Alexa Binns 0:00
Welcome today to Lockwood Holmes, Founder and Managing Partner of Vincimus Capital, we’re going to speak about the differences between multi family offices versus typical RIAs, how you might think about, diversifying across assets and within venture and where they’re seeing liquidity opportunities today, whether that’s continuation vehicles, secondary opportunities, etc. Thank you, Lockwood, that’s

Lockwood Holmes 0:42
great to be here. Excited. So chat with you guys for a little

Alexa Binns 0:46
while. Absolutely. You have a very interesting career path. Would you sort of give us the quick intro on how you sort of got to the point of launching Vincimus.

Lockwood Holmes 0:59
no problem. And, you know, I was talking to my coo yesterday, and we were talking about, you know, this podcast, and, and he was like, so I was like, Yeah, I’m gonna be on this podcast called swimming with alligators. And he goes, Well, you should be able to talk very intelligently about that being, you know, being from Florida. And no joke, when I was growing up, we used to catch gators, and we would put them in our pond, and our, excuse me, put them in our swimming pool, and my mom would come out. We’d even put little babies in the bathtub. So if it was swimming with alligators, I could talk intelligently about swimming with alligators, but we’ll talk about swimming with alligators today,

Earnest Sweat 1:35
so that’s hilarious. Yeah, I’m

Alexa Binns 1:38
very impressed that you were catching baby alligators.

Lockwood Holmes 1:42
Well, if you put a light on them at night time they freeze. And so you could just literally go pull up beside them in the boat and just put them on the boat. No problem, they wouldn’t even move as they get bigger, it gets a little more complicated, and you obviously have to be careful about mama, mama, mama, sitting around. So yeah, it was a fun pastime when I was a child.

Earnest Sweat 2:02
I’m trying to think of what’s the analogy towards investing or dealing with fund managers, but I’ll just let the audience figure that out.

Lockwood Holmes 2:10
Yeah, we’ll get to that later.

