back in the day, quote, unquote, back when I graduated, it was banker or bust. You had to go invest in banking. And I was 20. I know how old you are when your first job out of school, 2223 I’m like, Oh, my professional career is over. I didn’t get banking out of school, and it was the best thing that had ever happened to me. Honestly, I ended up at Erlang, which is a great firm to, you know, cut your teeth in and in terms of working in an office and working with smart people and dealing with clients and things of that nature. And I wanted to do something else. I wanted to do something in the financial markets, and I had no idea what that meant. I had a call with a recruiter, and I ended up interviewing for a risk position at CORBA and capital, which some people probably listening know about great firms at the time, they were very much a hedge fund of funds. They’ve evolved into more of a full scale asset management firm, but I was interviewing for the risk side, and ended up fortuitously getting that position. And again, when you think about what I always talk about, how the universe takes you where you’re supposed to be. I wasn’t on the investment team at first, and that was a really good thing for me, because I learned almost from the outside in terms of allocations and looking at managers and looking at investments with a risk first framework, which has served me well over my career. So started on the risk side, really couldn’t I mean, when I stepped into the door at CORBA, I could tell you maybe what a hedge fund was at first, but realistically, I mean, the nuances of it, things of that had great bosses. That’s been a big thing throughout my career, to be honest with you. You know, a good training program in terms of getting me up to speed. And then the global financial crisis hits, and you think about, you know, what is the best time to learn, fortunately or unfortunately, it’s during crises, because you really understand what’s going on and what can go wrong. And so work through that at Corbin did a lot of good work there with a lot of smart people, and then moved over to the investment team, and that was really the post the GFC, and them seeing the work I did, I think them seeing the work I did, and being able to do a lot of different things, moved over to the investment team, and then that was the allocation side from then then on out. And I knew when I was at CORBA, and early I’m like, this is, this is what I want to be doing. If you think about what we do on the allocator side, what is it you have you know whether you’re allocating to hedge funds, to private investments, to combination. Both to Public Market platforms, which we do at Caprock as well. What do you get? You get to speak to really smart people a majority of the day. You get to learn a majority of the day. And you get to, you know, refine your investment viewpoints all the time. And I don’t think a lot of people, you know, there’s a lot of narrow fields within finance, allocating capital is a very wide field. And when I was at CORBA, I’m like, Yeah, I can do this. And I think, I think I want to do this for the rest of

Alexa Binns 05:32
my life. given just this piece of risk, it is something that we don’t talk about much on the show, because venture doesn’t really have the language for it. Could. Are there any applications or lessons learned? Can you teach us how you think about risk so that, yeah, the GPS listening can sort of orient themselves a

Vivek Jindal 05:58
a little bit better. Well, you know, eventually it’s a funny thing, right? When you look at hedge fund risk, I mean, you’re creating these optimized portfolios, and you do these, these blended portfolios with sharp ratios and volatility characteristics and return characteristics, and that’s the that might be what you’re thinking about from a backwards looking standpoint. But then you’re also combining that with an exposure framework. So if you think about risk, if you think about real risk in terms of asset allocation, because again, as allocators, you get to speak to a lot of smart people, but you don’t have a full data set, right? So if you were doing risk within a fund, to fund side, within an allocation framework, to managers, within what we do as a job, you have to go in knowing you are not working off of a full data set, because you are not the person picking stocks on the hedge fund side or credits. You are not flying around the country and trying to find, you know, operational inefficient firms on the private equity side, and you’re not meeting founders, you know, all day on the venture side. And so what are you working with on the risk side? So on, you know, what’s what the hedge fund side that that’s more data driven, obviously, on the exposure side, on the on the returns metrics, you can even push that forward on the private equity side as well, because these are even to positive companies, and you’re looking at it and you’re saying, okay, you know, can I model this out correctly? What are we looking at from a specific manager, going through their book and doing the portico venture is very different. Obviously, I always say this a lot. I’m like, you have to be, you have to be a little bit crazy to be a founder. You really do, and you’ve got to be idealistic to be a VC, especially in the early stage, right, because you’ve got a founder that is crazy enough to think, you know, the world needs this. I found this, and I don’t like using the word disrupter. There’s a bad connotation with that now, compared to what it used to be. But there is this specific market that needs something, and there’s all these established players, but I’m bringing this forward, and I just know it’s going to work, and that you got to be a little bit crazy to think like that. And it’s good that you’re crazy, because otherwise these startups would never get off the ground. And then on the venture side, especially on the early stage, we’re talking about, you know, true venture here. You know, seed, pre seed, maybe not on the angel side, but you know, before, probably series A for the first investment, you’re looking at someone who may not have any revenue. You’re looking at someone who may be a first time founder. You’re looking at a concept and an idea, and you’re thinking, Yeah, I’m going to give this guy a million bucks, and it’s just okay. I mean, you know, I have a $100 million fund, or whatever. Or whatever, and I’m going to start off with a million dollars or more check, and we’re going to raise and grow with them. And this guy could fail, or this guy could be, you know, a 20, as in my portfolio, this port, CO, so then, as the LP to the GP, how do you look at risk? There’s a lot of different ways to do it, but it is a little bit more art than science, because what I’m trying to do is create a portfolio of ventures that is accessible for our clients. That Ernest, you used the All Weather side before, but I really do think about that, not just all weather in terms of performance. But in sectors, in strategies, you know, mixing early stage with some mid stage and late stage, because the dividing line between growth equity and venture is kind of skewed at this point on the later stage, vintage year, right? I mean, you look back and say, Well, I was in the top decile fund of, I don’t know, pick a time frame, 2018 to 2019 that may not be a top decile fund, over a 10 year period of time, right? Just the market is. So you need that vintage year diversification, and you combine that all out. I mean, you are doing statistical work. You’re trying to model things out. You’re trying to model out. I. Some aspects of what they are going to be investing in are how much capital they’re calling over a period of time, things like that.

