I recently went through a process for an IR position with a VC about to launch its second fund. I never worked in IR and did not consider it before this opportunity came up. I have experience investing in GPs. Yet, this exercise required thinking through that process in the mirror. How do you architect a strategy to engage LPs? Particularly in this capital markets environment where LPs are skittish about 1) venture and 2) emerging managers.
I scoured the web looking for resources to help fill in the gaps. What were the intricacies of the position? How long does it take to prep for a process? What tools do you need to execute? What’s the best way to approach different categories of LPs? And what sort of conversion metrics should I look for at each stage of the funnel?
What content I could find did not help. Everything geared towards IR positions at big shops: hedge funds and PE. Nothing tailored for VC or emerging managers. So to prep, I drafted a handful of questions. You can find a link to the complete doc below. This helped me prepare for everything from the tactical to the personal.
Below is a collection of 10 questions I asked at various points during the process. I expect it will help others plan for an optimal interaction with their interviewer. I’ve included a link to the entire prep doc below. It includes 36 questions to prep and 24 questions to ask. I also added a linked table of contents for quick navigation during a zoom interview.
- What risks would you look to mitigate before joining [ firm you’re interviewing with ]?
- What are the best ways for a manager to preserve leverage with prospective LPs?
- How are economics split across the existing team members?
- How often do you expect to raise a new fund?
- What are the strengths and weaknesses of the GP or partnership?
- Are there existing LPs who own a piece of the LP or receive a fee break?
- What’s the hardest lesson you’ve learned navigating the prior fund?
- What will the firm look like in 2, 5, and 10 years?
- What are the ideal traits of a team member at [fund name]?
- What’s one problem you’re dying for someone to solve in [sector]?
Note that if you expect to ask the interviewer only questions you found on the internet, you won’t impress them. Dig and find a way to make a personal connection. Do you know a 3rd party who can provide intel on the interviewer? Find a podcast that the interviewer or firm did. With all the content GPs produce, you have to know the fund’s strategy in the first interview. How will you frame it for LPs? How is this fund differentiated from all the others? What’s its edge? Why can this fund drive repeatable outperformance?
The dynamic between LPs and GPs is similar to GPs and entrepreneurs. The pitch needs to drive engagement, not demonstrate how smart you are. The party listening to the pitch will never know as much about the subject matter. So, how do you make it accessible? How do you frame in a way that will trigger pattern matching? Language that matches something they’ve seen and made money with before. Do that, and you’ll drive engagement.