In this episode of "20 minutes vc," host Harry Stebbings interviews Lindel Eickman, a prominent LP and Managing Director at Foundry Group, delving into his transition from overseeing private equity at UTIMCO to working with friends at Foundry Group. Eickman shares insights on the LP community, portfolio construction, and the evolving landscape of venture capital investing. He emphasizes the importance of partnership dynamics, the challenges in constructing a diversified portfolio, and the role of LPs in mentoring emerging managers. The conversation also touches on the trend of LPs transitioning to private capital, the significance of branding for LPs, and the complexities of generational transitions in VC firms. Eickman's experience at KPMG and his approach to saying "no" to hedge fund managers are also discussed, highlighting his strategic and selective investment philosophy.
"And joining me today, I'm delighted to welcome Lindel Eckman, managing director at Foundry Group, and Lindell is a nationally recognized leader in the LP community, having successfully managed the private investment program for the combined 35 billion pool of capital managed by the University of Texas Investment Management company, otherwise known as Utimco."
The quote introduces Lindel Eikman as an influential figure in the LP community, highlighting his experience in managing significant capital at Utimco and his prior work at KPMG.
"I totally backed into this. Friend of mine found an internship. It was a paying internship, so those are good."
This quote explains that Eikman's entry into the LP world was unplanned and came about through the opportunity of a paid internship.
"But really, when you think about foundry, I mean, Brad, Jason, Seth and Ryan are my friends. Who doesn't want to work with their friends?"
The quote highlights the personal connection and friendships as key motivators for Eikman's move to Foundry Group.
"When you think about our portfolio here at foundry, it's very different than what I had previous"
Although the quote is incomplete, it suggests a shift in Eikman's approach to portfolio management compared to his time at Utimco.## Foundry's Investment Strategy
"We're focused on taking our fund, and we are investing that in a mix of direct deals and portfolio fund managers. In our case, we're putting 25% of the fund into the manager side of that."
The quote explains Foundry's investment approach, highlighting their strategic fund allocation between direct deals and manager investments.
"We really haven't seen this differently from our early stage funds or really any other market signal from existing investors."
This quote emphasizes that Foundry's experience with negative signaling is consistent with their early-stage funds, suggesting that their follow-on investment strategy does not alter market signals.
"To get Alpha, you usually have volatility. And when we think of the small early stage funds. Yeah. I think you are given that opportunity to have outsized alpha when basting us the return profiles."
The quote discusses the relationship between alpha and volatility in venture capital, particularly in the context of early-stage funds.
"I was at Fred's annual meeting back in probably the fall of 2006... And we were in New York. I had flown up, spent a long, long day meetings after meetings, and ended up at a dinner where this guy, Brad Feld was softly pitching me."
The quote describes the initial encounter between Lindel Eichman and Foundry, providing context for the start of their investment relationship.
"I think timing was important there, and USV was actually my first venture investment... I understood the network thesis that made sense to me."
The quote reflects on the factors that influenced Lindel Eichman's decision to invest in USV, emphasizing the role of timing, understanding of technology, and network thesis.
"Well, I think foundries on the record is saying that we're not going to transfer this through a generational transition."
The quote indicates Foundry's stance on generational transition and highlights the difficulty of executing such transitions successfully in the venture capital industry.
"Access is just as important for vcs. So I would argue with Mike about that some I always look at sourcing advantage is what I call it, but that's access by another name."
This quote challenges the idea that the primary importance for LPs is access rather than picking, suggesting that both VCs and LPs rely on access to opportunities.## Hybridization of GPs and LPs
"I don't think most platforms lend themselves to it and certainly traditional institutional lps. I don't think they make great direct investors and in general they aren't able to attract the most talented direct investors to their platform."
The quote highlights the difficulty traditional institutional LPs have in becoming successful direct investors and their challenges in attracting top investing talent.
"I think many gps miss on portfolio strategy. That's probably the place that when we ask questions, GPS just flail about, especially newer or emerging gps, and they're unaware of the risk characteristics that are different in a total portfolio versus an individual position."
This quote emphasizes the common oversight of portfolio strategy by GPs and the lack of understanding of risk at the portfolio level compared to individual investments.
"It's an awareness and a thoughtfulness of how they're going to build a portfolio."
The quote suggests that an impressive GP demonstrates a deep understanding of portfolio construction and risk strategy.
"I think the gps are recognizing, appreciating the commitment. But when it comes to branding, in our case we differentiate because of our access to an experienced LP in my background, but really it's about access to my partners and their GP perspective."
This quote highlights the value of LP branding and the unique benefits an experienced LP can bring to GPs, including mentorship and access to a network with a GP perspective.
"And even in that scenario, it was difficult to focus on venture because you're not able to put large checks to work."
The quote reflects on the challenges large institutions face when trying to invest significant sums in venture capital, which Foundry Group Next is addressing.
"Compensation plus a bonus. And that bonus is often derived from some combination of return performance over a period of years."
This quote explains the general compensation structure for LPs, emphasizing the performance-based bonus system.
"I don't think that I'll say large north american institutions do a great job of incentivizing their staffs."
The quote implies that there are systemic issues in the way large North American institutions incentivize their staff, which could be a topic for further discussion.## Importance of Large Capital Pools
"In general, I think that we need to appreciate the importance of the pools of capital, the large pools of capital, and the importance of what they do for the economy and what they will do for those people they actually support."
This quote emphasizes the vital role that large capital pools have in the economy and the importance of the individuals who manage and invest these funds.
"Compensation structures are certainly an issue. Public disclosure is always a challenge that we faced."
The quote addresses the speaker's concerns about how compensation is structured in their field and the difficulties associated with public disclosure.
"Absolutely. Get out if you're even close to the door."
The quote is a direct and straightforward recommendation to seize exit opportunities when they arise.
"Every year we have a continuing theme of trying to sneak silly phrases into the presentation, and there's been some chicanery around that, and that will certainly continue, and I'm certain that I will be the target of it."
This quote describes the lighthearted and humorous pranks that take place at Foundry Group, fostering a playful work environment.
"I think it's actually focus small funds and helping GPS raise small funds. That's different and it's hard."
The quote highlights the intellectual challenge and stimulation found in concentrating efforts on smaller funds and helping them to raise capital.
"Fred hasn't led me astray yet, so it's hard not to mention Fred and certainly Brad, my partner. I think that Dixon and Evans from Andreessen put out good content."
The quote recommends several individuals and their content as valuable resources for industry insights and information.
"There's a lot of hubris in the room when GPs come in. I think the mistake they make generally is putting too much in a pitch deck and not limiting and not taking their own advice."
The quote criticizes GPs for not practicing what they preach in terms of pitch deck brevity and clarity when seeking investments from LPs.
"The creature from Jekyll island is important to understand the fed monetary system in our world today. [...] One that just has stuck with me I cannot shake from my head is demon by Daniel Suarez."
The quote shares the speaker's top book recommendations, highlighting their educational and entertainment value.
"We are investing with Resolute Ventures. It is a combination of real experience and portfolio strategy."
This quote explains the rationale behind the speaker's recent investment choice, emphasizing the importance of strategy and experience.
"And again, a huge thanks to his partner Bradfeld for making the introduction today. [...] So go to wealthfront.com twentyvc."
The quotes show appreciation for the connections that made the interview possible and promote the services of sponsors while inviting listeners to engage with the show through various platforms.