Earnest Sweat 11:37
The venture and growth equity is becoming a little bit blurred. But I would actually extend that across all, almost all asset classes at this point, even up to public rights, are becoming blurred. How is that phenomenon where multi stage venture funds are competing against private equity funds, and in some instances, getting alpha before hedge funds. Yeah, public equities. How does that challenge your perspective when it comes to finding the right all weather portfolio? I think so.

Vivek Jindal 12:16
I think of it as an opportunity to be honest with you. You see hedge funds that are going into the private landscape. Sometimes they’re good at it, sometimes they’re not. And you see private equity funds drop down into either lower sides of the middle market, side with their larger buyout, they drop down the middle market because they need to be able to put money out the door and commit capital to deals. You see private equity go into the venture space, which we’ve seen. I think if you say I’m going to find managers that can stick to their knitting, it creates an opportunity, because there’s a lot of noise out there, right? You go to these conferences, you talk to people, and you know, XYZ hedge fund now has their private fund, and they’ve got their long only fund, and they’ve got their long short fund. And I’m looking at that and I’m saying, Well, you, you were amazing on the long short side for 20 years, but you’re expanding. Maybe, maybe you’re going to be good on that side. Maybe you’re not, but I really love what you’re doing on this long, short side, still, or on the venture side, hey, this is your third fund, and you were at 60 million. Then you went to 85 and you’re now at 105, there’s no dollar creep. You’re still concentrating on what you do best, on positioning, on what you do best on stage of the company, being able to filter out that noise and find managers that do something very good, specific, something specifically, very good. My wife always talks about finding people’s superpowers, right? Like, what is this person’s superpower? And I think about that with my team dynamics, but I think about that with managers as well when I’m talking to them and I’m across the table from them and going through the whole diligence process, okay, well, what is this person’s superpower? What is this fund’s superpower? Is it finding specific companies within this space? Is it a venture fund, and you guys know this as well as anyone that can sit on the board of an early stage company. Because early stage companies, it’s a sliding door moment every single day, almost where, you know, you need the advice from tenured people. You need to be able to, you know, make a decision, maybe not every day, but in real time. And if you go left, it might be a failure. And if you go right, you’re winding up on target in a year, right like so is it a manager that has the operational chops to sit on a board, or a manager that can open up doors for underlying companies, things like that nature, if you are able to identify. Say what people’s superpower is within those, within the GP construct, within the manager construct, and really build out the portfolio of a lot of different types without over diversifying. I think the noise aspect of managers doing something else outside of their knitting, you can just filter through it or ignore it.

Alexa Binns 15:21
Cap Rock has a long history of doing ventures where other investment professionals for high net worth haven’t necessarily touched that. How has that practice evolved? Do you feel like it is more or less how it’s always started, or is this a little bit different now?