Lockwood Holmes 2:16
So human. I’ll give you a little context into Vince miss capital and how I got to where I am right now. But basically, born and raised Jacksonville, Florida, and I grew up in kind of a very entrepreneurial home, my family, had a family Lumber Company, I grew up sweeping, sweeping the lumber yard, working in the construction real estate space. We had insulation companies. I would install an installation in Florida in the summerthey sold that company towards the end of my high school career, and so as a family, we kind of had liquidity for the first time. And as I graduated, we were exploring different opportunities. And obviously you have every single person when you have a liquidity event in a relatively small town, everybody wants to have the opportunity to manage your money. And so we put it around to a handful of different RAs, a couple different wire houses, and ultimately landed at a multi family office that was really aligned from a value standpoint, and really was leveraging, kind of, the collective resources of their clientele to offer private market access. And so 2025 years ago, when they were doing this, you know, essentially, single family offices, historically, were the only ones really kind of getting into the private, you know, pensions, endowments and single, large, single family offices 2025, years ago. Yeah, and then so you’ve seen, like, the democratization of the private marketplace, really, over the last two decades. And nowadays, you know, every single RIA or multi family office has some sort of access or exposure, and we can discuss what that looks like, because I would argue that they don’t have a diversified exposure still, but they’re having more exposure to the private marketplace, which is really great, because it creates a little bit more movement.I worked in the kind of blue collar PE company where we bought and sold operating companies in Florida. And then when the downturn hit in 2007-2008 I told the family I needed to learn some new vocabulary words, and my wife and I came out to graduate school at Pepperdine University in California. And so anyway, so I. I came out here 1516, years ago, and haven’t left. You know, I fell in love with the ocean and the waves and the community, and it’s been a really great thing. And honestly, access to kind of the venture world and access to the private marketplace, so many people are constantly coming through LA, and so it’s really been great exposure for a lot of my clients that are kind of all over the place and and so I worked in private equity after grad school and the restaurant space, buying and selling restaurants all over the country. We would buy franchises. It was really fun. And then when I was kind of having my second child and traveling every, you know, on the road every single week, we decided it was probably, you know, you know, a good chance to diversify and to take a look elsewhere and see what we could do. And I met a guy that had started an RIA five or six years prior,. And he asked me to kind of do some consulting work for him. And I’m like, Listen, I don’t really like financial advisors. I feel like you guys were trying to sell something. I’ve had a bad experience with you earlier in my life. He’s like, Well, why don’t you come do some consulting work for me for a couple, you know, a couple months, and just check it out. And I fell in love with the business, honestly, like I fell in love with the idea that you’re actually walking alongside people, and every single situation is completely different. People ask me about performance all the time, and you’re like, Well, I can talk about performance, but the reality of it is every single investor or client is completely different with their liquidity needs, their risk tolerance, their timing. And a lot of my clients are entrepreneurs as well, so we have to make sure that we have capital available if they’re going to make any new acquisitions or bolt ons or anything like that. So every single situation is completely different. So it’s kind of like I almost have to work up a customized portfolio and back test it to show you, kind of, from a performance standpoint, what we would look at. And then fast forward or back, go back to about a couple years ago I ran so the person that I went to work for the RA was phenomenal. We were part of that democratization of the private marketplace. I remember 10 years ago, Partners Group, KKR, and all these, you know, major private equity funds were beginning to try to get into the RIA space. And they’re like, hey, you know, and so I was sitting down with them. I was, in a lot of ways, I was at some of the first meetings they took. And now fast forward to today, where, you know, a lot of RIAs and multi-family offices have exposure to, you know, the KKR fund of funds, and you’re seeing I capital, the birth of I capital. I remember the first pitch I heard on I capital, seven or eight years ago, and now it’s become somewhat of a marketplace, you know, if not the marketplace they continue to acquire and bolt on there, which is really interesting, and offering more diversified solutions to the everyday life of our multi family office. So, yeah. So we were part of that, that story. We had tremendous success in that area, and then a couple years ago, I decided, you know, I really wanted to go back to running a company. I was, you know, managing financial advisors. I was managing the operations a lot, and I had gotten away from what I love the most, and that’s kind of investing in the private marketplace, and then, honestly, sitting down and doing customized portfolios for clients. And so, you know, I went out on my own and was able to recruit a couple of really great people to be a part of the team. And that was kind of the birth of Vince’s capital. And as we discussed a little earlier, but prior to the call Vince’s miss, that the name was kind of derived are influenced by Ernest Shackleton story of the endurance and I really like that, because to me, and I do a lot of long distance paddle racing and and stuff like that, and, and you know, you’re talking 30 to 40 mile races sometimes, and it’s consistent, methodical over a long period of time, that that allows you to do well, if you Come out the gates too hard, you burn out, you bonk, your nutrition is not right. So it’s consistent, methodical over a long period of time. And I think that’s to me, what investing is. It takes patience. It takes setting a really good pace. It takes discipline. Diversification across vintages is just as important as is diversification across sectors or classes, as far as I’m concerned. So that’s kind of, kind of been that and we, you know, we, we’ve had a really good last couple years, and I feel like the markets, though they haven’t been hot, from a from a liquidity standpoint, I feel like they’ve been more opportunistic, specific, specifically in venture really, over the last, what, 1218, months, a lot of the valuations have come down, so the entry points are really good. So it’s hard though, in that sense, because you’re competing with the S, p5, 100 index, it’s on fire, and you’re trying to convince your clients. You’re like, yes, they’re having a great run, and that’s great overall for everybody at the same time. Yeah, you know, we still got to be consistent, methodical, because I still believe in my thesis is that, you know, we can win, you know, three to 500 basis points over, over the S, p5, 100 index in the long run by doing what you know, a lot of these Ivy League endowments, the Yale endowment, the Harvard endowment, have done over, you know, a long period of time and and so being able to communicate that when you have, you know, stock market through the roof sometimes is a little bit more challenging. But it’s, it’s that consistency, you know, and communication, education. No,

Earnest Sweat 10:36
I love that, especially that reference to earnest shock and it’s not because he shares a name with me, but just that story of endurance. I think it applies to allocators, but it definitely applies on the other side to GPS as well. I think, you know, we Alexa and I came up in a generation. Luckily, we started our careers where we saw that immediately the downside, right, graduating in, I think both of us were 2007 so like, you can see the downside of the market, but understanding, if you make decisions and get good every day, right, be persistent, no matter where the market is going, you’re going to be sustainable, and actually, you know, find alpha. So I love that. What was, you know from that, you know, all that experience, where did you see the real opportunity to start your your differentiated firm, like, what themes and trends were you really feeling like you could exploit

