Who Do You Want to Work With?
Every GP, LP, and marketer should define their Ideal Partner. Most never do. Read this and let me know . . . you down with IPP?
Years ago I was hired to raise capital for a firm that looked flawless on paper. Multiple billions under management. A track record that made getting meetings easy. The returns did not lie. What I had not examined closely enough, even post-Madoff, was the back office. The problem did not surface until the operational diligence stage, which derailed fundraising. We got to the finish line and lost. Twice. The lesson did not come from the portfolio or culture. It came from the plumbing.
That experience changed how I work. I think like an investor now. I have suspicions . . . reservations. I need to know the issues before I get enamored with the special sauce.
It surprises people. They assume a fundraiser says yes to anyone with a fund and a fee. I get paid when I raise capital and earn nothing when I do not. Hard work means nothing when what you sell has no buyers.
It took me thirty years doing business in over thirty countries to get comfortable saying I know a lot about capital. The wrong manager paired with the wrong capital (and fundraising process) falls apart at the first drawdown. The right manager paired with the right capital can compound for decades. Without experience, the distinction seems obvious. With experience, you notice the subtleties and lean into them . . . hard.
Most readers know my history with boxing and the story behind One Step Capital. One of my favorite takeaways from losing fights that I try to bring to this business is “it’s not a loss but a lesson.” I apply similar learnings to this business and before I take anyone on, I run myself through an exercise. Marketers have a name for it. The ideal customer profile (“ICP”). I prefer ideal partner profile (“IPP”), because I view this work as a partnership, not a transaction.
Many GPs chase any LP with money. Some LPs chase “shiny penny” managers due to FOMO. Placement agents often focus solely on managers who will pay. I believe in the power of pausing; focusing on best mutual fit.
If you run a fund, have you paused to map out your ideal LP? If you allocate, what do you want from a GP; have you considered it thoughtfully and thoroughly?
I have . . . after multiple hard lessons, but here you have it:
My ideal partner has scars, wants to level up and operates as an owner, not an optionality-seeker.
An owner puts his/her own money into the fund and into the business like I have; an owner loses sleep when things go south and does whatever possible to rectify it. An optionality-seeker does not: working capital covered, expenses passed through, no skin in the game. The optionality-seeker walks. The owner doubles down, pivots, obsesses about how to turn it around. I know which I want as a partner . . . do you?
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