Vivek Jindal 15:37
I think everything’s going to evolve over time, but the program that we started, Caprock, just turned 20 years old, and has been investing in ventures. I mean, before, probably the people at Caprock that have been investing in ventures have been investing in ventures before Caprock was formed, right? And so there’s always going to be an evolution. For example, you know, we do things within a commingled construct now, and we have for a little bit of time, but you know that necessarily wasn’t the first way that we invested in a venture. The first was, you know, let’s go find good managers. Let’s get good access. Venture was a different asset class 15 years ago than it is now. But the way that we think about this, you know, from an institutionalized standpoint, putting together, let’s say, seven to 10 good managers over three years, from a vintage diversification standpoint, plus a bunch of CO investments, or direct investments, in a single construct where a client has $1 and It goes into that I think, is really powerful. It allows you to know that all weather portfolios come together. It also allows me, as the CIO, to go out to the marketplace and say, I have discretionary capital. You know, you’re relying on the trust of clients, but we’ve been doing it for a long time, and so we do have that, we do have that trust built in. But to to go out to the marketplace with that, to say we’re looking for these specific, you know, slots to be filled, whether it’s, you know, now, within AI, obviously, within biotech, within consumer, and then create that exposure, and then allow that, allow our clients to invest into that. I think that’s the evolution that we’ve seen. It’s also looking at the world a little bit differently. You know what was in favor at times? You know, whether it’s consumer or something else, on the venture side, might be out of favor now, and it’s making sure that you’re you’re you’re looking at the next 10 years and 12 years, as opposed to what’s in favor now, obviously we have AI exposure, like AI is going to touch everything. I don’t, I don’t think that’s something so far fetched around. Think I’m going, you know, to, I’m saying something out of school, but creating that exposure and thinking about it, because we’ve had so many reps in this of not just thinking about what’s in favor now, but what’s in favor in 12 years is going to be is important and is going to be important, but the way that we deliver that exposure to clients is always going to evolve over time.

Alexa Binns 18:15
Any anything you can share in terms of what you think is out of favor that’s worth looking at, or you’re looking to meet more

Vivek Jindal 18:21
managers. Consumer is a great example of this. It’s hard. CPG is hard. It’s not like it once was the exit opportunities that you saw, you know, CPG, aspects of clothing, obviously you see venture dollars flow towards things like makeup, for example, right? And that’s been a big segment and sector. Biotech is also something that’s been out of favor. The public markets are killing it. The valuations have gone like this, and the science has gone like this. And so where do you see this going? I mean, if I had to think about stages, and it’s something we’ve discussed internally recently, longevity and the aspect of biotech of, okay, you know, what are the supplements that people are taking? What are the drugs that people are gonna be taking in 510, years that are in a very early stage of clinical development right now, that Pfizer is going to buy at some point, because they’ll buy up the team, things like that. You know, we’re always happy to take meetings across the board. I think that’s how you learn. But being able to invest in, first and foremost, good managers, but in potentially out of favor fundraising, Marcus funds that are having trouble fundraising because of what the sector is now, and having that viewpoint of where something will be in 12 years. Yeah, I do think that’s how you compound capital over time. And we talk about the All Weather portfolio, and it’s not, you know, it’s a term I use, I don’t mean it in the full Ray Dalio standpoint, but it is. Saying, Okay, this aspect is in favor now, and it’s doing well over the next three years. If there’s a slowdown in this sector in seven we’re going to have other shots on goal in other sectors to be able to pull the performance of that commingled fund up. And I think that’s really important.

Earnest Sweat 20:18
you always talk about skewing the risk in the client’s favor. So after you figured out kind of like, oh, we have discretionary capital, we want to go after these types of in or out of favor verticals. Then how does it actually work in practice for you to find those fund managers, and does your decision, is it a mix of kind of new managers versus established? Yeah.