Lockwood Holmes 11:42
Well, you know, it’s interesting, you know, to kind of go back to the story of, you know, we, we started getting some of the bigger players in the private equity space, you know, looking to come to the average RIA are looking to begin conversations. I continue to be intrigued by, Hey, how can I continue to get upstream with these guys? How can, how can we, you know, if they’re raising money, and more money is going to come from kind of the average, you know, ra, multi family office, how can we sell to those guys? And so I kept exploring upstream. And obviously, well, you know, to digress just for a second. I also believe that, you know, when you’re investing, a lot of my clients want to have an impact with what they’re doing. They want to be in touch with the investments that they’re having. They want to be able to hear the stories of founders. They want to be able to hear even the portfolio managers on the GP side, they want to have relationships with them and and I think for me, I just feel like there was just so much more of an opportunity to have impact and to form a stewardship standpoint, with every dollar that I’m investing, if I’m getting closer to the source, you know, of the creation of The product or service, or whatever that looks like. And then also, like, I just find it very interesting to be able to invest in things that are changing the world, you know, whether it’s the agricultural technology space, or whether it’s blockchain, or whether it’s AI or, you know, so to be able to, you know, to be afforded the opportunity from an accreditor, a qualified purchaser. I mean that, you know, obviously you have to be qualified there, but to be able to have that opportunity to do that, to me, is just as significant as the opportunity from a performance standpoint. So I do feel very much that there is a calling there, and I think that also significantly influenced, to get back to your question earnest, my pathway, in order to be like, Okay, I want to have time and resources to be able to invest now in those portfolio managers, and then, you know, potentially looking at, you know, even on the director or the CO investment or the follow on, you know, I need to have opportunity and time and bandwidth to be able to do the due diligence, necessarily, to to to be able to invest, the time to make those investments, and so that that kind of also is what birth, you know, Ben Smith and the growth and the trajectory, and not every client is good for us, honestly, like, if you know, not you know, if they’re, they don’t align with that thesis, from a, from A from a kind of allocation standpoint, on the endowment, they don’t align with kind of the patient capital side, because it does require patience. Yeah, we’ve been able to kind of offset some of that patience with kind of the private credit space. Recently, in the last, you know, 18 to 24 months, I mean, that’s been on a tear. So although you’re paying ordinary income tax on that, you’re not getting those capital gains treatment, you know. But you know, it has been different. And then, you know, even recently, too, we’ve started allocating a little bit more to kind of cash on cash lower middle market, you know, just non sexy, you know, companies, and there’s been some really great funds there, so to kind of augment the portfolio on the venture side, you know, I feel like I get excited. I wake up in the morning and get the most excited. About the venture at the same time, I have to make sure that I’m hitting the non sexy as well. To be able to, you know, to augment those are to, you know, when you’re J curving, you got to be able to create return and elsewhere, you know. So that’s, that’s always the challenge.

Earnest Sweat 15:15
since you brought it up Lockwood, who is a good fit? We have a number of aspiring allocators, and maybe they’re new to the space as a family office, small family office, maybe not. They’re just high net worth individuals. Could you give the criteria that you think is a great fit for your firm?

Lockwood Holmes 15:41
Sure. I mean, I think maybe I’ll start with kind of an AUM, just because I think of it as an entry point into true diversification within the private marketplace. You know, the majority of the time you’re having to write in order to get into a fund, you know, a lot of times they’re looking at a minimum check size of $250,000 now in advance, because a lot of times I’m putting 10 to 15 clients in per deal. They potentially allow flexibility there. But the reality of it is, if you don’t want to be over-concentrated. I say you don’t want to be divorcified or overly diversified, but you also don’t want to be overly concentrated too so there, I think you know, for me, on the Aum side, being able to have, at a minimum, two or 3 million to get started, and to have a pathway to kind of, you know, five plus, I think that’s where you really can, that’s the the honey hole to get started, and really creating a diversified portfolio in the private marketplace. And really, you know, it takes three, you know, at least two to two to four years, maybe, to incubate a portfolio, to get it to where it’s not full J curve. So, you know, a lot of times we’ll start off in the secondaries and and some, maybe some, some stuff that’s even even getting into some, are the fund to funds, you know, stuff I’m not, like, I don’t wake up in the morning like wanting to invest in fund to funds, but a lot of times it’s a great way to get initial exposure right out the gates, and so you are still benefiting from private market returns. So a lot of times, I’ll start off in the fund of funds, and then end up kind of creating my own fund to funds, essentially, with the portfolio managers and stuff like that, you know. But the reality of it is, at the end of the day, is the same strategy. It’s just, you know, maybe you add another zero, could go up to well north of a couple 100 million if a client wanted to invest that much. And then I think, once you get north of that 100 million dollars, or couple 100 million dollars, as far as investable assets go, you also have the opportunity, you know, a lot of times, to potentially even be the anchor or lead. And a lot I like investing in half a billion or our smaller funds. You know, if it’s VC, I like 100 or 50 or less. You know, if it’s, if it’s PE you know, you’re looking at, you know, half a million, sometimes it’s a little or half a billion, or sometimes it’s a little bit more than that. But, like, that’s a legitimate check size, and when you have, you know, so my goal at Ben Smith has been able to kind of leverage economies of scale, to write larger check sizes, to then either take a seat on the Advisory Council, the limited partner Advisory Council, to walk alongside them, or to potentially negotiate on the economics or whatever, but to be a part of that like, I don’t want to just write a check and just be passive. I want to add my strategic networks. I want to be able to introduce them to, you know, other investors that Svensa Miss might not be a client of, insist or not. I don’t really care. I think, you know, one of the things I was talking about is that I’m going to digress again, because I think this is a really important point. I was talking to one of our Venture Capital Partners, 10 VCs. They’re in Silicon Valley, a really great group of guys, and they’re kind of generalist, but they’re, you know, seed stage, and I’m on the advisory council there. And one of the things I didn’t realize until I was on the advisory council with them was how strategic. I mean, they’re looking at, they’re having 3000 deals come through a funnel a year, yeah? And, you know, a lot of times they go, delete, delete, delete in the inbox, but like, they’re seeing a lot, and then it starts that due diligence funnel. And they might do six to 10 deals a year, right? But there is. There’s something outside of just a product and service that tremendously adds value to the probability of seeing success on the back end and and one of the things that they stressed, that I felt that was really significant, is who’s alongside you on the cap table. Because if you have someone that is not aligned with kind of, generally, you’re thinking with regards to kind of the trajectory of, you know, alongside the founders, you know, because they’re very significant with the influence that they’re having. And if you push too early, or you don’t take advantage of the opportunity early on, like you can miss, you know. Or you go out and raise too much money, or you, you know, set the valuations. I mean, all that is incredibly strategic. So what I realized as kind of an allocator, at the end I’m an allocator. I’m not, you know, a venture Manager, Portfolio Manager, is, is realizing the significance of making sure they’re really good at what they do, as far as walking alongside founders and giving them advice and and making sure that, like, if, hey, if they’re in the seed game, making sure we’re writing large enough checks to be able to be on on that board, or whatever that looks like from an influence standpoint. So you know that that, to me, has been something that you know, that’s why you see a lot of times these new fund managers, and they don’t necessarily have the experience and walk alongside founders. That’s scary to me. That’s really scary to me, because even though they might be able to network identify really great deals, doesn’t necessarily mean they’re gonna be able to hit that sweet spot when you start to look at exits or be wise or not be too greedy, you know, because it’s, it’s it’s complex, you know, yeah,

