“All these sorts of things that are quite frankly boring, monotonous, tedious, unglamorous, or not sexy, they are the sorts of things that can make or break whether a fund is good or not. Because you can be a great investor, but if the experience of the LP is awful, it doesn’t matter how good the fund is.
“Ultimately, somebody’s got to deal with you. They’ve probably got people to report to themselves. If you’re giving them a headache because you can’t do the aspects of it, then that’s where you’re going to lose LP appetite. That can tell apart who sees themselves as an investor and who sees themselves as a fund manager.” – Nicky Sugarman
Nicky Sugarman is a highly sought after advisor to both family offices and venture investors. Prior, he was also a partner at Stanhope, a $40B multi family office, running their private equity and venture practices. Moreover he, along with Jonathan Hollis at Mountside Ventures, launched the program for the emerging manager to learn the institutional lens.
You can find Nicky on his socials here:
LinkedIn: https://www.linkedin.com/in/nicky-sugarman-98188636/
X / Twitter: https://x.com/NickySugarman
Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.
OUTLINE:
[00:00] Intro
[02:36] Nicky and LEGOs
[05:24] LEGOs or cars
[05:59] What Nicky’s dad taught Nicky
[06:45] Why does the world need another fund accelerator?
[08:35] The curriculum at the fund accelerator
[10:21] The difference between a fund manager and investor
[12:04] Thoughtful examples to the previous question
[14:12] Diligence vs stalking
[16:29] Nicky’s most used app
[17:28] Why are mega cap funds necessary?
[21:21] Why VC becoming PE is inevitable
[24:48] The best types of LPs for multi-asset portfolios
[26:33] Why do LPs speak in IRR, not multiples?
[29:06] Understanding a GP’s valuation policy
[33:46] Communicating news from GPs to LPs
[36:03] How does Nicky know if a GP is in for the long haul?
[38:33] Nicky’s favorite answers to how a firm scales
[39:48] First critical hires at a VC firm
[40:45] Ideal traits of a VC COO
[41:38] How much should a good COO get paid?
[42:50] Should people get paid at the 50th percentile?
[45:28] How much should GPs pay themselves?
[48:30] The one what-if that keeps Nicky up at night
SELECT LINKS FROM THIS EPISODE:
- Stanhope Capital
- S4S Ventures
- Jonathan Hollis
- Mountside Ventures
- LEGO
- ChatGPT
- X / Twitter
- Andreessen Horowitz (a16z)
- Vista Equity Partners
- Thoma Bravo
- Silver Lake
- @endowment_eddie
- Endowment Eddie on GPs holding companies on different valuations
- First Republic Bank (Wikipedia)
- First Republic Bank’s bank failure
- Henry Shi
- Super
- Lean AI Leaderboard
- Telegram
- Cursor
- Rahul Prakash
- NOMO Ventures
SELECT QUOTES FROM THIS EPISODE:
“All these sorts of things that are quite frankly boring, monotonous, tedious, unglamorous, or not sexy, they are the sorts of things that can make or break whether a fund is good or not. Because you can be a great investor, but if the experience of the LP is awful, it doesn’t matter how good the fund is. Ultimately, somebody’s got to deal with you. They’ve probably got people to report to themselves. If you’re giving them a headache because you can’t do the aspects of it, then that’s where you’re going to lose LP appetite. […] That can tell apart who sees themselves as an investor and who sees themselves as a fund manager.” – Nicky Sugarman
On GPs answering questions on operational excellence… “The best answer I could ask from a GP is for them to be super honest and say, ‘These are the people I’ve leaned on to help me understand what best practices look like.’” – Nicky Sugarman
As an LP… “If you’re hearing [your portfolio news] in the news first, that’s a bad sign.” – Nicky Sugarman