Vivek Jindal 20:48
I mean, that is the art versus science standpoint. And when you talk about ventures that are above any other asset class, is there, right? I mean, an aspect of it is okay. I think Cap Rock has done a really good job and will continue to do a good job. And obviously I’m speaking my book here, but getting into managers that are hard to get into, it’s the old Groucho Marx line. I’m going to butcher it, but I don’t want to be part of a club that wants me to join and venture kind of has that where sometimes we’re taking up the last 5 million of capacity that this manager is offering, and I’m having conversations, and I’ve laid the groundwork for years with people for this. So there’s the capacity constraint issue, which, I think, works in our favor. There’s, you know, the word of mouth side. It’s not venture doesn’t have the same aspect of capital fundraising and formation that hedge funds do, where you’ve got cap intro people at every bank, and there’s conferences everywhere, or on the private equity side, where you can go to pitch book and look up, you know, returns in the industrial segment within private equity, in the middle market space, and rank a bunch of people and then reach out for meetings. And it’s kind of a formulaic process combined with, you know, the super returns of the world and other conferences. And you know, you put that together and understand what the whole landscape is. There’s a venture manager that’s going to form in a month, that’s going to spin out somewhere or somewhere, and it’s going to be someone that’s going to probably be one of the best returning funds over the next 12 years. And how do we find that, not necessarily always, you know, taking the vintage one risk, but how do we identify that manager or that person and continue and have those conversations, to at least start that dialog, to follow that manager, and follow that practitioner, follow that GP, so that you can potentially get in over time and and create that exposure. So that’s that. That’s one thing. The third thing is, it is a big aspect of word of mouth, right? I mean, there are a few conferences. There’s some that are situated on the West Coast. They’re good. You talk to people in AGMs, you talk to other allocators in the hallways of AGMs. But you really do have to have your network. And I’m not one for group think if you know, someone says, Hey, this is the best biotech manager. You, you have to invest there. I’ll take a look for sure. But you definitely need a good network of allocators specifically within the venture.

Earnest Sweat 26:17
Now we’re going to take a quick break to speak with our

Alexa Binns 26:19
sponsor on the show today. We have our seller partner and industry expert, Shane Gowdy. He’s the leader of Sidley’s venture funds practice, and if you get value from this podcast, we have Shane and the Sidley team to thank for it. They make these recordings possible. We are looking forward to hearing from you. Shane, for the audience. Tee peas, LPs listening. What would you like them to know about Sidley?

Shane Goudey 26:42
Yeah, here’s what I want them to know. I want them to understand just the incredible capabilities of our firm in representing emerging companies and venture firms to the fullest and maximum extent. And that is certainly doing wonderful fund formation work with deep experts who are very practical like our practice is very practically oriented. You know, we could certainly take a very different mindset. And well, I don’t know if it’s private equity ish, but really see the relationship in it all. And I think our firm is uniquely positioned to represent really the totality of the ecosystem, and not just venture, private equity, you know, hedge, real estate, you know, you name it, the deals, and really being able to provide clients these different perspectives, not just from our world, but from other worlds, and that, for my client base, has just been eye opening, being able to have this richly sophisticated, diverse advice built on hundreds years plus of experience in working in avenues, in ways that you know, a lot of the newer firms just don’t Have, that they just they operate in their silo, and God bless them, they don’t see forest through trees, and they don’t have that expertise. So Sidley really is, you know, one of the largest law firms in the world, but it has this new firm mentality about it, which, you know, I’m excited to be a part of and help build. And you know, the people that I get to work with on a day to day to day basis, and it’s how we’re building our client base. We’re not just, you know, again, pointing a large vacuum at an eco so we really are purposeful about who we want to partner with, and, you know, providing, again, that kind of responsive concierge, practical service. So I think it’s a new way of looking at things with a much, much bigger capacity to do incredible things for our clients. So we’re just super excited about it. Yeah,

Alexa Binns 28:46
no, it makes me wonder. You know, venture got a little bit of a haircut when, when Wall Street got a chance to look at our multiples and say, These things don’t match up, and if you’d been working with a group like Sidley, you know, would we have all kept, kept our expectations in check, you know, that you were sort of connected through the whole life cycle of a company?