Alexa Binns 21:01
yeah. You’ve talked about diversifying across ventures and across vintages. Is there anything you’re specifically looking for right now where you say, Oh, I’ve got a gap, and would love to meet teams that are focused on X or I’m really excited about, you know, selecting a manager who’s who’s focused on wine, yeah, I

Lockwood Holmes 21:24
I mean, I think I’m always open to taking meetings at this point. You know, over the last couple decades, I feel like I’ve built a really good Rolodex of managers. So I might take on one to two new managers a year. But I also, I’m all about slow dating, you know, let’s hold hands before we kiss. You know, I really want to make sure I get to know them. And then for me, you know, kind of my ethos at Ben sub miss is our core values are being steadfast, immovable, which is kind of character driven and a bounding, which is multiplication, but like to me, having portfolio managers that allow align with those kind of that that ethos, because it’s that steadfast consistency. I don’t ever want to push my clients from a timing standpoint to get into a deal at the same time. I don’t ever like to be pushed from a portfolio manager, or, you know, a fund manager, to or GP to get into a deal anytime I feel that stress or that anxiety. Now, certain times timing, you know, you have to be opportunistic, and timing lines up. But at the same time when there’s that pressure, and like, even with my clients, the way that we do it is, you know, I have a weekly Investment Committee where I’ll have 10 or 15 different opportunities, green light, yellow light, red light, that are constantly coming through. And when we look at our client portfolios and see who’s available from a diversification standpoint to participate, I will then actually say, Hey, this is my recommendation. So there’s maybe some different opportunities there, because certain, you know, certain families have certain convention convictions about certain things, such as the defense tech sector. I mean, I love defense tech, but some people, you know, so there’s, there’s obviously an element of education there, but sometimes there’s certain convictions that certain families have that they don’t want to participate in certain deals. So, but I want to make sure that I’m augmenting that, to make sure that we’re so diversified. So yeah, slow dating is really important to me. And then, you know, right now, like when I’m looking at venture I was just pulling up before we jumped on this call, you know, some of our fund managers, but you know, from a macroeconomic standpoint, we like to look at, you know, where, you know, we believe to be a lot of the opportunities. I heard this from one of our, our fund managers, but he says, good, good deals. Don’t have wings, you know. So, like, that’s the question I ask. I tell my clients all the time, and I ask myself, it’s, why am I seeing this deal? You know, I’m a, you know, I’m an allocator. So by the time it gets to me, it’s B or C level that you know at best. You know, that’s why I pay my portfolio managers the two and 20. Often times, that’s true. And then, and then my clients, I’m like, guys, love you guys. You’re very smart, and a lot of them are some of the best entrepreneurs that I’ve ever met. But the same time, if they’re getting a venture deal and they’re, you know, they’re there, and they own a bunch of car dealerships, I’m like, why the heck are you seeing this deal? I mean, that’s not that’s like d or f, maybe like z, you know, and it’s like, Man, how many times have have they missed out on, you know, that that fund had to go around to the people that first invested in the seed. They didn’t get, they didn’t come back around the series. So like understanding the story behind it. And it’s not that you can’t find a gem or a diamond in the rough sometimes. But the reality is, from a probability, statistical standpoint, yeah, you’re just really not, especially if you’re trying to get a rebound where they mismanaged cash flow, or they went out the gates to, like, it’s really hard to bring momentum, get momentum start, you know, back up when it when it’s with when it’s been lost. And so I really, really put a lot of weight on the general partners that we’re investing with as an LP like, it’s very significant to me. Anytime I get a deal, and relatively their realm, I kick it to them. And most of the time, they’re like, Yeah, saw this past, you know, or, okay, Lockwood, you’re not, you’re not going to be the one getting, you know, this the first swing at that, even though you have good relationships, you know? So anyway,

Alexa Binns 26:44
I respect, I respect self awareness. Not everybody has it.

Lockwood Holmes 26:50
Well, I’ve got my butt handed to me too many times to think that I’m that smart.

Earnest Sweat 26:57
Self awareness and humility has a cost. Now we’re going to take a quick break to speak with our sponsor. One thing I’ve always been impressed with SVB is, no matter all the different groups, all the different functions, there is a seamlessness of like working together and utilizing different attributes and so curious, with your team being kind of on the front line in financing, how best do you use those other things? Like, one thing that comes to mind is the research that you all put out is phenomenal, and yeah, how do you leverage that and leverage other groups to then provide the best product to their customers? I think the way,

Christopher Hollins 27:37
The way I’ll describe it is the bottle. So if you think about what face is a client or an acquisition, a potential firing of a client, we have our relationship managers who do a tremendous job of outreach. We have my organization It’s like I have my organization where we’re focused on ensuring relationship managers, that they have a Fulton or an holistic relationship with all of the capabilities that it takes to action transactions and we have relationship advisors. What binary relationship managers to ensure that they create, fly and experience that’s consistent across the relationship with SB, that is at our court with recognize that there is specialization in the way that she interact with clients on one of the issues, from Final perspective, like I said we talked about, FCP, there’s a lot of coaching facts, especially when they Get in hand to things didn’t happen within the FX paint, yeah, as well as in trading liquidity, where insurance patch sleeps lots of small, what I’d say ticket go to the coast founders paying them large DC don’t have the easy access to or if they have that access to it, They wouldn’t have to find their way through a commercial bank situation in order to find that which is not that easy, and I think most importantly, like redo this network over time. So I gave the internal reference for there is an ecosystem of innovative Google or multi time, multi time founders. There are folks who kind of grew up with us, yeah, being a founder, maybe they accidentally met a great couple here that, you know, produce some unicorns along the web. And they are like, almost like a referral model that we say, when you want to understand you want to manage to understand you and what you’re about. That’s the biggest place to go, because they spend the time understanding your business and understanding how they can help you. They help just treat you like the next number of the month. Absolutely,

Earnest Sweat 29:54
One thing I wanted to get your perspective on is it’s been some time since the acquisition. I. By First Citizens Bank. Curious what adjustments or Innovations has SVB made to maintain its relevancy and leadership in the venture ecosystem? Think

Christopher Hollins 30:13
a couple of things. I think First Citizens Bank has been wonderful, as you know, kind of our parent company, and allowing the culture of SVD to flourish, they have been all and on, ensuring that we are connected with our clients, recognizing that our place in the innovation economy actually not only reaps the ability to actually grow the macro economy, but also is a profitable, specialized map. Yeah, it’s not. They’re not trying to turn us into a regional bank. They have that as a part of their portfolio. So they recognize the specialization that we have and are encouraging. I’d say what we’re what we’re doing, and what you’ll see from us in the next year or two is our ability to take our digital assets and put that on a larger, more public platform with SEDS support and help for us, such that we’re able to actually roll out capabilities faster and be able to scale their ability in being around for Over only 25 years, and knowing the banking business very well is going to be nothing but a boon to us. Our specialization in understanding what happens within the edition allows them, from an underwriting perspective, to get roomy surgery around how that actually best helps innovators, especially all the way up to food, VC firms. And look, I think there’s a lot of dry powder that still exists, given all of what’s happened post COVID, and I think that we are going to be continually positioned to be very successful in the business of the zone. Well, I

Earnest Sweat 31:54
I can tell from this conversation your leadership, intention and thoughtfulness will definitely put you guys well positioned to do all of that. And now

Alexa Binns 32:03
back to our elk interview.

Earnest Sweat 32:07
So lock, what is there you’ve been looking at this space and all in kind of private asset classes for a while, specifically with venture? Is there a new approach you’re taking with fund managers now, because we’ve seen a couple different cycles since you’ve been in this space and around it.