Shane Goudey 29:13
Yeah, I think it’s, it’s just having kind of the full view of the spectrum, as opposed to just swimming around in one pool, you get to kind of be part of a lot of different things happening across different economic sectors, different industrial sectors, just and having like the real expertise, not just from the deal side, not just from like fund formation, emerging companies, Cap markets, IPO, but Having like the regulatory expertise, you know, automotive or defense tech, or you know, you know AI, or you know, cryptocurrency or digital asset like, having regulatory expertise, because that matters, that really, really matters to a ton of these clients for these very different asset classes that you know can possibly be great at. News for them to drive down and explore. And, you know, having just a law firm that has the access to not just how to do the lawyering, but to the network of the company clients we represent. And, you know, it’s just fun. It’s fun being part of a system where you’re just, you see the whole horizon. It’s good

Alexa Binns 30:18
stuff. Now we talk about that a lot where, oh, the LPs are investing in all the asset classes, and the venture capitalists know very little about their true competition,

Shane Goudey 30:29
yeah, yeah, no, that’s right. That’s exactly right. And you know, when they say, you know, they’ve got an allocation to alternative assets, right? That, I mean, the lion’s share of it goes to private equity, right? It’s not, it’s not the venture the the largest percentages of any big institutions alternative asset allocation are never to venture. And, you know, having a little bit of visibility into what it is that those fund managers do that they can gain that level of confidence. And some of it’s just the function of the funds that they do, right, you know, and the sizes of the transactions that they have and the control positions that they take, it’s just a different type of investing, of course. But nonetheless, I think there are lessons to be learned on both sides, because private equity has got a lot to learn from Venture as well, and I think it’s been much better in that way, and in particular, when you get the kind of cross streams where the sea meets the rivers, and you get this kind of silty goodness of growth venture investing. You know, there’s a lot of learning being done there, and it’s pretty interesting to see how things are changing and how things are developing in those ways. And

Alexa Binns 31:34
now back to our elk interview.

Earnest Sweat 31:38
Who are your ideal kind of straight down the fair way clients, the type of people that you feel like your approach really fits,

Vivek Jindal 31:53
Honestly, it’s probably anyone that can invest in alternatives. You know, I started in the private wealth business. And one of the firm’s previous cap rocks had tech entrepreneurs and founders. And I thought, hey, this is going to be great. Like these guys understand the risk they want, you know, they want growth. They want growth equity. They want to venture. They want, you know, private equity. And someone pulled me aside and said, hey, you know, maybe in like 510 years, but right now, they’ve been paying themselves $100,000 a year, and they just want to buy a house. And they may be worth like, 25 on paper or $30 million on paper, but they have no liquidity, and they’re the first tranche that they’re seeing. We’re investing in private credit because it’s going to give them yield and pay off a mortgage. And so that was kind of an aha moment of, don’t just categorize your clients of what they can do and what you think they’re going to do based on where they are and what their risk tolerance is. It’s more to take the holistic view of, hey, if you can do alternatives, if you’re a qualified purchaser. Basically, I think we have a solution for you, and that’s a good thing because I, I’m a big believer in this. Again, you know, Cap rock was a great place for me to go to, and the tagline is aligned wealth with the clients, but it’s aligned investing for me with the clients and the advisors. And I had a lot of conversations with the CO CEOs about this before I joined. If I’m a huge believer in what alternatives can do for a client’s portfolio over time. Does it have to be the majority of your book? No, does it have to be a portion of it? I think so. If you want to compound over time, there’s, you know, we can talk about the statistics constantly, but you guys know this, the value creation on the private side is ever increasing on companies, because companies are staying private for longer.
Alexa Binns 34:38
And can you double click for us on, not just why alternatives, but why venture? What’s that doing in your portfolios? I

Vivek Jindal 34:46
it’s a huge portion of what we do, in terms of, at least, you know, maybe not always in terms of dollar amount and exposure for a client, but in terms of brain space, because we are thinking about this in it. What is the next innovation wave, and where are you getting access to that? And so I’m starting there from the venture side, a lot of times, on the allocation side, but also just on the thought partnership side, of thinking through, okay, the venture is investing in this or in these segments or doing this. How does that play out within the private equity landscape? How does that play out within the private credit landscape, and how does that play out within the public standpoint and landscape? And so it’s, it’s a two kind of pronged approach there, where there’s the information sharing aspect, which is great, and the information learning aspect and gleaming aspect for me, but then combined with, Okay, we have these commingled funds, we have these direct investments, we have these co investments. Let’s put it together on a client portfolio. The one thing that I don’t do, and I think again, another reason why I came to Caprock, and I think why Caprock liked me, a big thing for me is I came from the single family office world, and so we don’t have model portfolios where you’ve got to be 50% public equities, 30% public credit and 20% alternatives. And within the alternatives, there’s structured portfolios, and this is all you can get. It is treating each of our individual clients as a single family office, and that’s what the multifamily office approach really is and really should be about. Now there’s aspects of scale. Obviously, we’re doing that on a commingled side. We’re doing that on the diligence side. I can’t dilute 1000 funds, right? You know, it’s a combination of give and take with the advisors and conversations with the clients and the advisors. But the approach is, and I talk about this a lot, what is my job? My job is to fill the shelves with a lot of really good products, and the advisor’s job is to go shopping with the client and fill up their cart, and whatever that mix and match is, what comes out is that the advisor is going to know that client a lot better than I ever will.