Lockwood Holmes 32:27
Yeah. I mean, I think every situation and every person is different, and every thesis that they have, personally, I like it when there’s a specific thesis and niche and venture with what they’re going after. If they’re defense Tech, I want them to be defense tech. You know, I think where we’ve seen We’ve gotten hurt before, is with when there’s scope creep and they’re getting too broad and, you know, like, let’s take AI, for example, or even blockchain, there’s actually a ton of application that, like, it’s, it’s very broad, you know. So, like, you could actually be really, really good at AI and be really diversified in your venture fund, because you’re seeking a lot of tax tactical application, which I think is where the opportunity is, like, if there’s not application opportunity, you know, and then you’re seeing the big boys commoditize, you know, AI, they want to make it free as much as possible so that they can really leverage, I mean, that’s what Facebook’s doing, that’s what Microsoft’s doing, you know. So you, I think you got to be pretty strategic with what you’re doing in tax, you know, tactical with regards to so I like that, especially because I have pretty broad exposure to some really good venture managers, you know, we, whether it’s bio tech, you know, Blockchain, you know, deep tech, we’ve even seen a lot of insurance tech, defense Tech, I think I’ve already said that some of those, you know, Those are kind of, I’m just making sure I don’t like to be overly redundant. I like to find a manager that is, hey, this is kind of what they’re doing, and then allows me, you know, to then kind of build out that diversification within the venture space Ernst. I would say that we’ve seen some some creativity with regards to how the typical, you know, funds are being set up now, with potential, you know, because what we’re seeing and is, you know, a lot of these 10 year with two one year option funds are now coming, you know, like last year, for example. Like, what’s really, I would say, honestly, I want to come back to this point, but I want to provide a little bit more context into it, because it’s really challenging. So for me as. An allocator in the private marketplace, where we’re trying to push 50% up to 75% of the portfolios into the private marketplace. We have to be very, very thoughtful and methodical with regards to Cash Flow Planning, because you have capital calls typically over a three year period, right? Yeah, and then you know distributions are, you know, hopefully by year six, you have your principal back. Hopefully in venture it actually is a longer tail, yeah. And so you can make all the assumptions that you want, but if reg the regulatory environment or the interest rates are like, it’s like, last, last, last 18 to 24 months have it, it’s getting better, obviously. But if it’s locked up, if they’re acting as if a portfolio manager is acting as a fiduciary, which essentially they are, with regards to, they’re acting in the best interest of their clients, they’re going to push for a one year option or two year option or a continuation vehicle, because it’s not in the best interest to then sell. So at the same time, I have to make sure, well, I was taking, you know, from a cash flow management standpoint, we have these massive spreadsheets on every client that are, you know, 20 years out, with regards to Cash Flow Planning. I mean, that’s why, like, when people push back a little bit on, on, on fees that I’m making, I’m like, You don’t understand, this isn’t just a, you know, modern portfolio theory, you know, you know, algorithm that people are putting into the public equity markets. This is, you know, this is very sophisticated. And by the way, it changes every single call that I have with a portfolio manager. Fast forward to having 30 portfolio managers or 30 private market investments, and it changes every quarter on liquidity or capital calls or distributions, like it is. It’s an ever evolving puzzle, which, yeah,

Earnest Sweat 36:46
a 3d puzzle. It’s a three but I

Lockwood Holmes 36:49
love that, like it’s fun because it’s creative and it’s changing, you know, my ADD kicks in, you know, it’s like, Okay, today is completely different than yesterday, you know? So that’s what gets really fun, and then communicating on the front end. So a lot of times I’ll like to create two or three options for liquidity, you know. So I’ve really been exploring different, you know, whether it’s quarterly or monthly liquid options that are in the private marketplace that give me a little bit of an on and off ramp if I need it from a cash flow standpoint. And then also, like, like, I said, a lot of earnest, getting back to your question on who my ideal client is. A lot of the people that we’re working with are first and second gen, you know, entrepreneurs, and so they understand and get the approach that we’re taking to the private marketplace. You know, a lot of traditional, third, fourth plus generation, you know, they’re so far removed from the kind of entrepreneur. And I don’t mean this in a critical way. Generally this is not always the case. I’m just generally speaking here, they’re so far removed from that. And a lot of times their wealth, you know, if they’re continuing to grow at a six to 10 or five, like, it’s so substantial at that point, they already kind of have a lifestyle locked in. There’s no what’s the terminology that they use? They, with regards to, they’re not necessarily in the Multiplication game, they’re in the

Earnest Sweat 38:10
man maintaining

Alexa Binns 38:12
concentrated. Yeah, they’re concentrated, yeah.

Lockwood Holmes 38:14
So, so they, they don’t necessarily, a lot of times, jump into this kind of entrepreneurial approach and, you know, because I don’t just, I invite clients to be a part of the story, you know, yeah. And I also, like, I would say, with our clients, we get a question, you know, probably three to four questions a week with regards to their businesses. And hey, can you give me an update on multiples on what you’re seeing in the space, and I’ll connect them with one of our fund managers to at least have a conversation on what potential exits look like. And sometimes they’ll even exit some of our funds, which is amazing. So you have a built in relationship there, and I would say that’s a tremendous value add to have a client that’s an entrepreneur, that has a company that’s doing really well, that potentially has recapitalization opportunities within the family of clients right there, or Intel that’s kind of insider Intel, and someone that’s already done it that we can connect with. So I think that at the end of the day, I always put wealth into three major buckets. And I would say four, four buckets, buckets, if I include philanthropy. Because I think, to me, from a stewardship standpoint, philanthropy is a big part of it. But the first bucket is kind of institutional capital, like, as far as we’re managing it, institutions like the due diligence, the types of, you know, businesses we’re investing in, and that’s your traditional kind of multi family office allocation that I’m that I’m doing. Then you kind of have your entrepreneurial bucket where it’s operating companies that clients are actively engaged in. Now they’re going to always see the highest return on investment. A lot of times they’re like, Well, what is that? What does that loan need to be? Be for you. And I’m like, it needs to be at a minimum, in the 30s, 3030, plus 40 plus IRS. Otherwise, you can, we can invest in 20 to 30, you know, percent opportunities, and be passive. And you can go sit on the beach and go totally, you know, Cabo, get better at pickleball. Get better at pickleball. So, but, you know, a lot of times that risk and that reward, and by the way, you know, they get a lot out of that. I know some of my clients love going into the workplace every single day and never want to retire, you know, so being able to have some actively engaged, you know, operating companies, or whatever that potentially looks like. And then the third bucket I put real estate in because it’s kind of a hybrid, you know, sometimes it can be income producing, sometimes it can be more passive. But I like to see those buckets, like a third, a third, a third. It’s never going to be perfect, you know. And then you have that philanthropic bucket too, that at the end of every year I was just, you know, we just got off, you know, out of December is always our busiest month, because we’re, you know, tax loss harvesting. We’re trying to do projections on potentially what cash flow looks like in the next year. And then we’re doing a lot of philanthropic giving, because we’ll and we’ll engage into donor advised funds. And by the way, I, I don’t know if you guys have explored much about the evolution of the donor advice fund, but it’s tremendous. What you can do in donor advice funds. I can make the same investments in the private marketplace through different organizations like impact Foundation, or there’s a lot of really great donor advice funds out there that allow you to steward dollars actively. You know, whether you’re investing in emerging markets. Are, you know, like in Africa, or are there so many different entrepreneurial type things that you can do for profit and non profit, and you can just have them in different buckets, and people don’t understand that. So if you wanted to have a DAF and create an endowment for your family and let that thing multiply and bake and then distribute it for a year, it’s kind of like a poor man’s foundation or poor man’s endowment. So there’s a lot of creativity that goes in, and I get just as excited about that as I do, you know, you know, do on the for profit side. Because to me, it’s all blurred, you know. Like to me, impact just doesn’t mean philanthropic impact is everything you know,

Alexa Binns 42:14
no, especially if there are some funds you’re interested in investing in that don’t necessarily promise the same returns that you’re looking for. It’s a great solution. Your point on concentration is hilarious. I was chatting with my dad the other day, who’s a successful, excited entrepreneur, and he was saying he wasn’t stressed out at all about concentration. I’ve got like, 20% of my net worth in a single company. And he was like, What? No, like, 90 didn’t even keep them up at night. You know, like, when you’re the one who built the business, you’re like, Yeah, you get used to that. I wanted to get back to your points on cash flow, in terms of some of these liquidity things you’re getting pitched. Are there any you’ve just like, I’d love to hear any you think are just total garbage, and what you are actually recommending to your clients, like, what are some of these? Whether it’s secondary funds or that are that are intriguing to you in wine? Yeah.

Lockwood Holmes 43:11
I think you have to be really careful, because even in, even in, you know, I was talking to a buddy the other day about the private credit space, and I feel like it’s been a really good ride over the last 24 months. I mean, you’re seeing these interval funds that are quarterly liquid, you know, doing 12 to 14% now that’s ordinary income, so you have to cut it in half, pretty much. But

Alexa Binns 43:39
unlike the endowment, but doesn’t have to pay taxes on that. Yeah, yeah.

Lockwood Holmes 43:44
Or, you know, it’s in an IRA or something else. A lot of times we’ll do our income producing stuff and tax advantageous vehicles, so we push those a lot of times to Iris and stuff. That’s a really good point that you make. Thank you for that. Think about it. But we do do that, and I think it, you know, and, and even, like, a lot of times we’ll have oversight in a four one Ks, and you can be creative with your 401 K so a lot of times I’ll get my public equity exposure in the 401 Ks, leverage the iris for the private credit, and then do long term, you know, you know, equity type investing in the qualified and the non qualified accounts, the non tax advantageous accounts.