Alexa Binns 45:28
Speaking of turbulent times and shiny objects, curious, what is interesting to you in the secondary market right now, and why?

Vivek Jindal 45:39
Kind of everything, I would say it’s, it’s no bad assets, just bad prices. I mean, it’s that mentality on the secondary side. Look, you, you have a lot of different transactions that play out. It’s the LP led secondaries, but then the GP led secondaries are really interesting, right? And it’s both on interest, but it’s also on the portfolio company side. And you’ve seen that on the private equity side that’s been going on for some time, the banks are steadfast in that. There’s the buyers on the secondary side, there’s the GPS that knows what they’re doing. There’s the LPS that knows what they’re doing. On the venture side, it’s becoming very interesting, because venture as a whole, two things are happening in the dynamic. Fundraising is challenging. I’m sure everyone you talk to is going through that. And liquidity is challenging, right? Dvpi as a whole on the venture side, I was looking at some stats. Today it’s picked up. We’ve seen some IPOs as the IPO market is opening up again, but those are for some mega deals. You have a lot of gains on paper, but your tvpi may be high, but your dvpi is not. And so it’s not specific sectors or segments, but it’s the aspect of, and we’re talking about venture specifically. It’s the aspect of venture being open to secondary sales, which they have not in the past as much. I mean, you’ve seen it on individual names, obviously, and there’s marketplaces there. But from a venture GP side, it’s, it’s not the first time, but it’s, it’s a it’s momentum behind secondary transactions that you really haven’t seen in the

Alexa Binns 47:27
past. Yeah, you have a motivated seller where you wouldn’t Yes, before. I mean, you,

Vivek Jindal 47:32
you’re always seeing it on the direct name side, there’s always employees, there’s rovers and other bunch of other stuff that you have to deal with. But you’re always seeing employees as they should try and sell in the secondary to create some liquidity for themselves. That’s always going to be marketplaces. There’s always gonna be a marketplace for that. And there’s, there’s a bunch of well known companies that have sprung up around that. But the LP side, you know, you see it from some well known LPS that are running into the denominator effect, where their boards are saying, We can’t increase our private exposure until we see some liquidity. And you see maybe a new CIO comes in, or someone, and they’re trying to sell some stuff on the secondary so that they can shape their portfolio. That’s always been there. That’s probably picking up to some extent, but the GP LED Side, I think, has picked up. And to your point, you have motivated sellers. And these are not, again, you’ve got to parse through a bunch of stuff. There’s a lot of noise, but if you can find good assets at good prices, I mean, that’s a home run for you, if you’re trying to step in there. And then the third thing is, it’s an interesting dynamic, but kind of a secondary fund of secondary funds. We’re seeing that to some extent, you know, doing some work there on secondary funds that do that, or secondary funds that pick off interest from fund to funds that’s more in the private equity side than in the venture side. But I, if I had to guess, and we’re talking, you know, three years from now, that’s probably made its way down into the venture segment as well.

Earnest Sweat 49:26
Since you mentioned one where you had a kind of trend that you thought would happen to the venture world. What other trends or things are you looking out for in the next decade for venture and growth equity?