Earnest Sweat 49:05
I don’t know if you provide any advice to your fund managers who are emerging managers on that, you know, view if they have certain positions within, whether it’s the whole fund or specific positions in companies, how do you feel about that? You know, maybe taking, maybe it’s their gold and goose, but they needed to show some dpi,

Lockwood Holmes 49:36
yeah, I think, once again, I think the context is really, really important in understanding that story. You know, I talked to a GP the other day and, and we talked about, you know, follow along, investments. And, you know, a lot of times what. Seeing in the space is a lot of times people write checks to participate in CO investment or follow on investment opportunities. And what they communicated to me, I found very interesting. They said that, hey, if I knew when I raising that fund that these clients were setting aside a particular amount to participate and follow on, then I could keep it cleaner than potentially having to do a fund two, because to me, fund two with the same investments or a couple continuation vehicles, and fund one doesn’t really give me that diversification. I’m already exposed there, and that potentially means I’m coming in at a higher valuation on that same thing I’ve invested in. I don’t know, I’m a little bit murky on that. That being said, you know, a handful of our portfolio managers have done that, and they felt like they are significant, like I had a friend approach me the other day that has been invested in the first three or four rounds, and he’s like, Man, this thing is an absolute winner. It’s in the bio tech space and, and, you know, the valuations significantly high. And so I’m like, doing the math on what it would take to get a five or 10x and it’s just like, so astronomical. I’m like, Look, there’s so much risk in bio tech like, and that’s the thing. In the same way, adventure with valuations. Like, if you’re coming in at $20 million which there’s still a lot of people coming in at $20 million valuations, you know, for that to get a 10x you’re looking at is that’s significant. If you’re coming in at five to 7 million million dollars, you know, valuation on a seed round or whatever. Okay, you know, if that hits a hunter mil, I’m doing really well, like, I like that. It’s easier for me to grasp. Now, sometimes that can be really me being short sighted and not being as much of a visionary. And I mean, we have the NVIDIA as we have these crazy things that, you know, you’re like, Oh, I’m too late to the game. And then all sudden, they double again. You’re like, you gotta be kidding me, you know. But, you know, having a triple unicorn from a statistical probability standpoint is, you know, very, very, very low, especially given the particular space that they’re participating in. So I don’t know. I think understanding the context, understanding the narrative behind it, I don’t necessarily love it when a fund manager just rolls, you know, into the next fund at the same time I get it. The other thing that I’ve been seeing recently too, which I find to be pretty creative, and I think it’s going to be a lot of administrative work, but I also think it’s a value add from it for that GPS can add to LPS is kind of a, you know, you know, I recently invested in a fund that has an annual liquidity opportunity after, let’s just call it a three year lock up, where there’s already a preset, you know, discount to any LP that wants to get out, and the first right refusal goes to the GP and then to the LPS. Or sometimes they’ll say, you know, look, whether they say people get preferential treatment, whether the LP or GP, like, people do, right? Like, that’s just this. And a lot of times the GP will gobble it up because they believe in what they’re selling the most, right? But I think that’s unique. If you just said, Hey, you know, every year there’s gonna be a 10% discount on valuation, and you could have potential. Like, that’s attractive to me. I don’t mind taking a 10% haircut to be able to potentially move capital. And, you know, have clients that all of sudden, you know, a big, big opportunity comes up that they want to make an acquisition, and they might want that capital. So for them to take a 10% discount, no problem. 100% they get the capital they need. So, yeah. I mean, I don’t know what question I was answering there. I know I probably went out on a tangent, but yeah, I think it’s interesting to see the evolution of how these things are being structured.

Alexa Binns 53:53
It’s a cool example of how the GPS themselves are solving the liquidity issue up front. Yeah, fabulous. Well, we’ve, we’ve covered every topic imaginable. Thank you. Awkward. Any final thoughts for this audience?

Lockwood Holmes 54:09
even if you’re, you’re potentially looking to find a new financial advisor or a multi family office. I tell clients all the time that they are, you know, looking at me alongside others. The fact that you’re, I think the statistics speak for themselves. With regards to having a financial advisor if you’re entrepreneurial and want to have more impact in your dollars. I fundamentally believe that the private marketplace is a great place. I think it’s a phenomenal place. I think you have to have patient capital and realistic expectations, and I think at the end of the day, aligning with people that you can do life with, because just like when we make an investment with a portfolio manager that’s in venture capital private equity, that’s a decade right there, if I don’t like that person, or we don’t get along like. Why would we do the same thing with choosing a financial advisor? You got to have someone that you align with, from a value standpoint, from a world view standpoint, and someone that you’re Hey, you know what? I’m not going to my heart rate. I’m going to go up if I get a phone call from these guys, you know? And so I think that’s just important. I’m fine with them slow dating me as much as possible in order to make sure that that relationship is right, because that just means that there’s more alignment in the long term. So I don’t think, you know, I think patience is really, really important. Narratives are important. Context is important.

Earnest Sweat 55:43
Well, lock with we really appreciate you joining us on the podcast, and if someone wants to find you, how do they find you in the Vince team? Sure

Lockwood Holmes 55:53
you can go to our website@vince.com, get that.com? When you go to a kind of a harder word, like Vincimus you have to go to Latin. You can speak Latin, you can still get the.com so my email should be there, and you can send a quick email, and we’ll follow up shortly. But yeah, thank you so much for having me. Really

Speaker 1 56:14
Thanks for Thanks for being on. See you later, Allocator!