Vivek Jindal 49:41
That’s a great question. So I do think the aspect of just putting dollars to work, and that’s the only additive that a venture fund is supplying. It’s coming, it’s hitting a roadblock or a wall, um. It is the best venture managers. I’m talking about a true venture here, right? We’re not just talking about opportunity funds and growth funds. Talking about true ventures. You have to be able to open doors for founders in a way that you did not necessarily need to prior, because valuations were going like this, and a larger venture fund was just going to come in and give a higher check and a higher valuation, and eventually something good was going to happen. It was going to happen. So that trend is increasing. I’ve seen that from both sides of my life, actually, because my wife is on the startup side, and I see what the advice is that because, because, as an allocator, you don’t really see the inner workings of what those board discussions are, those venture discussions are, and to see what the good ones are versus the not so important ones, that’s going to matter a ton elsewhere. You know, on the venture side, I do think, look, this might be a moment in time aspect versus over the next 10 to 12 years, but there is some valuation discipline that’s come into the market. Into the market. We’re not in the 2018 2019 timeframe. Talk to me, when rates are lower in 2027 what’s going to be happening there, and what the money that’s being thrown around is. But you do see some valuation discipline, both from the GP side. But then you know, LPs are getting smarter as well. This isn’t just a spray and pray asset class anymore for some LPs, especially on the institutional side, this is targeted. People are asking smarter questions. People are demanding more. And then the third thing is, you know, co investments on the venture side, historically have been costly. It’s not the private equity side. Private Equity co investments are zero and zero, and that’s kind of table stakes. The CO investment fee is being driven down as well. And I think that’s a good thing for the industry as a whole, because it’s good for the GPS. Look, they use CO investments to create revenue for their employees, and that’s a worthwhile endeavor, because you’re not going to see carry for 15 years sometimes. So they do need to be able to, you know, provide some economic benefits for the employees, especially people that are not partners. But on the flip side, the aspect of being able to have a relationship with the GP and say, Okay, well, we’re for CO investments from there, and it’s going to defease the total investment combined with what we think of as the core exposure, I think is a really good thing for the industry as a whole.

Alexa Binns 52:26
You heard, you heard all of the predictions here, folks, co investments going to zero, yeah.

Vivek Jindal 52:34
Oh my God, please don’t quote me on that. I’m gonna get so many angry phone calls.

Earnest Sweat 52:39
Venture Partners, private equity fund managers, you need to charge more. You guys, yeah,

Speaker 1 52:44
don’t quote me on that, either. The other thing

Earnest Sweat 52:52
In one of my last questions I’d be remiss to ask, if you’ve mentioned a number of times how important it is to find the superpower of a fund manager no matter what asset class they’re in. The question I have is, what’s the shrewdest way you’ve been able to do that? If it’s through, yeah, I don’t even know the question or some activity, yeah, it’s,

Vivek Jindal 53:17
well, I mean, there’s, there’s a few things, right? One, you do want to go into business with good people, because, you know, everyone’s nice, and everyone can return capital, and everyone can create returns in the right markets when things get hairy, what happens? And I learned that during, you know, the 2008 time period when gates went up on the hedge fund side for assets that shouldn’t have been gated. These are equity, long, short funds. And it was, it was a tough scenario. And so, you know, you start with that, but then it’s a lot of, again, I talk about the art versus science standpoint here, because you can look at statistics and exposure and all that stuff and return information all day long. You need to have a good network to be able to reference and check what these people do really well. If someone says they’ve got the operator team, and let’s, let’s take private equity, for example, you’ve got the operator team in house, and you’ve got this buy and build strategy, and you can create these synergies. I mean, can you talk to some of the, pardon me, old companies that they invested in and understand what they’re doing, understand the dynamic. Talk to some people that have invested in these people prior. The references matter a ton. And then if you talk on the venture side, yeah, you do want to talk with some founders. You do want to talk with some people where maybe the investment went to zero, because that happens in ventures all the time. But how was it from an experience standpoint, how did they help you along? What they said they did, was what actually happened. And you’ve got to get a lot of different viewpoints, a lot of different data points there. Because people’s views are sometimes skewed about what the outcome is for versus the process. But you’ve got to, you’ve got to take on a bunch of touch points in a manager’s ecosystem, from who they invest in, who invests in them, what people in the industry think about them, things of that nature. And you, you’ve got to kind of come to a conclusion on your own, and that’s what we get paid for, obviously, as allocators, to decide whether or not this is someone that does what they say they do, can put up the results, and is someone that you want exposure to. Because once you pick that manager, I mean, on the private side, I mean, that’s that’s a marriage for 12 to 15 years, and they’re hoping that you go into the next vintage, and the next vintage, and the best partnership possible are ones that outlive my tenure in this industry, and the person that you know, you know when I retire, takes over, and they’re still allocating to these guys.